■^ 


■      MANUfACrUREO    BY 
E.   C.   MCCULLOUGH    &    Co 
.     MANILA. 


THE  LIBRARY 
OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 

SCHOOL  OF  LAW 


LEADING  AND  SELECT  AMERICAN  CASES 

IN    THE    LAW    OF 

BILLS  OF   EXCHANGE, 
PROMISSORY  NOTES,  AND  CHECKS 

ARRANGED  ACCORDING  TO  SUBJECTS.  " 

WITH    NOTES    AND    REFERENCES. 


BY 

ISAAC  F.  REDFIELD 

AND 

MELVILLE     M.    BIGELOW. 


BOSTON: 

LITTLE,   BROWN,   AND    COMPANY. 

1871. 


Entered  according  to  Act  of  Congress  in  the  year  1871,  by 

ISAAC  F.    KEDFIELD   AND   MELVILLE   M.    BIGELOW, 

In  the  office  of  the  Librarian  of  Congress  at  Washington. 


IS7I 


/si 

I 


CAMBRIDGE  : 
PRESS    OF  JOHN   ^VTLSON  AND   SON. 


c? 


PREFACE. 


In  preparing  this  volume,  the  editors  have  first  endeav- 
ored to  present  the  history  of  commercial  paper  throughout 
its  usual  stages;  and  then  to  illustrate  such  collateral 
branches  of  the  general  subject  as  are  of  practical  impor- 
tance. The  cases  as  far  as  the  subject,  "  Discharging 
Indorser  or  Drawer,"  p.  544,  are  arranged  by  topics  in  the 
order  of  progression  which  bills  and  notes  usually  follow  in 
the  course  of  business.  At  this  point  the  cases  upon 
collateral  subjects  begin,  and  continue  through  the  book. 

The  editors  have  aimed  to  present  the  largest  possible 
number  of  valuable  cases,  and  to  illustrate  as  wide  a  range 
of  topics  as  space  would  permit.  Upon  subjects  involved 
in  conflict,  decisions  presenting  the  diiferent  rulings  have 
been  selected  as  principal  cases ;  and  to  these  have  been 
added  notes,  citing  the  authorities  which  have  followed  or 
rejected  the  doctrine  of  the  respective  cases,  and  stating  the 
general  current  of  adjudication  upon  the  subject. 

The  preparation  of  the  notes  has  been  mainly  the 
work  of  Mr.  Bigelow  ;  and  the  editors  have  sought  to 
present  their  annotations  within  the  narrowest  compass 
compatible  with  a  full  illustration  of  the  subject  of  the 
work.  They,  like  the  principal  cases,  are  selected  matter ; 
embracing  mainly  the  decisions  which  were  deemed   to  be 


V35840 


IV  PEEPACE. 

of  practical  importance  to  the  profcs.sion.  It  is  hoped  that 
the  selection  may  prove  satisfactory ;  though  it  would  be 
too  much  to  exjject  that  no  errors  of  judgment  have  been 
made. 

The  opinions  in  many  important  cases  have  been  pre- 
sented in  full  in  the  notes,  in  the  belief  that  they  would 
prove  more  acceptable  than  any  annotations  that  could  have 
been  made  in  their  place. 

In  the  citation  of  text-books  in  the  notes,  the  original 
paging  is  uniformly  referred  to,  unless  otherwise  indicated. 

The  following  additional  references  and  citations  should 
be  made  at  the  places  designated :  In  the  middle  of  p. 
63,  at  the  end  of  the  paragraph  in  which  Wilkinson  v. 
Johnson  is  first  cited,  add,  "  But  see  Goddard  v.  Mer- 
chants' Bank,  4  Comst.  147."  At  the  end  of  the  same 
page,  add  reference  to  "  Forgery,"  p.  643.  At  the  end  of 
p.  476,  add  reference  to  Commercial  Bank  of  Albany  v. 
Clark,  p.  536,  and  note. 

Boston,  March  25,  1871. 


ANALYTICAL    INDEX. 


FORM  AND  REQUISITES. 
I.    Thompson  v.  Sloan. 

(23  Wendell,  71.     Supreme  Court  of  New  York,  January,  1840.) 

PAGE 

Payable  in  Canada  vioney.  —  A  written  promise,  executed  in  New  York,  to  pay  in 
that  State  a  certain  sum  in  Canada  money  is  not  a  negotiable  note  ;  but  if 
negotiable,  parol  evidence  is  admissible  to  show  the  meaning  of  the  term 
"  Canada  money  " 1 

Note  discussing  the  general  question,  when  a  note  or  bill  may  be  said  to  be  pay- 
able in  money,  and  when  not ;  and  citing  many  cases 6 

II.  WoRDEN  V.  Dodge. 

(•1  Denio,  159.     Supreme  Court  of  New  York,  January,  1847.)  * 

Payable  out  of  a  particular  fund.  —  An  instrument  by  which  a  party  promises  to 
pay  a  certain  sura  at  a  stated  time  out  of  the  net  proceeds  of  ore  to  be  raised 
and  sold  from  a  certain  ore-bed,  is  not  a  promissory  note,  it  being  payable 
upon  a  contingency 7 

Note  referring  to  many  analogous  cases 8 

III.  Cook  v.  Satterlee. 

(6  Cowen,  108.     Supreme  Court  of  New  York,  August.  1826.) 

Additional  directionx.  — An  order  directed  to  the  defendants  to  paj'  to  the  plaintiff, 
or  bearer,  ninety  days  after  date,  §400  ;  "and  take  up  their  note  given  to 
William  and  Henry  B.  Cook  for  that  amount,"  is  not  a  bill  of  exciiange, 
though  accepted  by  the  defendants 8 

Note  upon  the  same  subject,  referring  to  numerous  cases 9 


VI  ANALYTICAL    INDEX. 

IV.     Kelley  V.  Hemmingway. 

(18  Illinois,  60-i.     Supreme  Court,  June,  1852.) 

PAGE 

Certainty  as  to  time  of  payment.  —  A  writing  promising  to  pay  a  certain  sum  when 
K.  shall  arrive  at  age,  is  not  a  promissory  note,  being  payable  upon  a  contin- 
gency which  may  never  happen  ;  and  it  does  not  alter  the  case  that  K.  actually 
lived  to  attain  his  majority 11 

Note  and  digest  of  the  cases 12 


MAKER'S   LIABILITY. 
I.     Wallace  v.  McConnell. 

(13  Peters,  136.     Supreme  Court  of  the  United  States,  January,  1839.) 

Note  payable  at  pai-ticuJar  place.  No  demand  necessary  upon  maker.  —  In  an  action 
against  the  maker  of  a  note  payable  at  a  designated  place,  no  demand  need 
be  averred  and  proved ;  if  the  maker  was  ready  and  offered,  at  the  time  and 
place,  to  pay,  it  is  a  matter  of  defence  to  be  pleaded  and  proved  by  him  .     .        15 

Note  of  reference 25 


DRAWER'S   LIABILITY.  25 


ACCEPTANCE. 

I.     Allen  v.  Suydam. 

(20  Wendell,  321.     Court  of  Errors  of  New  York,  December,  1838.) 

Agent's  duty  to  present  for  acceptance.  —  An  agent  who  receives  a  bill  of  exchange, 
payable  after  date,  for  collection,  which  has  not  been  accepted,  is  bound  to 
present  the  same  for  acceptance  without  \mreasonable  delay,  or  he  will  be 
liable  to  his  principal  for  the  damages  which  the  latter  may  sustain  by  the 
agent's  negligence.  In  case  the  debt  is  lost  by  the  agent's  negligence,  the 
measure  of  damages  is  prima  facie  the  amount  of  the  bill  ;  but  evidence  of 
facts  may  be  produced  tending  to  reduce  the  recovery  to  a  nominal  sum 

In  what  cases  presentment  for  acceptance  is  necessary 26 

Note  discussing  the  question  and  the  cases 39 


ANALYTICAL   INDEX.  Vll 

II.     Spear  v.  Pratt. 

(2  Hill,  582.     Supreme  Court  ot  New  York,  May,  1842.) 

PAGE 

What  constitutes  acceptance.  —  If  the  drawee  of  a  bill  of  exchange  write  his  name 
across  the  face  of  tlie  bill,  this  binds  him  as  an  acceptor ;  and  this  too, 
though  the  statute  requires  aacei)tance  to  be  in  writing:,  and  signed  by  the 
acceptor  or  his  agent 41 

Note  upon  the  same  question  and  citing  numerous  cases 42 


III.      COOLIDGE   V.    PaYSON. 

(2  Wheaton,  66.     Supreme  Court  of  the  United  States,  February,  1817.) 

Promise  to  accept.  —  A  letter  written  within  a  reasonable  time,  before  or  after 
the  date  of  a  bill  of  exchange,  describing  it  in  terms  not  to  be  mistaken,  and 
promising  to  accept  it,  is,  if  shown  to  the  person  who  afterwards  takes  the 
bill  on  the  credit  of  the  letter,  a  virtual  acceptance,  binding  the  person  who 
makes  the  promise  ;  and  this  too  though  it  was  drawn  in  favor  of  a  person 
who  took  it  for  a  pre-existing- debt 43 

Note  examining  the  cases  upon  this  sulyect 49 

TV.    BoYCE  V.  Edwards. 

(4  Peters,  111.     Supreme  Court  of  the  United  States,  January,  1830.) 

Promise  to  accept.  Bill  must  be  pointed  out.  —  In  order  to  bind  as  an  acceptor  one 
who  has  promised  to  accept  a  non-existing  bill,  the  particular  bill  must  be 
pointed  out  and  described  in  terms  not  to  be  mistaken. 

Distinction  between  an  action  upon  a  bill  as  an  accepted  bill,  and  one  founded 

on  a  breach  of  promise  to  accept 52 

Note  referring  to  many  other  cases 56 


V.       HORTSMAN    V.    HeNSHAW, 
(11  Howard,  177.     Supreme  Court  of  the  United  States,  December,  1850.) 

What  acceptance  admits.  —  Tiio  drawee  of  a  bill  of  exchange  cannot  recover  the 
amount  thereof  paid  to  a  houa  Jide  holder,  if  the  drawer  put  the  bill  into  cir- 
culation bearing  a  forged  indorsement  of  the  payee's  name.  Acceptance 
admits  the  drawer's  signature  to  be  genuine,  an<l  tlie  drawer,  in  such  case, 
warrants  the  signature  of  tlie  payee 57 

Meacher  v.  Fort  presented  in  full  in  note  referring  to  many  other  cases     ...         59 


Vlll  ANALYTICAL    INDEX. 

VI.       SCHIMMELPENNICH    V.    BaYARD. 
(1  Peters,  264.     Supreme  Court  of  the  United  States,  January,  1828.) 

PAGE 

Acceptance  supra  protest.  —  If  the  drawees  of  a  bill  of  exchange,  refusing  to  lienor 
the  bill,  were  bound  to  accept  the  same,  tliey  will  not  be  permitted  to  change 
the  relation  in  which  they  stand  to  the  parties  on  the  bill  l)y  a  wrongful  act. 
They  can  acquire  no  rights  as  the  holders  of  bills  paid  supra  protest,  if  they 
were  bound  to  honor  them  in  their  character  of  drawees. 

When  bound  to  accept.  —  A  drawee,  who  has  been  in  the  habit  of  receiving  con- 
signments from  the  drawer  with  whom  he  has  an  open  account  therefor,  is 
not  bound  to  accept  bills  drawn  on  him  against  a  particular  shipment,  which 
bills  the  drawer  in  his  letter  of  advice  says  may  be  charged  in  account,  if 
the  account  actually  show  that  the  drawer  had  no  funds  in  the  hands  of  the 
drawee 64 

YII.     KoNiG  V.  Bayard. 

(1  Peters,  250.     Supreme  Court  of  the  United  States,  January,  1828.) 

Acceptance  supra  protest  by  stranger.  — It  is  no  objection  that  a  stranger  has  inter- 
vened as  acceptor  for  the  honor  of  an  indorser  ;  or  that  his  acceptance  has 
been  made  at  the  request  and  under  the  guaranty  of  the  drawee.  But  in 
such  case  the  indorser  may  avail  himself  of  all  defences  which  lie  could  have 
made  had  the  drawee  accepted  for  his  honor  and  then  sued  upon  such 
acceptance 85 

Note  referring  to  other  cases 87 

VIII.     The  United  States  v.  The  Bank  of  the  Metropolis. 

(15  Peters,  377.     Supreme  Court  of  the  United  States,  January,  1841.) 

Acceptance  by  the  United  States.  —  The  liability  of  the  United  States,  on  an 
acceptance  by  an  authorized  officer  given  to  a  bona  fide  holder  is  the  same  as 
that  of  a  private  individual. 

Conditional  acceptance.  —  A  bill  drawn  by  a  government  contractor  was  "  ac- 
cepted on  condition  that  the  drawer's  contracts  be  complied  with,"  and  dis- 
counted by  the  defendants  in  due  course  of  trade.  Held,  that  forfeitures 
previously  incurred,  and  advances  previously  made,  were  not  covered  by 
the  condition 88 

IX.    Newhall  V.  Clark. 

(3  Cushing,  376.     Supreme  Court  of  Massachusetts,  March,  1849.) 

Conditional  acceptance.  —  An  acceptance  of  the  following  order  is  conditional  : 
"  Please  pay,  &c.,  out  of  the  amount  to  be  advanced  to  me,  when  the 
houses  I  am  now  erecting  on  your  land  .  .  .  are  so  far  completed  as  to 


ANALYTICAL   INDEX.  IX 


liave  the  plastering  done,  according  to  our  contract,"  &c.  And  if  tlie  work 
was  never  done  by  the  contractor  (tlie  drawer),  under  the  contract  referred 
to,  the  event  never  occurred  upon  which  the  defendant  by  his  acceptance 
bouufl  liimself  to  pay.  And  it  is  iraniaturial  tiiat  this  contract  was  subse- 
quently cancelled  by  the  drawer  and  acceptor,  if  there  was  no  fraudulent 
interference  by  the  acceptor  to  prevent  the  completion  of  the  work  con- 
tracted for 104 

Note  referring  to  many  cases 108 


INDORSEMENT. 
I.     Brown  v.  The  Butchers'  and  Drovers'  Bank. 

(6  Hill,  443.     Supreme  Court  of  New  York,  May,  1844.) 

Fonn  of  indorsement.  —  The  following  figures  in  pencil,  on  a  bill  of  exchange,  viz., 
"  1,  2,  8,"  in  connection  with  evidence  tending  to  show  that  the  person  who 
placed  them  there  meant  thereby  to  bind  himself  as  an  indorser,  constitute 
a  valid  indorsement ;  though  it  also  appeared  that  he  could  write    ....       110 

Extended  note  discussing  the  cases 110 


II.     Camden  v.  McKoy. 

(3  Scammon,  437.     Supreme  Court  of  Illinois,  December,  1842.) 

Indorsement  hy  one  not  a  party.  —  If  one  not  a  party  to  a  promissory  note  place 
his  name  on  the  back  thereof,  the  payee  not  having  indorsed  it,  he  is  to  be 
regarded  as  a  guarantor,  and  not  as  maker  or  surety  ;  and  the  holder  has  no 
authority  to  write  over  the  name  any  thing  which  wouM  render  such  person 
liable  as  an  original  promisor,  in  the  absence  of  proof  of  intention  ....       112 

Note  referring  to  other  cases 124 


III.     Union  Bank  of  Weymouth  and  Braintree  v.  Willis. 

(8  Metcalf,  504.     Supreme  Court  of  Massachusetts,  October,  1844.) 

Indorsement  by  one  not  a  jxirty.  —  If  a  person  not  a  party  to  a  note  place  Ins  name 
upon  the  back  of  it  at  the  time  it  was  made,  he  is  liable  as  maker ;  and  when 
the  note  is  in  the  hands  of  a  bona  fide  holder,  the  presumption  in  the  absence 
of  proof  is  that  the  name  was  placed  upon  it  at  the  time  it  was  executed      .      124 

Note  referring  to  other  cases 131 


ANALYTICAL  INDEX. 

ly.     Hall  v.  Newcomb. 

(7  Hill,  41C).     Court  of  Errors  of  New  York,  December,  1844.) 


PAGE 


Indorsement  by  one  not  a  party.  — .  If  one  wlio  is  not  a  party  to  a  promissory  note 
place  his  name  upon  the  back  thereof,  the  payee  not  having  indorsed  it,  lie  is 
to  be  regarded  as  an  indorser,  and  not  as  maker  or  guarantor 131 

Note  citing  other  cases 139 


V.  Sylvester  v.  Downer. 

(20  Vermont,  355.     Supreme  Court,  March,  1848.) 

Indorsement  by  one  not  a  party.  —  One  who  is  not  a  .party  to  a  promissory  note, 
by  placing  his  name  upon  the  same,  the  payee  not  having  indorsed  it,  ren- 
ders himself  prima  facie  liable  as  maker  ;  but  evidence  may  be  received  to 
show  the  real  intention  of  the  signer 139 

Note  referring  to  other  cases 143 

VI.  Greenough  V.  Smead. 

(3  Ohio  State,  415.     December,  1854.) 

Indorsement  by  one  not  a  party.  —  If  one  not  a  party  to  a  note  put  his  name  on  the 
back  thereof,  the  note  being  subsequently  indorsed  by  the  payee  below  his 
signature,  but  not  being  intended  for  the  payee,  such  party  is  to  be  regarded 
as  an  indorser  ;  but  if  the  note  were  intended  for  the  payee,  the  liability  of 
such  third  person  is  that  of  ma^er  or  guarantor 143 

Note  and  reference  to  other  cases 150 

VII.     Rey  V.  Simpson. 

(22  Howard,  841.     Supreme  Court  of  the  United  States,  December,  1859.) 

Indorsement  by  one  not  a  party.  —  The  defendants,  W.  M.  and  J.  M.,  not  parties 
to  the  note  in  suit,  placed  their  firm  name  on  the  back  of  the  note,  at  its 
inception,  and  before  it  had  been  passed  or  offered  to  the  plaintiff,  at  the 
request  of  ^he  other  defendant,  the  maker,  knowing  that  the  note  had  not 
been  indorsed  by  the  payee,  and  with  a  view  to  give  credit  to  the  same,  for 
the  benefit  of  the  maker :  held,  that  W.  M.  and  J.  M.  were  original  promisors 
with  the  maker ;  evidence  being  admissible  to  show  their  intention      .     .     .       150 

Note  presenting  a  summary  of  the  conflicting  cases 155,156 


ANALYTICAL   INDEX.  XI 

VTTT.     Leavitt  v.  Putnam. 

(3  Comstock,  494.     Court  of  Appeals  of  New  York,  July,  I80O.) 

I'AQB 

Indorsement  after  muturily.  —  Negotiable  paper  does  not  lose  its  negotiable  char- 
acter by  being  dislionored  ;  hot  even  tiiough  indorsed  to  a  particular  person 
without  other  words 156 

Note 158 

IX.    Estabrook  V.  Smith. 

(6  Gray,  570.     Supreme  Court  of  Massachusetts,  September,  I80G.) 

Indorsement  of  Jinn  note  by  partner  in  his  oivn  name.  —  An  indorsement  by  one 
partner,  in  his  individual  name,  to  his  copartner,  the  paper  being  payable  to 
the  firm  or  order,  will  not  enable  the  indorsee  to  sue  thereon  in  his  own 
name 158 

Note  and  reference  to  other  cases 160 

X.     Stevens  v.  Beals. 

(10  Cushing,  291.     Supreme  Court  of  Massachusetts,  October,  1852.) 

Indorsement  by  ivife  irith  consent  of  Iter  husband.  — A  wife,  with  the  consent  of  her 
husband,  may  indorse  in  her  own  name  a  promissory  note  made  payable  to 
her  during  coverture,  and  pass  a  good  title  to  the  indorsee 161 

Note  and  reference  to  other  cases 164 


HOLDER  FOR  VALUE. 

L     Bay  v.  Coddington. 

(5  Johnson's  Ch.  54.     Court  of  Chancery  of  New  York,  1821.) 

Note  delivered  as  security  for  contimjent  liability. — A,  the  agent  of  B,  received 
negotiable  notes  to  be  delivered  to  B,  but  delivered  them  to  C,  as  security 
for  responsibilities  incurred  by  C  in  indorsing  accommodation  paper  for  him- 
self, A.  C  had  not  then  become  chargeable  on  his  said  indorsements.  Held, 
that  C  was  not  a  bona  Jide  holder  for  value,  though  lie  did  not  know  that 
the  delivery  of  the  notes  to  himself  by  A  was  fraudulent,  but  believed  A  to 
be  tiie  real  owner  of  them 166 


Xll  ANALYTICAL   INDEX. 

11.     Stalker  v.  McDonald. 

(6  Hill,  93.     Court,  of  Errors  of  New  York,  December,  1843.) 


PAGE 


Paper  takm  as  security  for  antecedent  debt.  —  One  who  takes  a  note  merely  as  col- 
lateral security  for  an  antecedent  debt,  without  aQvancing  any  thing  upon 
it,  or  rehnquishing  any  security,  is  not  a  holder  in  the  due  course  of  trade   .      169 

III.     Swift  v.  Tyson. 

(16  Peters,  1.     Supreme  Court  of  the  United  States,  January-,  1842.) 

Paper  taken  in  payment  of  pre-existing  debt. —  The  bona  fide  holder  of  a  bill  of 
exchange,  who  has  taken  it  before  .maturity,  in  payment  of  a  pre-existing 
debt,  without  notice  of  any  equities  between  the  drawer  and  acceptor  thereof, 
will  not  be  affected  by  such  equities. 

Authority  of  the  decisions  of  State  courts.  —  The  34tli  section  of  the  Judiciary  Act 
(1  St.  at  Large,  92),  is  limited  to  the  laws  of  a  State  strictly  local ;  that  is, 
to  the  positive  statutes  of  the  State  and  their  interpretation  by  the  local 
tribunals,  and  the  rights  and  titles  to  things  having  a  permanent  locality, 
such  as  real  estate.  It  does  not  apply  to  questions  of  general  commercial 
law,  such  as  bills  of  exchange  and  promissory  notes 186 

Opinion  of  Court  in  Atkinson  v.  Brooks,  26  Vt.  574,  given  in  note  ....  195 

Note  from  American  Law  Register 202 

Extended  discussion  of  the  more  recent  cases  upon  this  and  other  analogous 

questions 208 

TV.     Pettee  v.  Prout. 

(3  Gray,  502.     Supreme  Court  of  Massachusetts,  September,  1855.) 

Presumption  of  title.  —  In  an  action  upon  a  note  payable  to  A,  or  bearer,  the 
production  of  the  note  by  the  plaintiff,  B,  is  sufficient  evidence  of  his  title, 
though  he  is  the  general  agent  of  A,  who,  the  answer  alleges,  is  the  owner 
of  the  note. 

Equities.  —  One  to  whom  a  note  payable  to  A,  or  bearer,  is  transferred  before 
maturity,*  takes  it  subject  to  no  equities  or  rights  of  set-off  which  the  maker 
might  have  against  A 217 

Reference  to  other  cases 219 

V.    Way  v.  Richardson. 

(3  Gray,  412.     Supreme  Court  of  Massachusetts,  March,  1855.) 

Presumption  of  title.  —  It  is  not  competent  for  the  defendant  to  deny  that  the 
plaintiff  is  the  owner  and  holder  of  a  note  upon  which  he  brings  suit  as  such. 


ANALYTICAL   INDEX.  XIU 

PAGB 

without  traversing  the  signature,  or  the  indorsement,  or  the  delivery  of  tiie 
note  ;  and  in  sucli  case  evidence  is  inadmissible  to  prove  that  the  plaintiflF 
never  owned  the  note,  and  never  employed  counsel  to  prosecute  the  action, 
and  that  he  had  no  interest  in  the  suit 220 


VI.  'Davis  v.  McCready. 

(17  N.  Y.  [3  Smith],  230.     Court  of  Appeals  of  New  York,  March,  1858.) 

Defence  of  breach  of  executory  agreement. — It  is  no  ground  of  defence  to  an 
action  against  the  acceptor  of  a  bill  that  the  holder  was  informed  that  it  was 
accepted  in  consideration  of  an  executory  contract,  if  he  had  no  notice 
of  its  breach 222 

Note 225 


VII.     Brewster  v.  McCardel. 

(8  Wendell,  478.     Supreme  Court  of  New  York,  January,  1832.) 

Postdated  paper.  —  An  indorsee  for  value  of  a  postdated  note  may  recover  there- 
on, though  he  took  it  before  the  date  at  which  it  purported  to  be  executed  .      226 

VIII.     Bayley  v.  Taber. 
(5  Massachusetts,  286.     Supreme  Court,  May,  1809.) 

Note  void  by  statute.  —  Commercial  paper  declared  ^oid  by  statute  is  void  even 
in  the  hands  of  a  bona  fde  holder  for  value ;  and,  therefore,  where  prom- 
issory notes  were  antedated  to  avoid  a  statutory  prohibition,  held,  that  in 
an  action  against  tlie  maker  he  could  prove  the  actual  date  at  which  they 
were  made  and  issued,  even  against  an  innocent  indorsee 226 

IX.     Paton  V.  COIT. 
(5  Michigan  [1  Cooley],  605.     Supreme  Court,  October,  1858.) 

Illegal  consideration.  Burden  of  proof.  — Whenever  the  consideration  of  negotiable 
paper  between  the  original  parties  has  been  illegal,  especially  if  it  is  as  to 
them  in  violation  of  a  positive  prohibition  of  statute,  proof  of  such  illegality 
throws  upon  the  indorsee  the  burden  of  proving  that  he  took  it  bona 
fxle,  and  gave  value  for  it 230 

Note 234 


XIV  ANALYTICAL    INDEX. 


X.    Fowler  v.  Brantly. 

(14  Peters,  318.     Supreme  Court  of  the  United  States,  January,  1840.) 

PAGE 

What  sufficient  to  put  the  holder  upon  inquiri/.  —  A  note  made  payable  to  the  cashier 
of  a  bank,  and  drawn  within  a  peculiar  form  to  be  within  the  usages  of  the 
bank,  was  sent  to  an  agent  to  procure  a  discount  at  the  bank.  The  note 
was  rejected,  and  marked  in  pencil,  with  a  mark  employed  by  the  bank, 
to  indicate  that  it  had  been  offered  and  refused.  The  agent  then  sold 
the  note  and  applied  the  proceeds  to  his  own  use.  Held,  that  the  note  on  its 
face  was  sufficient  to  put  the  holder  upon  inquiry,  and  that  he  could  not 
recover  though  he  had  no  knowledge  of  the  fraud 235 

Note 239 

XI.     Goodman  v.  Simonds. 

(20  Howard,  343.     Supreme  Court  of  the  United  States,  December,  1857.) 

Bona  ^fide  holder's  claim  only  to  he  repelled  by  bad  faith.  —  In  an  action  by  the 
holder  of  a  bill  of  exchange  placed  by  the  drawer  in  the  hands  of  the  holder 
as  collateral  security  for  his  debt,  the  following  instruction  was  given  to  the 
jury  :  "  That  if  such  facts  and  circumstances  were  known  to  the  plaintiff  as 
caused  him  to  suspect,  or  that  would  have  caused  one  of  ordinary  prudence 
to  suspect,  that  the  drawer  had  no  interest  in  the  bill,  and  no  authority  to 
use  the  same  for  his  own  benefit,  and  by  ordinary  diligence  he  could  have 
ascertained  these  facts,"  the  plaintiff"  could  not  recover.  Held,  that  the 
instruction  was  erroneous,  and  that  nothing  short  of  bad  faith  in  the  holder 
would  overcome  his  title  ;  and  the  burden  of  proof  is  upon  him  who  assails 
the  title  to  show  such  bad  faith 239 

Note  collecting  the  early  and  recent  cases  upon  this  point 257 

XII.     Fisher  v.  Leland. 

(4  Gushing,  456.     Supreme  Court  of  Massachusetts,  October,  1849.) 

Indorsee  affected  with  notice.  —  One  who  has  taken  commercial  paper  by  indorse- 
ment before  it  is  due,  with  notice  of  fraud  in  its  inception,  is  subject  to  the 
same  defences,  in  an  action  against  the  maker,  that  could  be  raised  against 
the  payee  to  whom  the  fraud  had  attached.  And  the  maker,  against  such 
indorsee,  can  give  in  evidence  the  fraudulent  acts  of  the  payee,  and  the 
admissions  and  confessions  of  the  latter,  while  he  was  the  holder  of  the 
note 258 

XIII.     Hascall  v.  Whitmore. 

(19  Maine,  102.     Supreme  Court,  April,  1841.) 

Indorsee  with  notice  claiming  under  holder  tvithoiit.  —  One  who  purchases  commer- 
cial paper  for  value,  with  notice  of  defect  m  its  inception,  from  a  bona  fide 


ANALYTICAL   INDEX.  XV 

PAGE 

holder  without  notice,  stands  upon  the  rights  of  the  latter,  and  may  recover 

the  amount  of  the  paper 201 

Note 202 


XIV.     Grant  v.  Ellicott. 

(7  Wenddl,  227.     Supreme  Court  of  New  York,  May,  1831.) 

Accommodation  paper.  ITohhr  with  notice.  —  In  an  action  by  an  indorsee  of  a  bill 
of  exchange  against  the  acceptor,  it  is  no  defence  that  the  bill  was  accepted 
for  the  accommodation  of  the  drawer,  and  that  the  indorsee  had  knowledge 
of  the  fact  when  he  took  the  bill 263 

Note 264 

XV.     Small  v.  Smith. 

(1  Denio,  583.     Supreme  Court  of  New  York,  October,  1845.) 

Fraudulent  diversion.  —  One  who  purchases  accommodation  paper  with  knowl- 
edge that  the  terms  and  conditions  on  which  the  accommodation  was  given 
have  been  violated  is  not  a  bona  Jide  holder  as  agaiqst  the  party  who  lent 
his  name  for  accommodation 264 

XVI.     Mohawk  Bank  v.  Corey. 

(1  Hill,  513.     Supreme  Court  of  New  York,  July,  1841.) 

Accommodation  paper.  Diversion. —  Where  it  does  not  appear  that  the  accom- 
modation party  had  any  interest  in  the  manner  in  which  his  paper  was  to 
be  applied,  it  is  immaterial  that  it  was  not  used  according  to  agreement  .     .       267 

Note 268 

XVII.     Stoddard  v.  Kimball. 

(6  Gushing,  4G9.     Supreme  Court  of  Massachusetts,  October,  1850.) 

Misapplication.  —  In  an  action  bj'  the  indorsee  against  the  indorser  who  had  in- 
dorsed the  paper  for  the  maker's  accommodation,  the  indorser  cannot  raise 
the  defence  that  the  note  was  misajiplied  by  the  maker,  without  showing 
that  the  plaintiff  had  knowledge  of  the  misapplication. 

Amount  of  recovery.  —  If  accommodation  paper  has  been  taken  to  secure  a  pre- 
existing debt  of  a  less  amount  than  that  expressed  on  the  face  of  the  paper, 
the  holder  can  recover  against  tlie  accommodation  indorser  only  the  amount 
of  the  debt,  if  he  (the  holder)  is  not  liable  to  any  third  person  for  any  sur- 
plus       269 

Note  citing  many  other  cases 270 


XVI  ANALYTICAL  INDEX. 

XVIII.     Baxter  v.  Little. 
The  Same  v.  Harris. 

(6  Metcalf,  7.     Supreme  Court  of  Massachusetts,  March,  1843.) 


PAGE 


Papei-  overdue.  Set-off.  —  When  tlie  first  indorsee  of  a  promissory  note  negotiates 
it  after  it  is  dishonored,  and  the  second  indorsee  brings  an  action  thereon 
against  the  maker  or  first  indorser,  the  defendant  cannot  set  off  any  claim 
wliicli  lie  lias  against  the  first  indorsee,  except  such  as  existed  at  tlie  time 
of  the  transfer  of  the  note  to  the  plaintiff,  although  he  had  no  notice  of  such 
transfer  when  he  acquired  his  claim  against  the  first  indorsee 271 

Note  embracing  opinion  of  Court  in  Britton  v.  Bishop,  11  Vt.  70,  and  reference 

to  other  cases 275 


XIX.  Knights  v.  Putnam. 

(3  Pickering,  184.     Supreme  Court  of  Massachusetts,  September,  1825.) 

Usury.  When  maker  can  set  up  this  defence.  —  Commercial  paper  which  is  vahd 
in  its  inception  cannot  be  tainted  with  usury  afterwards,  except  as  between 
the  immediate  parties ;  and  therefore  the  maker  of  a  note,  vahd  when  exe- 
cuted, cannot  raise  the  defence  against  an  indorsee  that  the  latter  purchased 
the  note  of  the  payee  at  a  usurious  rate  of  interest 277 

XX.  Holmes  v.  Williams. 

(10  Paige,  326.     Court  of  Chancery  of  New  York,  1843.) 

Usury.  —  Where  the  holder  and  apparent  owner  of  negotiable  securities  sells 
them  at  a  discount,  to  a  bona  Jide  purchaser,  who  has  no  knowledge  of  the 
purpose  for  which  such  securities  were  made,  the  holder  representing  such 
securities  to  belong  to  himself,  and  to  be  business  paper,  the  transaction  is  not 
usurious,  as  between  the  vendor  and  purchaser,  though  the  representations 
of  the  vendor  were  false,  the  paper  having  been  made  to  be  sold  at  usurious 
discount  in  the  market 280 

XXI.     Cameron  v.  Chappell. 

(24  Wendell,  94.     Supreme  Court  of  New  York,  May,  1840.) 

Usury.  —  Acceptance  of  a  bill  in  consideration  that  a  shipment  of  wheat  shall 
be  made  to  the  drawee  by  the  drawer  does  not  make  the  bill  accommo- 
dation paper  between  the  parties ;  and  such  bill  is  not  tainted  with  usury 
by  the  fact  that  the  drawer  afterwards  procured  it  to  be  discounted  at  a 
rate  of  interest  beyond  that  allowed  by  law 287 


» 


ANALYTICAL  INDEX.  XVii 

PRESENTMENT  AND  DEMAND  FOR  PAY^SIEXT. 

I.     MussoN  V.  Lake. 

(4  Howard,  262.     Supreme  Court  of  the  United  States,  December,  1845.) 

PAGE 

Necessity  of  presentment.  —  The  notary  should  present  tlie  paper  when  he  de- 
mands pa3ment ;  and tliis  rule  has  not  been  changed  by  statute  in  Louisiana. 
Even  if  it  had  been  there  changed,  as  the  defendant's  contract  was  to  Ije 
performed  in  Mississippi  where  the  law  merchant  prevails  in  this  particular, 
presentment  could  not  be  dispensed  with. 

Protest,  how  far  evidence. — A  protest  which  only  states  that  payment  was  de- 
manded, is  not  evidence  to  prove  presentment 290 

Note  referring  to  other  cases ^ .    .     .    .      296 

II.     Renner  V.  Bank  of  Columbia. 

(9  Wheaton,  581.     Supreme  Court  of  the  United  States,  February,  1824.) 

On  what  day  jwesentment  should  be  made.  Usar/e  of  banks.  —  A  custom  of  all  the 
banks  of  the  District  of  Columbia  to  demand  payment  and  give  notice  to 
indorsers  of  commercial  paper  on  the  fourth  day  after  the  day  of  payment 
named,  which  has  been  uniformly  followed  for  upwards  of  twenty  years,  and 
which  was  known  to  and  understood  by  the  defendant  when  he  indorsed  the 
paper,  is  to  be  considered  as  entering  into  the  contract,  so  that  demand  and 
notice  on  the  fourth  day  are  sufficient  to  charge  the  indorser 297 

Extensive  note  and  references  to  otlier  cases 306 

III.  Dana  v.  Sawyer. 

(22  Maine,  244.     Supreme  Court,  April,  1843.) 

At  what  time  of  day  presentment  should  be  made.  —  When  a  bill  or  note  is  not  pay- 
able at  a  place  where  there  are  established  business  hours,  presentment  for 
payment  may  be  made  at  any  reasonable  hour  of  the  day  ;  but  presentment 
to  the  maker  at  near  midnight,  after  he  had  retired  to  rest,  is  not  a  rea- 
sonable hour,  and  will  not  charge  an  indorser  on  notice,  unless  there  was  a 
waiver  of  any  objection  as  to  the  time,  or  unless  it  appear  that  payment 
would  not  have  been  made  upon  a  demand  at  a  reasonable  hour      ....      310 

Note  and  references  to  other  cases 311 

IV.  Taylor  v.  Snyder. 

(3  Denio,  145.     Supreme  Court  of  New  York,  May,  1846.) 

Where  to  be  made.  —  The  place  of  date  of  a  promissory  note  payable  generally,  is 
only  prima  facie  the  place  of  payment ;  and  though  a  note  be  made  and  dated 

b 


XVlll  ANALYTICAL   INDEX. 


in  New  York,  if  the  maker  then  resided  in  Florida,  and  tlie  holder  knew 
this  at  the  time  the  note  was  executed,  and  the  maker  has  not  chantiod  his 
residence  since  tliat  time,  demand  must  be  made  of  the  maker  in  Florida  in 
order  to  charge  an  indorser 313 


V.     Chicopee  Bank  v.  Philadelphia  Bank. 

(8  Wallace,  CiL     Supreme  Court  of  the  United  States,  December,  LS69.) 

Paj/ahk  at  bank.  Negligence  of  collecting  hank.  —  Though  commercial  paper  be 
physically  in  the  bank  at  which  it  is  payable,  yet  if  the  bank  is  ignorant  of  ' 
this  by  reason  of  the  feet  that  the  letter  in  whicli  it  was  sent  slipped  through 
a  crack  in  the  cashier's  desk  and  disappeared  before  it  had  been  seen  by 
him,  then  there  is  no  presentment,  even  though  the  acceptor  had  no  funds 
there,  and  di!l  not  mean  to  pay  the  bill.  And  such  a  disappearance  carries* 
a  presumption  with  it  of  negligence  in  the  collecting  bank,  and  throws  the 
burden  of  proof  upon  the  bank  to  repel  this  presumption.  In  the  absence 
of  such  proof,  the  bank  is  responsible  to  the  holder  for  the  amount  of  the 
bill  or  note •    .     322 

Note  and  extensive  discussion  of  the  cases 326 


PAYMENT. 


I.     Wheeler  v.  Guild. 

(20  Pickering,  545.     Supreme  Court  of  Massachusetts,  October,  1838.) 

Payment  to  one  not  authorized  to  receive  it,  and  before  maturity.  —  The  plaintiff,  holder 
of  a  note  indorsed  in  blank,  delivered  it  to  B.  and  G.,  attorneys  in  partner- 
ship, to  be  held  by  them  as  collateral  security  for  the  payment  of  certain 
debts  due  from  the  planitiff  to  B.  and  G.,  and  otlier  persons  ;  and  the  note 
was  placed  among  the  private  papers  of  G.,  by  whom  the  business  was  trans- 
acted. Some  time  after  payment  Of  the  debts  so  secured,  but  before  the 
maturity  of  the  note,  the  maker  paid  to  B.  the  amount  due  on  the  note,  exclu- 
sive of  interest,  and  took  therefor  a  receipt  signed  by  B.  alone,  setting  forth 
that  it  was  in  full  payment  of  the  note,  and  that  the  note  was  to  be  deliv- 
ered up  to  the  maker.  Held,  that  as  the  note  was  not  in  fact  delivered  up 
to  the  maker,  and  as  tlic  right  of  B.  and  G.  to  transfer  or  collect  the  note 
had  ceased  upon  payment  of  the  debts  for  which  it  was  pledged,  and  as  the 
note  was  paid  before  maturity,  the  payment  to  B.  did  not  operate  as  a  discharge 
of  the  note ;  and  that  the  plaintiff  might,  notwithstanding  such  payment, 
recover  the  amount  from  the  maker 331 

Note  discussing  the  cases  and  giving  extracts  from  other  opinions 388 


ANALYTICAL  INDEX.  xix 

II.     SwoPE  V.  Ross. 

(40  Pennsylvania  State,  186.     Supreme  Court,  1861.) 

PAGE 

Paper  not  accepted  discounted  hy  drawee  before  maturiti/.  —  Tlie  drawee  of  a  bill 
not  accepted  by  him  may  discoimt  the  same  before  maturity  and  thus  be- 
come holder  of  the  paper.  Such  proceeding  is  not  a  payment,  and  the 
drawee  can  recover  against  the  drawer  at  the  maturity  of  the  paper,  upon 
taking  the  usual  proceedings  to  charge  him 340 

Note • 343 

III.     Eastman  v.  Plumer. 

(32  New  Hampshire,  238.     Supreme  Court,  December,  1855.) 

Wrongful  payment  by  principal  debtor.  Effect  as  to  surety.  —  The  defendant  signed 
a  negotiable  note  as  surety  for  the  principal  maker.  The  note  was  indorsed 
in  blank,  and  the  indorsee  called  upon  the  principal  debtor  for  payment. 
The  latter  brought  the  money,  paid  the  amount,  and  received  the  note.  In 
point  of  fact,  this  money  paid  by  the  principal  had  been  furnished  b}'  a  tliird 
jierson,  who  sent  it  to  purchase  the  paper  through  the  principal  as  liis  agent, 
though  this  fact  was  unknown  to  the  holder.  This  third  person,  the  owner 
of  the  money,  brought  an  action  on  the  note  against  the  defendant,  the  suret}^ 
Held,  that  tlie  payment  by  the  principal  discharged  the  paper  as  to  the 
surety,  and  that  tlie  action  could  not  be  maintained 343 

Extended  note  embracing  the  opinion  of  the  Court  in  Jones  v.  Broadhurst,  9 

Com.  B   173,  and  reference  to  other  cases 345 


PROCEEDINGS   ON  NON-PAYMENT. 

I.     Burke  v.  McKay. 

(2  Howard,  06.     Supreme  Court  of  the  United  States,  January,  1844.) 

Protest  of  promissory  note.  —  It  is  not  necessary  in  Mississippi,  or  by  the  general 
law  merchant,  that  a  promissory  note  should  be  protested  by  a  notary,  or 
that  he  should  give  notice  of  dishonor 355 

Note 357 


XX  ANALYTICAL   INDEX. 

II.     Mills  v.  Bank  of  the  United  States. 

(11  Wheaton,  431.     Supreme  Court  of  the  United  States,  February,  1826.) 

PAGE 

Form  of  notice.  — Notice  to  an  indorser  is  not  defective  by  reason  of  not  stating 
the  name  of  the  holder,  or  by  reason  of  a  misdescription  of  the  date  of  the  note 
in  question,  provided  there  was  no  other  note  payable  at  the  same  place  and 
made  and  indorsed  by  the  same  parties.  Nor  is  it  fatal  to  the  notice  that  it 
did  not  contain  a  formal  allegation  that  payment  was  demanded  at  the  bank 
when  the  note  became  due.  It  is  sufficient  that  it  states  the  fact  of  the  non- 
payment of  the  note,  and  that  the  holder  looks  to  the  indorser  for  indem- 
nity. "Whether  the  demand  was  duly  and  regularly  made  is  matter  of  evi- 
dence to  be  established  on  the  trial 358 

Note  giving  extracts  from  opinions  and  reference  to  other  cases 362 

III.     Gilbert  v.  Dennis. 

(3  Metcalf,  495.     Supreme  Court  of  Massachusetts,  March,  1842.) 

Form  of  notice.  —  Merf  notice  of  non-payment,  which  does  not  express  or  im- 
ply demand  and  dishonor,  is  not  such  notice  as  will  render  the  indorser 
Uable 863 

Note  giving  opinion  of  the  Court  in  Furze  v.  Sharwood,  2  Q.  B.  888,  and 

digesting  other  cases 871 

lY.     Munn  v.  Baldwin. 

(6  Massachusetts,  316.     Supreme  Court,  March,  1810.) 

Manner  of  sending  notice.  Post-office.  —  Putting  a  letter  into  the  post-office  di- 
rected to  the  indorser  of  a  bill  of  exchange,  and  containing  notice  of  protest 
for  non-payment,  is  sufficient,  though  it  does  not  appear  that  the  letter  was 
ever  received 376 

Note 377 

Y.     Bowling  v.  Harrison. 

(6  Howard,  248.     Supreme  Court  of  the  United  States,  December,  1847.) 

Notice  to  be  given  personally,  when. —  If  the  parties  reside  in  the  same  citj^  or  town 
the  indorser  is  entitled  to  personal  notice  of  the  dishonor  of  the  bill  or  note, 
either  verbally  or  in  writing,  or  a  written  notice  must  be  left  at  his  dwelling- 
house  or  place  of  business.  Notice  by  tlie  mail  in  such  case  is  not  sufficient. 
And  a  memorandum  on  a  note,  in  these  words :  "  Third  indorser,  J.  P. 
Harrison,  lives  at  Vicksburg,"  is  not  an  agreement  to  receive  notice 
through  the  post-office        378 

Note  discussing  other  cases  and  giving  extracts  from  the  opinions 381 


ANALYTICAL  INDEX.  XXI 

VI.  Chanoine  V.  Fowler. 

(3  Wendell,  173.     Supreme  Court  of  New  York,  August,  1829.) 

PAGE 

Bi/  whom  notice  should  be  r/h-iti.  —  Notice  of  dishonor  cannot  be  given  by  a  stran- 
ger ;  it  should  be  given  by  the  holder,  or  by  one  who  is  a  party  to  it,  and 
who  would,  on  the  same  being  returned  to  him,  have  a  right  of  action  on 
it     . 383 

Extensive  note  giving  references  to  otlier  cases,  and  extracts  from  the  opin- 
ions      384 

VII.  Simpson  v.  Tdrney. 

(5  Humphreys,  419.     Supreme  Court  of  Tennessee,  December,  1844.) 

Intermediate  parties.  —  Notice  given  by  the  holder  of  a  promissory  note  to  the 
second  indorser  too  late  to  fix  his  responsibility,  will  not  avail  an  intermedi- 
ate indorser,  though  it  would  have  been  in  due  time  if  given  by  him       ,     .      386 

Note 388 

VIII.     Bank  op  Alexandria  v.  Swann. 

(9  Peters,  33.     Supreme  Court  of  the  United  States,  January,  1835.) 

When  the  notice  shoidd  be  sent.  —  It  is  sufficient  to  charge  an  indorser  that  notice 
of  the  default  of  the  maker  of  a  note  be  put  into  the  post-office  early  enough 
to  be  sent  by  the  mail  of  the  succeeding  day.  The  holder  is  not  required 
to  give  notice  the  day  upon  which  the  demand  was  made 388 

Note  containing  opinion  of  the  Court  in  Lawson  v.  Farmers'  Bank,  1  Ohio 

State,  206 390 

IX.     Walker  v.  Stetson. 

(14  Ohio  State,  89.     Supreme  Court,  December,  1862.) 

Domicile.  Where  notice  should  be  sent.  —  The  fact  that  a  drawer  or  indorser  goes 
from  the  place  of  liis  actual  residence  to  another  place  to  dispose  of  prop- 
erty, which  occupies  him  for  several  weeks  of  time,  does  not  make  such 
town  his  place  of  business  within  the  meaning  of  the  rule  upon  the  subject 
of  notice,  in  the  absence  of  all  explanation  as  to  the  mode  of  doing  the 
business,  or  of  his  relations  to  the  post-office  there 397 

Note 404 

X.     Bank  of  Columbia  v.  Lawrence. 

(1  Peters,  578.     Supreme  Court  of  the  United  States,  January,  1828.) 

Where  notice  shoidd  be  sent.  —  Actual  notice  to  an  indorser  is  not  required  ;  due 
diligence  only  is  necessary.     Therefore,  in  the  case  of  an  indorser  who 


XXn  ANALYTICAL   INDEX. 

PAGE 

lived  in  the  country,  two  or  tliree  miles  flistant  from  the  place  (G.)  at  which 
the  note  in  question  was  payable,  where  he  usually  received  his  mail ;  held, 
that  notice  left  in  the  post-office  at  G.,  directed  to  him  at  that  place,  was 

sufficient  to  charge  him 404 

Note  and  reference  to  other  cases 409 

XI.     Bank  of  Utica  v.  Bender. 

(21  Wendell,  643.     Supreme  Court  of  New  York,  October,  18;)9.) 

Diligence.  Law  and  fact. —  When  the  facts  are  all  found,  what  is  reasonable 
diligence  is  a  question  of  law. 

Reasonable  diligence,  not  excessive,  required.  —  The  holder  of  a  bill  inquired  of  the 
drawer,  upon  discounting  the  same,  where  the  defendant,  an  accommoda- 
tion indorser  of  the  drawer,  resided.  Notice  was  sent  according  to  the 
answer  given.  Held,  that  this  was  reasonable  diligence,  nothing  having 
occurred  to  lead  the  holder  to  distrust  the  information  received,  though  the 
indorser  actually  lived  in  a  different  place  from  that  named,  and  received 
his  mail  in  a  third 410 

Note 413 


EXCUSES   OF  PRESENTMENT  AND   NOTICE. 
I.     Windham  Bank  v.  Norton. 

(22  Connecticut,  213.     Supreme  Court,  July,  1852.) 

Unavoidable  accident.  —  Presentment  of  commercial  paper  must  be  made  on  the 
day  on  which  it  becomes  due,  unless  it  is  out  of  the  power  of  the  holder,  l^y 
the  use  of  reasonable  diligence,  to  present  it.  Failure  of  such  presentment 
is  excused  by  any  inevitable  or  unavoidable  accident,  not  attributable  to  the 
fault  of  the  holder,  provided  he  make  presentment  as  soon  thereafter  as  he 
is  able 414 

Note  distinguishing  Schofield  v.  Bayard,  3  Wend.  488 422 

II.    Juniata  Bank  v.  Hale. 

(16  Sergeant  &  Rawle,  157.    Supreme  Court  of  Pennsylvania,  June,  1827.) 

Death  of  maker.  Indorser  appointed  administrator.  —  The  death  of  the  maker  of  a 
note  before  it  becomes  due,  and  the  taking  out  letters  of  administration  upon 
his  estate  by  the  indorsers  and  others,  before  the  note  arrived  at  maturity, 
do  not  dispense  with  the  necessity  of  notice  to  the  indorsers  of  non-paj'ment 
by  the  maker 423 

Note  examining  Caunt  v.  Thompson,  7  Com.  B.  400,  and  referring  to   other 

cases 428 


ANALYTICAL   INDEX.  XXllI 


III.     HoPKiRK  V.  Page. 

(2  Broekonbroiigh,  20.     Circuit  Court  of  the  United  States  for  Virginia, 

ISIay,  1822.) 

PAG  E 

Drawimj  willwut  finids.  —  If  tlie  drawer  have  no  funds  in  the  hands  of  the  drawee 
at  the  time  of  drawin<,^  and  no  right  to  draw,  and  has  the  strongest  reasons 
to  heiieve  that  his  draft  will  not  he  i)aid,  lie  is  not  entitled  to  notice  of  dis- 
honor. 

Effect  of  war.  —  The  effect  of  war  is  to  suspend  all  commercial  intercourse  be- 
tween the  countries  engaged  in  it ;  and  therefore  presentment  and  notice 
will  he  excused  during  the  continuance  of  hostilities.  But  these  steps 
should  be  taken  within  a  reasonable  time  after  the  cessation  of  the  war   .     .      430 

Extended  note  and  discussion  of  the  cases,  and  containing  opinion  in  House  v. 

Adams,  48  Penn.  State,  2G1 441-443 

IV,     McGruder  V.  Bank  of  Washington. 

(9  Wheaton,  598.     Supreme  Court  of  the  United  States,  February,  1824.) 

Removal  into  another  jurisdiction.  —  The  removal  of  the  maker  of  a  note,  before 
its  maturity,  into  another  jurisdiction  from  that  in  which  the  note  was 
executed,  will  excuse  the  holder  from  making  a  personal  presentment  and 
demand 447 

Note  discussing  analogous  question 449 

V.    Lehman  v.  Jones. 

(1  Watts  &  Sergeant,  126.     Supreme  Court  of  Pennsylvania,  May,  1841.) 

AhscondiiKj  of  the  paijor.  —  If  tlie  maker  of  a  promissory  note  absconds  before 
the  maturity  of  the  note,  this  will  excuse  the  holder  from  making  present- 
ment at  his  last  place  of  residence 450 

Note  and  reference  to  otlier  cases,  and  containing  extract   from  oinnion  in 

Pierce  v.  Cate,  12  Cush.  I'JO 451 

VI.     Williams  v.  Bank  op  the  United  States. 

(2  Peters,  96.     Supreme  Court  of  the  United  States,  January,  1829.) 

Absence  of  payor.  —  In  an  action  against  an  indorser,  it  appeared  tliat  the  notary 
called  at  his  dwelling-house  to  serve  notice  of  dishonor,  and  found  the  house 
shut  up,  the  doors  locked,  and  the  family  out  of  town  (as  he  learned  on  in- 
quiry of  the  next  neiglibor),  upon  a  visit  of  unknown  duration,  lldd,  that 
he  had  used  due  diligence,  and  that  the  indorser  was  liabld 452 

Note  and  reference  to  cases 458 


XXIV  ANALYTICAL   INDEX. 


VII.    Barton  v.  Baker. 

(1  Sergeant  &  Rawle,  334.     Supreme  Court  of  Pennsylvania,  April,  1815.) 

PAGK 

Insolvency.  Assignment  to  indorser.  —  Tlioiigh  the  maker  of  a  note  was  insolvent 
when  the  note  was  made  and  indorsed,  and  also  when  it  fell  due,  and  this 

I  fact  was  known  to  the  indorser,  this  will  not  excuse  due  notice  of  non-pay- 
ment. But  if  the  indorser  has  received  from  the  maker  a  general  assign- 
ment of  his  estate  and  effects,  notice  is  not  necessary 4-58 

Note  and  reference  to  other  cases 461 

Opinion  in  Watkins  v.  Crouch,  5  Leigh,  522      ,  , 463 


VIII.    Berkshire  Bank  v.  Jones. 

(6  Massachusetts,  524.     Supreme  Court,  September,  1810.)" 

Waiver  of  notice.  Payable  at  bank.  —  Waiving  notice  by  an  indorser  does  not 
excuse  the  indorsee  from  making  demand  of  payment ;  but  if  the  paper  was 
payable  at  a  designated  place,  and  the  indorsee  was  ready  to  receive  pay- 
ment at  the  time  and  place,  no  further  demand  is  necessary 468 

Note  and  reference  to  other  cases,  and  containing  opinion  in  Union  Bank  v. 

Hyde,  6  Wheaton,  572 469 

Also  opinion  in  Coddington  v.  Davis,  1  Comst.  186 471 

IX.     SiGERsoN  V.  Mathews. 

(20  Howard,  496.     Supreme  Court  of  the  United  States,  December,  18.57.) 

Promise  to  pay,  ivhen  a  zvaiver.  —  If,  before  the  maturity  of  a  note,  the  indorser 
dispensed  with  a  presentation  of  the  note  and  demand  of  payment,  and  prom- 
ised to  pay  it  or  to  provide  for  its  payment  at  maturity,  he  cannot  set  up  as 
a  defence  to  a  suit  upon  the  note,  that  it  was  not  presented  for  payment,  and 
demand  made  therefor,  when  it  was  due,  and  that  no  notice  of  its  dishonor 
was  given.  Or  if,  after  the  maturity  of  the  note,  the  indorser  promised  the 
holder  or  his  agent  to  pay  the  same,  having  at  the  time  of  making  said 
promise  knowledge  of  the  fact  that  the  note  had  not  been  presented  for  pay- 
ment, and  that  no  demand  had  been  made  therefor,  or  notice  of  non-payment 
given,  the  indorser  cannot  now  set  up  as  a  defence  to  the  note,  a  want  of 
such  demand  and  notice 473 

Note  referring  to  numerous  other  cases 475 


ANALYTICAL   INDEX.  XXV 


ACTIONS. 


I.     Pearce  v.  Austin. 

(4  Wharton,  489.     Supreme  Court  of  Pennsylvania,  March,  1839.) 


PAGE 


Who  mmj  sue.  —  One  to  whom  negotiable  paper  is  indorsed  as  agent  for  another, 
may  bring  an  action  upon  the  same  in  his  own  name ;  unless  such  agent's 
possession  is  shown  to  be  mala  ^cle 477 

Note  and  digest  of  tiie  cases 478 


II.     Staples  v.  The  Franklin  Bank. 

(1  Metcalf,  43.     Supreme  Court  of  Massachusetts,  March,  1840.) 

When  action  may  be  brought.  —  The  maker  of  a  promissory  note  is  bound  to  pay 
it  upon  demand  made  at  any  seasonable  hour  of  the  last  day  of  grace,  and 
may  be  sued  on  that  day,  if  he  fail  to  pay  on  such  demand. 

Post-notes,  issued  by  a  bank,  are  payable  on  demand  made  at  any  time  on  the 
last  day  of  grace,  after  the  known  and  usual  hour  of  opening  the  bank  for 
business,  and  may  be  put  in  suit  on  that  day,  if  payment  is  refused     .     .     .      480 

Note  and  reference  to  other  cases 490 


III.     Smith  v.  The  Bank  of  Washington. 

(5  Sergeant  &  Rawle,  318.     Supreme  Court  of  Pennsylvania,  1819.) 

When  action  may  be  browjht.  —  Notice  to  an  indorser  of  non-payment  of  a  prom- 
issory note  was  put  into  the  post-office  on  the  13th,  and  by  the  course  of  the 
mail  could  not  reach  him  before  the  19th.  Suit  was  brought  on  the  IGth, 
Held,  that  it  was  premature 490 

Note  referring  to  other  cases 492 

IV.      OSBORN   V.    MONCURE. 
(3  Wendell,  170.     Supreme  Court  of  New  York,  August,  1829.) 

When  action  may  be  brought.  —  An  action  brought  against  the  maker  of  a  prom- 
issory note  on  the  third  day  of  grace  is  premature 493 

Note  referring  to  the  contlict,  and  containing  opinion  in  Smith  v.  Aylesworth, 

40  Barb.  104 494 


XXVI  ANALYTICAL   INDEX. 

EVIDENCE. 

I.     Wells  v.  Whitehead. 

(15  Wendell,  527.     Supreme  Court  of  New  York,  July,  1836.) 

PAGE 

Production.  Bill  drawn  in  sets.  —  In  a  suit  against  the  indorser  of  a  bill  of  ex- 
change drawn  in  sets,  the  defendant  may  require  the  production  of  the  iden- 
tical one  of  the  set  dishonored 498 

Opinion  in  Downes  v.  Church,  13  Peters,  205,  and  other  cases  referred  to     .     .      501 

II.     Bank  of  the  United  States  v.  Dunn. 

(6  Peters,  51.     Supreme  Court  of  the  United  States,  January,  1832.) 

Evidence  to  vary  Uahility  of  indorser.  —  Tlie  indorser  of  commercial  paper  will 
not  be  permitted  to  show  that  his  indorsement  was  intended  to  be  merely 
formal ;  and  that  he  was  informed  by  the  payor  that  he  would  incur  no 
responsibility  by  indorsing  the  paper,  as  its  payment  had  been  secured  by  a 
pledge  of  stock 503 

III.     Townsend  V.  Bush. 

(1  Connecticut,  200.     Supreme  Court,  November,  181-1.) 

Competency  of  party  to  commercial  paper  to  prove  it  invalid.  —  A  party  to  a  nego- 
tiable instrument,  who  is  divested  of  interest,  is  competent  to  prove  usury 
in  the  inception  of  the  paper  . 507 

lY.     Thayer  v.  Grossman. 

(1  Metcalf,  416.     Supreme  Court  of  Massachusetts,  September,  1840.) 

When  indorser  competent  to  prove  payment.  —  In  an  action  by  the  indorsee  against 
the  maker  of  a  note  indorsed  overdue,  the  indorser  is  competent  to  show 
payment  before  the  note  was  indorsed 522 

Note  in  regard  to  the  conflict,  and  citing  other  cases 527 

V.     The  Commercial  Bank  of  Albany  v.  Strong. 

(28  Vermont,  316.     Supreme  Court,  February,  1856.) 

Sufficiency  of  prorf.  —  A  decision  of  the  county  Court,  as  to  the  sufficiency  of 
certain  proof,  held,  to  refer  to  its  cliaracter,  or  quality  and  competency,  and 
not  merely  to  its  quantity  or  force,  in  convincing  the  mind. 


ANALYTICAL    INDEX.  XXVll 


When  notice  should  be  sciU.  —  A  notice  of  the  dislionor  of  a  bill  of  excliiinf,'e,  or 
promissory  note,  should  be  addressed  to  an  indorser  at  the  place  of  his  resi- 
dence, unless  he  is  shown  to  have  a  place  of  private  business  elsewhere. 
The  office  of  a  corporation,  of  which  he  is  an  officer  (in  this  case  the  presi- 
dent), in  a  town  diflerent  from  that  in  which  he  resides,  will  not,  in  the 
absence  of  i)roof,  be  re^'ardcd  as  his  i)rivate  business  place ;  and  a  notice 
ad<lresscd  to  him  there  will  not  be  sufficient. 

Number  ofwilness(.<i.  —  That  a  notice  to  an  indorser  was  seasonably  deposited 
in  the  post-office  need  not  be  proved  by  a  sini^le  witness.  If  more  persons 
than  one  participated  in  the  act,  the  testimony  of  all  of  them  should  be 
adduced. 

Consideration  of  tlie  probability  as  to  the  manner  in  wiiicli  the  notice  in  the 
present  case  was  directed  and  sent  to  the  defendant;  and  of  the  testimony, 
in  reference  to  its  legal  sufficiency,  to  prove  that  the  notice  addressed  to  the 
defendant  as  indorser,  was  put  into  the  post-office,  seasonably  to  chart^e  him.      528 

VI.     The  Commercial  Bank  of  Albany  v.  Clark. 

(28  Vermont,  325.     Supreme  Court,  February,  18oG.) 

Admissions.  Notice.  —  A  written  admission  by  tlie  indorser  of  a  bill  or  note, 
that  he  received  due  notice  of  its  dishonor,  thouyh  strong  evidence,  is  not 
conclusive  of  the  fact  against  him.  He  may  show  that  the  paper  was  signed 
under  a  misapprehension  or  mistake  as  to  the  bill  or  note  referred  to,  and 
that  no  notice  of  the  dishonor  was,  in  point  of  fact,  given. 

Contract.  Estoppel.  —  Such  a  writing,  in  the  present-  case,  held  not  to  operate 
either  as  an  admission  for  tlie  purpose  of  a  trial,  as  a  contract,  or  as  an 
estoppel  in  pais 536 

Note  discussing  the  cases 540 


DISCHARGING  INDORSER  OR  DRAWER. 

I.     Sterling  v.  The  Marietta  and  Susquehanna  Trading 

Company. 

(11  Sergeant  &  Rawle,  179.     Supreme  Court  of  Pennsylvania,  May,  1824.) 

Additional  securiti/.  —  Taking  a  bond  from  a  third  person  for  the  money  due  upon 
a  note  is  no  discharge  of  an  indorser,  unless  it  be  so  agreed;  nor  will  pro- 
ceeding to  judgment  on  the  bond  alter  the  case. 

Delaying  suit. — Neither  giving  time  to  the  maker,  by  forbearing  to  proceed  to 
recovery  on  the  pai)er  by  legal  process ;  nor  delay  to  sue  the  indorser  for 
several  years,  within  the  period  of  limitation,  will  operate  as  a  discharge 
to  the  indorser ;  provided  no  time  was  given  before  the  indorser's  liability 
was  fixed 544 

Note  referi'ing  to  conflict,  and  citing  other  cases 546 


XXVin  ANALYTICAL   INDEX. 


11.     Okie  v.  Spencer. 

(2  Wharton,  253.     Supreme  Court  of  Pennsylvania,  December,  1836.) 

PAGE 

Additional  security.  Extension  of  time.  — If  the  holder  of  a  promissory  note  take  a 
check  upon  a  bank  from  the  maker,  dated  six  days  after  the  maturity  of 
the  note,  the  check  to  be  in  full  satisfaction  of  the  note  if  paid,  this  oper- 
ates as  an  extension  of  time  to  the  maker,  and  discharges  an  indorser     .     .      547 

III.     McLemore  V.  Powell. 

(12  Wheaton,  ,554.     Supreme  Court  of  the  United  States,  January,  1827.) 

Agreement  for  delay.  —  Mere  agreement  by  the  holder  with  the  drawer  of  a 
bill  of  exchange  for  delay,  made  without  consideration,  and  not  commu- 
nicated to  the  indorser,  does  not  discharge  the  indorser 551 

Note  containing  opinion  in  Payne  v.  Commercial  Bank,  6  Sm.  &  M.  24     .     .     .      554 
Also  opinion  in  Bank  of  Utica  v.  Ives,  17  Wend.  501 556 

lY.     Tiernan  V.  Woodruff. 

(5  McLean,  350.     Circuit  Court  of  the  United  States  for  Michigan,  June,  1852.) 

Agreement  for  delay.  Bankruptcy.  —  A  bankrupt  maker  of  a  promissorj'^  note 
procured  from  his  creditor  two  months'  time,  within  which  the  right  to  sue 
on  the  note  was  suspended.  The  agreement  was  upon  a  valuable  consid- 
eration.    Held,  no  discharge  to  an  indorser 558 

Note  containing  opinion  in  Frazer  v.  Jordan,  8  El.  &  B.  303 560 

V.     Couch  v.  Waring. 

(9  Connecticut,  261.     Supreme  Court,  June,  1832.) 

Judgment  and  execution  against  maker.  Indorser  sued  for  balance.  —  The  holder  of  a 
promissory  note  sued  the  maker  thereof,  and  obtained  judgment,  which  was 
satisfied  on  execution.  He  then  brought  an  action  against  an  indorser  to 
recover  a  balance  of  interest  due  on  the  note,  not  included  in  the  judg- 
ment and  execution.  Held,  that  the  effect  of  the  former  proceedings  was 
to  discharge  the  maker  from  further  liability,  and  to  preclude  the  holder 
from  resorting  to  the  indorser 563 

VI.     Newcomb  V.  Raynor. 

(21  Wendell,  108.     Supreme  Court  of  New  York,  May,  1839.) 

Release  of  first  indorser. — If  the  holder  of  a  promissory  note  release  the  first 

indorser  this  discharges  the  subsequent  indorsers 568 


ANALYTICAL    INDEX.  XXIX 

VII.     Pannell  V.  M'Mechen. 

(4  Harris  &  Johnson,  474.     Court  of  Appeals  of  Maryland,  June,  1819.) 

PAGE 

Composition  deed.  Remedy  against  indorser  reserved.  — A  made  a  negotiable  note 
payable  to  B,  wlio  indorsed  it  to  C,  by  whom  it  was  indorsed  to  D.  A  and 
B  made  a  composition  deed  with  their  creditors,  and  conveyed  all  their 
estate  to  trustees,  among  whom  was  C,  and  were  discharged,  with  the 
proviso  "  that  the  said  release  shall  not  operate  in  favor  of  or  be  construed 
to  release  any  persons  or  person  who  may  be  bound,  &c.,  for  A  and  B,  or 
either  of  them,  or  who  may  have  indorsed  any  note  or  notes  drawn  or  in- 
dorsed by  the  said  A  and  B,  or  either  of  them."  Held,  that  C,  who  had 
received  due  notice  of  dishonor,  was  liable  to  D 569 

Note  containing  opinion  in  Sohier  v.  Loring,  6  Cush.  537 574 

VIII.     Mayhew  v.  Boyd. 

(5  Maryland,  102.     Court  of  Appeals,  December,  1853.) 

Mortgage  security  sold  without  indorser's  assent.  —  An  indorsement  of  three  notes 
was  made,  in  consideration  of  the  execution  of  a  mortgage  at  the  same 
time  by  tlie  maker  to  the  holder,  by  the  terms  of  which  the  mortgagee  was 
to  sell  the  property  only  on  default  of  the  maker  to  pay  the  notes  at  their 
maturity.  When  the  first  note  was  due  it  was  dishonored,  but  by  the 
assent  of  all  parties  a  new  one  was  substituted  in  its  place.  Tlie  mortgagee, 
after  the  original,  but  before  the  new  note  or  any  of  the  otlk^rs  matured, 
sold  the  property  with  the  assent  of  the  mortgagor,  but  not  of  the  indorser, 
applied  the  proceeds  to  pay  the  first  two  notes,  and  sued  the  indorser  upon 
the  third.  Held,  that  the  right  to  sell,  which  accrued  upon  the  dishonor  of 
the  first  note,  was  taken  from  the  mortgagee  by  the  substitution  of  the  new 
one  in  its  place,  and  the  sale  before  the  maturity  of  the  latter  was  a  viola- 
tion of  the  contract  between  the  parties  and  discharged  the  indorser. 
General  nde.  —  Any  dealings  with  the  principal  debtor  by  the  creditor  which 
amount  to  a  departure  from  the  contract  by  which  an  indorser  is  to  be 
bound,  and  which,  by  possibility,  might  materially  vary  or  enlarge  the  lat- 
ter's  liability  without  his  assent,  discharge  the  indorser.     .......      577 

IX.    Farmers'  and  Mechanics'  Bank  v.  Rathbone. 

(26  Vermont,  19.     Supreme  Court, ,  1852.) 

Distinction  between  hill  for  value  and  accommodation  bill.  —  If  a  bill  of  exchange  be 
drawn  and  accepted  at  a  time  when  the  drawer  has  an  open  account  with 
the  acceptor,  for  goods  which  he  is  in  the  course  of  sending  to  the  acceptor 
for  sale,  and  it  appear  to  have  been  the  understanding  of  the  parties,  at  the 
time,  that  the  bill  was  to  be  paid  by  the  acceptor,  and  its  amount  be  entered 
in  the  general  account,  it  will  be  treated  as  a  bill  drawn  for  value,  imposing 
upon  the  acceptor  the  primary  obligation  to  pay  it,  and  cannot  be  held  an 
accommodation  bill;  and  its  legal  character,  in  this  respect,  will  not  be 


XXX  ANALYTICAL   INDEX. 


affected  by  any  alteration  of  the  balance  of  the  account,  nor  by  the  fact, 
afterwards  ascertained,  that  the  drawer  was  indebted  to  the  acceptor  at  the 
time  of  the  acceptance. 

The.  release  of  the  drawer,  in  such  case,  by  the  holder,  will  not  discharge  the 
acceptor,  but  will  be  treated  as  a  relinquishment,  merely,  by  the  holder,  of 
so  mucli  security  which  he  had  for  the  payment  of  the  debt. 

Accommodation  paper.  Release  of  drawer.  —  An  indorsee,  for  value,  of  a  bill  of 
exchange,  who  became  such  before  its  maturity,  and  in  ignorance  that  it  was 
given  for  accommodation,  has  a  right  to  treat  all  parties  thereon  as  liable  to 
him  according  to  their  relative  positions  on  the  bill,  and  to  regard  the 
acceptor  as  the  principal  debtor,  and  the  liability  of  the  drawer  as  collateral ; 
and  this  right  is  unaffected  by  any  subsequently  acquired  knowledge,  that 
the  bill  was  given  for  accommodation.  In  such  case  a  release  of  the  drawer, 
by  the  liolder,  has  no  effect  on  the  ultimate  liability  of  the  acceptor.  And 
in  this  respect  the  rule  is  the  same  in  equity  as  at  law 581 

Note  referring  to  other  cases 596 


SURETYSHIP. 

I.     Keith  v.  Goodwin. 

(.31  Vermont,  2G8.     Supreme  Court,  November,  1858.) 

When  surety  hoklen  as  principal,  as  to  guarantors.  — When  a  person  signs  a  note  as 
surety  for  the  makers  and  intrusts  it  to  them,  for  the  purpose  of  obtaining 
the  money  upon  it,  and  they  subsequently  obtain  further  guarantors,  upon 
tlie  credit  of  all  the  signers,  under  the  belief  that  they  are  joint  principals, 
and  in  order  to  procure  the  money  upon  the  note,  such  surety  will  be 
holden  as  a  principal  to  indemnify  the  guarantors,  if  they  are  compelled  to 
pay  the  note. 

Contribution.  Stipulation  for  full  indemnity.  —  One  who  signs  a  note  as  guar- 
antor or  surety,  others  having  before  signed  the  same  as  sureties,  may 
stipulate  for  full  indemnity  of  each  and  all  the  former  signers,  or  make 
that  the  condition  of  his  own  undertaking ;  and  in  that  case  he  will  not 
be  liable  to  contribute  with  the  other  sureties  to  the  payment  of  the  note. 
And  the  facts  and  circumstances  attending  the  signing  or  the  guarantj^  of 
payment  of  a  note,  may  be  sufficient  to  indicate  as  clearly  as  an  express 
stipulation  or  condition,  the  terms  of  the  undertaking 597 

Note  discussing  the  cases  at  length 603 

Opinion  in  Deardorff  t'.  Foresman,  5  Am.  Law  Reg.  N.  s.  539 604 


ANALYTICAL   INDEX.  XXXI 


BANK-BILLS  AND  0TIIP:R  PAPP]R  TAKEN  IN  PAYMENT 

OF  DEBT. 

I.     Bayard  v.  Shunk. 

(1  Watts  &  Sergeant,  !)2.     Supremo  Court  of  Pennsylvania,  May,  184  .) 

PAGE 

Payment  in  bank-bills.  —  If  a  creditor  receive  current  bank-notes  in  payment,- 
tliis  discharges  the  debt;  tliough,  by  reason  of  the  failure  of  the  bank,  of 
wiiich  botli  parties  were  ignorant  at  the  time,  the  notes  were  worthless 
when  received 617 


XL     Ontario  Bank  v.  Lightbody. 

(13  Wendfll,  101.     Court  of  Errors  of  New  York,  December,  1834.) 

Payment  in  bank-bills.  —  If  the  holder  of  commercial  paper  receive  bank-notes  in 
payment  of  the  same,  the  risk  of  the  solvency  of  the  bank  \yhich  issued 
the  notes  is  upon  him  who  gave  them,  in  the  abserfce  of  agreement;  and 
therefore  if  the  bank  had  actually  failed  or  stopped  paj-ment  at  the  time 
the  notes  were  received,  and  this  was  unknown  at  the  time  to*  the  holder, 
this  will  not  constitute  payment  of  his  paper,  though  such  bank-notes  were 
current  at  the  place  where  they  were  received,  at  that  time 625 

Note  containing  opinion  in  Fogg  i'.  Sawyer,  0  N.  H.  365,  and  citing  other  cases      684 


III.     The  Phcenix  Insurance  Company  v.  Allen. 

(11  Michigan,  501.     Supreme  Court,  July,  1863.) 

Payment  by  paper  of  third  })arty.  Duty  of  creditor.  —  Where  a  party  receives  a 
draft  as  conditional  payment  of  a  debt  due  him,  his  right  of  action  upon  the 
debt  is  suspended  until  the  draft  is  properly  presented  tor  payment  and  pay- 
ment refused.  By  receiving  such  draft,  the  creditor  accepts  the  duty  of 
doing  every  thing  with  respect  thereto  which  is  necessary  to  fi.\  the  liability 
of  the  parties ;  and  the  <iniis  is  upon  him  to  show  tliat  he  has  performed  that 
duty  when  he  seeks  to  recover  upon  the  original  cause  of  action     ....      637 

Note  referring  to  other  cases 642 


XXXll  ANALYTICAL  INDEX. 

FORGERY. 
I.    Canal  Bank  v.  Bank  of  Albany. 

(1  Hill,  287.     Supreme  Court  of  New  York,  May,  1841.) 

PAGE 

Recovery  of  money  paid  upon  forged  indorsement.  Notice.  —  Money  paid  by  the  ac- 
ceptor of  a  bill  to  an  innocent  holder  under  a  forged  indorsement  of  the 
payee  may  be  recovered,  if  seasonable  notice  of  the  forgery  be  given.      .     .      643 

Note  referring  to  other  cases,  and  containing  opinion  in  Merchants'  National 

Bank  v.  National  Eagle  Bank,  101  Mass.  281 648 


II.    The  Bank  of  the  United  States  v.  The  Bank  of  the 
State  of  Georgia. 

(10  Wheaton,  333.     Supreme  Court  of  the  United  States,  February,  1825.) 

Bank's  own  forged  bills  received  as  genuine.  —  If  a  bank  receives  from  a  debtor 
forged  notes  purporting  to  be  its  gwn,  as  genuine,  and  passes  them  to  the 
credit  of  the  debtor,  who  acts  in  good  faith,  the  receiving  bank  is  bound 
by  such  credit ;  and  it  cannot  recover  -from  the  depositor  and  debtor  the 
amount  of  the  forged  bills 650 

Extended  note  and  digest  of  the  cases 661 

Opinions  in  Mather  v.  Lord  Maidstone,  18  Com.  B.  273 661 

In  McKleroy  v.  Southern  Bank  of  Kentucky,  14  La.  An.  458 662 

And  in  Belknap  v.  National  Bank  of  North  America,  100  Mass.  376     .     .     .  665 


LOST  BILLS  AND  NOTES. 
I.     Pintard  v.  Tackington. 

(10  Johnson,  104.     Supreme  Court  of  New  York,  January,  1813.) 

IVhen  owner  may  recover.  —  The  plaintiff  declared  on  a  promissory  note,  pay- 
able on  demand,  and  stated  that  the  note  had  been  lost  or  destroyed ;  and 
the  existence  and  contents  of  the  note  being  proved,  and  it  not  appearing 
that  the  note  was  negotiable,  or  if  negotiable,  that  it  had  been  negotiated ; 
AeW,  that  the  plaintiff  was  entitled  to  recover 671 

Opinion  in  Blade  v.  Noland,  12  Wend.  173,  and  reference  to  other  cases  .     .     .      673 


ANALYTICAL   INDEX.  XXXlll 

II.     T(jWER  V.  Ai'i'LET(JN  Bank. 

(3  Allen,  387.     Suineme  Court  of  Massachusetts,  January,  \H(j-2.) 

PAGE 

Bank-bills.  Cirr.umstanti(d  fviihnce  of  destruction.  —  The  owner  of  bank-bills 
wliicli  cannot  be  iilentitied  or  distinguislied  from  otlier  similar  bills,  cannot 
maintain  an  action  aj^ainst  the  bank  which  issued  them,  upon  circumstan- 
tial evidence  that  they  have  been  destroyed,  and  a  tender  of  indemnity  .     .      G74 

Note  referring  to  other  cases GT'J 

III.     Rowley  v.  Ball. 

(3  Cowen,  303.     Supreme  Court  of  New  York,  October,  1824.) 

No  action  at  law  on  lost  neijotiahle  note.  —  An  action  at  law  cannot  be  sustained 
on  a  negotiable  promissory  note  pa3able  to  bearer,  by  tiie  owner,  on  proof  . 
that  the  note  was  lost,  though  he  show  that  it  was  lost  after  it  became  due. 

When  the  owner  may  sue  at  law 680 

IV.     FaLes  V.  Russell. 

(16  Pickering,  315.     Supreme  Court  of  ^Massachusetts,  March,  1835.) 

Action  at  law 'maintainable  on  lost  nccjotiahle  paper.  —  AVhere  a  nejiotiable  promis- 
sory note,  indorsed  in  blank,  was  stolen  from  the  holder  before  it  was  due, 
held,  that  he  might  recover  the  amount  from  the  maker,  in  an  action  at  law, 
on  filing  a  bond  sufficient  for  the  maker's  indemnification 683 

Note  referring  to  the  conflict,  and  containing  opinion  in  Thayer  v.  King,  15 

Ohio,  242 686 

V.     Chewning  V.  Singleton. 

{2  Hill,  Chancery,  371.     Court  of  Appeals  of  South  Carolina,  December,  183.').) 

licmcdy  in  eiptili/.  —  A  party  who  has  lost  a  note  pa^-able  to  bearer,  although 
past  due,  may  come  into  equity  for  relief  The  ground  of  jurisdiction  is  not 
only  that  he  may  give  indemnity  to  the  defendant,  but  that  he  must  swear 
to  the  loss G88 

Hopkins  v.  Adams,  20  Vt.  407,  in  note G'Jl 

YI.      TUTTLE   V.    StANDISH. 
(4  Allen,  481.     Supreme  Court  of  Massachusetts,  Septemlier,  1862.) 

Action  at  law.  Indemnity.  —  The  owner  of  a  lost  note  cannot  maintain  an 
action  at  law  against  an  indorser,  in  a  case  where  a  bond  to  indemnify 


XXXIV  ANALYTICAL    INDEX.  i 

PAGE 

tlie  (letbiidant  against  Leinu:  called  on  a  second  time  to  pay  the  note  would 

not  afford  to  liim  an  adequate  iirotection T      694 

Note  containing  case  of  Smith  r.  Rockwell,  2  Hill,  482 697 


VII.     The  Bank  of  the  United  States  v.  Sill. 

(5  Connecticut,  106.     Supreme  Court,  July,  1823.) 

Commercial,  paper  cut  in  fialvcs.  —  If  the  holder  of  a  bank-bill  voluntarilj-  cut  it  in 
halves,  for  the  sole  purpose  of  transmitting  it  by  mail  with  greater  safety, 
this  will  not  affect  his  rights  upon  such  bill.  To  entitle  him  to  recover  on 
the  production  of  but  one  of  the  parts,  he  must  show  that  he  is  owner  of 
the  whole,  and  account  for  the  absence  of  the  other  part. 

The  parts  of  a  divided  bank-bill  are  not  separately  negotiable. 

Notice  bjj  the  payor  of  cut  bills.  —  The  board  of  directors  of  the  Bank  of  the  United 
States  gave  notice  that  the  bank  would  not  hold  itself  responsible  upon  any 
of  its  notes  which  should  be  voluntarily  cut  into  parts,  except  on  the  pro- 
duction of  all  the  parts  ;  which  notice  was  published  in  all  the  newspapers 
of  the  city  of  Philadelphia,  at  which  place  said  bank  was  located ;  held, 
that  the  rights  of  a  person  in  Connecticut,  who  subsequently  became  the 
owner  of  a  note  so  cut'  into  parts,  and  who  was  in  possession  of  one  of 
the  parts,  and  who  had  never  received  the  notice,  were  not  affected  by 
the  same 699 

Martin  v.  Bank  of  the  United  States,  4  Wash.  C.  C.  253,  in  note 703 

Hinsdale  v.  Bank  of  Orange,  6  Wend.  378,  in  note 706 


LAAV   OF  PLACE. 

I.     Aymar  v.  Sheldon. 

(12  Wendell,  439.     Supreme  Court  of  New  York,  October,  1834.) 

Bill  drawn  in  one  countrij  and  indorsed  in  another.  —  In  an  action  by  an  indorsee 
against  an  indorser  of  a  bill  of  e.xchange  drawn  in  a  foreign  country,  and 
indorsed  and  negotiated  to  the  plaintiff  in  New  York,  the  law  of  New 
York  must  determine  whether  the  jiroper  steps  have  been  taken  to  charge 
the  indorser 709 

Note   referring  to  numerous  other  cases  and  giving  extended  extracts  from 

opinions  of  the  Court 712 


ANALYTICAL   INDEX.  XXXV 


CHECKS. 

I.     Morrison  v.  Bailey. 

(o  Ohio  State,  13.     Supreme  Court,  December,  1855.) 

PAGE 

Form.  — The  following  draft  is  not  a  check  :  W.  Q.  &  B. :  Pay  to  B.  on  the 
13th  of  July,  '53,  or  order,  three  hundred  dollars  ;  it  being  payable  on  a 
future  day  designated.  It  is  one  of  the  essentials  of  a  check  that  it  shall  be 
payable  on  demand. 

Dai/s  of  (/race  are  not  allowed  on  checks. 

Distinction  between  checks  and  bills  of  exchange 716 

Extended  note  embracing  opinions  in  Keene  v.  Beard,  8  Com.  B.  fx.  s.)  372, 

and  giving  references  to  other  cases #718 


II.     Mus.sEY  V.  Eagle  Bank. 

(9  Metcalf,  306.     Supreme  Court  of  INIassachusetts,  March,  1845.) 

Certification  of  checlcs.  Inherent  power  of  teller. — Evidence  that  tli.e  teller  of  a 
bank,  during  all  the  time  of  his  holding  office,  whenever  the  convenience 
of  the  bank  or  of  its  customers  required  it,  certified  that  checks  were 
"  good,"  which  were  drawn  on  the  bank  by  its  customers,  when  funds  to 
the  amount  of  such  checks  were  to  the  credit  of  the  drawers,  and  that 
his  so  doing  was,  in  some  instances,  known  to  the  bank,  and  was  not  for- 
bidden, and  that  it  was  the  usage  of  the  tellers  of  other  banks  to  do  the 
same  thing,  does  not  warrant  a  jury  to  infer  that  the  power  of  so  doing  was 
an  original,  inherent,  implied  power  of  the  teller,  as  such. 

Usage.  The  u.sage  of  issuing  certificates  of  deposit,  by  a  teller  of  a  bank,  is 
not  evidence  to  prove  a  usage  of  certifying  checks. 

A  teller  of  a  bank,  as  sucli,  has  no  authority  to  certify  that  a  check  is  "  good," 
so  as  to  bind  the  bank  to  pay  the  amount  thereof  to  any  person  who  may 
afterwards  present  it ;  and  a  usage  for  him  so  to  certify  a  check,  to  enable 
the  holder  to  use  it  at  his  pleasure,  is  bad 721 


III.     The  Farmers'  and  Mecfianics'   Bank  of  Kent  County, 
Maryland,  v.  The  Butchers'  and  Drovers'  Bank. 

(16  New  York  [2  Smith],  125.     Court  of  Appeals,  September,  1857.) 

Certification  of  checks.  —  A  bona  fi'h-  holder,  for  value,  of  a  negotiable  check 
certified  to  be  good  by  the  paying  teller  of  the  bank  on  which  it  is  drawn, 


XXX VI  ANALYTICAL   INDEX. 

PAGE 

whose  authority  to  certify  is  limited  to  cases  wliere  tlie  bank  has  funds  of 
the  drawer  to  meet  tlie  check,  can  recover  of  tlie  bank  the  amount  of  the 
check,  though  tlie  drawer  had  no  funds  in  the  bank,  and  though  the  certi- 
fication by  the  toller  was  in  violation  of  his  duty,  and  for  the  drawer's 
accommodation 727 

^Merchants'  National  Bank  v.  State  National  Bank,  in  note 739 


TABLE  OF  CASES  REPORTED. 


[THIS    TABLE    INCLUDES    THE    CASES    PRESENTED    AT    LENGTH    TS    THE    NOTES.] 

PAGE 

Adams,  Hopkins  v 691 

Adams,  House  v •443 

Allen,  Plifcnix  Ins.  Co.  v G37 

Allen  V.  Suydani  and  Boyd 26 

Appleton  Bank,  Tower  v 674 

Atkinson  v.  Brooks 19/> 

Austin,  Pearce  ?' 477 

Aylesworth,  Smith  v. 494 

Aymar  v.  Sheldon 709 


Baker,  Barton  v 4.")8 

Baldwin,  Munn  v 376 

Ball,  Rowley  v 680 

Bank  of  Albany,  Canal  Bank  r 643 

Bank  of  Alexandria  v.  Sw.ann 388 

Bank  of  Columbia  i\  Lawrence 404 

Bank  of  Columl)ia,  Renner  v 297 

Bank  of  Georgia,  Bank  of  United  States  v 6.0O 

Bank  of  Metropolis,  United  States  i' 88 

Bank  of  Ignited  States  v.  Bank  of  Georgia 650 

Bank  of  United  States  v.  Dunn 503 

Bank  of  United  States,  Martin  r 703 

Bank  of  United  States,  Mills  v 358 

Bank  of  United  States  r.  Sill C.'.i;) 

Bank  of  United  States,  "Williams  v 45i 

Bank  of  Utica  r.  Bender 410 

Bank  of  Utica  i".  Ives H.JG 

Bank  of  Waslun<;ton,  M'Gruder  v 447 


XXXVlll  TABLE    OP    CASES    REPORTED. 

PAGE 

Bank  of  Washington,  Smith  v 4'JO 

Barton  v.  Baker 458 

Baxter  v.  Little 271 

Bay  V.  Codflington 105 

Bayard,  Konig  v 85 

Bayard,  Schimmelpennich  v G4 

Bayard  v.  Shiink Gl7 

Bavley  r.  Taber 22G 

Beals,  Stevens  v IGl 

Belknap  v.  National  Bank  of  North  America 665 

Bender,  Bank  of  Utica  v 410 

Berkshire  Bank  v.  Jones 468 

Bishop,  Britton  v 275 

Blade  v.  Noland 673 

Bowling  V.  Harrison 378 

Boyce  and  Henry  i\  Edwards 52 

Boyd,  Mayhew  v 577 

Brantly,  Fowler  v 235 

Brewster  v.  McCardel 225 

Britton  v.  Bishop 275 

Broailhurst,  Jones  v 346 

Brooks,  Atkinson  v 105 

Brown  v.  The  Butchers' and  Drovers'  Bank 110 

Burgess,  Morrison  v 716 

Burke  V.  M'Kay 355 

Bush,  Townsend  v 507 

Butchers'  Bank,  Farmers'  Bank  v 727 

Butchers'  and  Drovers'  Bank.  Brown  v 110 


Camden  v.  IMcKoy 112 

Cimeron  v.  Chappell 287 

Canal  Bank  v.  Bank  of  Albany 643 

Chanoine  v.  Fowler 383 

Chappell,  Cameron  v 287 

Chewning  v.  Singleton 688 

Chicopee  Bank  v.  Philadelphia  Bank 322 

Church,  Downe  v 501 

Clark,  Commercial  Bank  of  Albany 536 

Clark,  Newhall  v 104 

Coddington,  Bay  v 165 

Coddington  v.  Davis 471 


TABLE    OF    CASES    RKPORTFD.  XXxix 

v.\t,i: 
Coit,  I'aton  v 2o() 

Commercial  Bank  of  Alhaiiy  v.  Clark o.'jG 

Commercial  Bank  of  Alhany  r.  Strong ,028 

Commercial  Bank  of  Xatcliez,  Payne  v ,0,')4 

Cook  V.  Satterlee 8 

Coolidge  r.  Paysou 4;j 

Corey,  Mohawk  Bank  r 2(i7 

Couch  V.  Waring o03 

Crossman,  Thayer  r 522 

Crouch,  Watkiiis  r .KJ.-j 


Dana  r.  Sawyer 310 

Davis,  Coddinirton  r 471 

Davis  V.  ]M'Creatly 222 

Deardorft'w.  Foresman 004 

Dennis,  Gilbert  v ;3(33 

Dodge,  Wordeu  r 7 

Downer,  Sylvester  r 139 

Downes  i:  Church 501 

Diuin,  Bank  of  United  States  r 503 


Eagle  Bank,  Mussey  v. 721 

Eastman  v.  Plumei' 343 

Edwards,  Boyce  v 52 

Ellicott,  Grant  v 2(53 

Estabrook  v.  Smith 158 


Fales  r.  Kus.sell G83 

Farmers'  and  ^lechanics'  Bank  r.  Butchers'  and  Drovers'  Ixuik   .     .  727 

Farmers'  Bank,  Lawson  v. otIO 

Farmers'  and  Mechanics'  Bank  i\  Bathbone 581 

Fisher  v.  Leland 258 

Fogg  V.  Sawyer 634 

Foresman,  Deardorff  v G04 

Fort,  Meacher  r .  59 

Fowler  v.  Brantly 235 

FowU'r.  C'lianoino  r 3S'6^ 

Franklin  PKUik,  Staples  r 480 

Frazer  r.  .Jordan 5 GO 

Furze  v.  Sharwood 371 


xl 


TABLE    OF    CASKS    REPORTED. 


PAGE 

Gilbert  r.  Dennis 3().'} 

Goodman,  Keith  c 597 

Goodman  v.  Simonds 2.")9 

Grant  v.  Ellieott -^63 

Greenou<i;li  i\  Smead 1-13 

Guild,  Wheelei-  v .'     .     .  331 


Hale,  Juniata  Bank  v.  . 
Hall  v.  Newcomb     .     . 
Harrison,  Bowling  v.     . 
Hascall  v,  Whitmore 
Hemmingway,  Kelley  v 
Hensliaw,  Horti^man  v. 
Holmes  v.  Williams  . 
Hopkins  v.  Adams     , 
Hopkirk  V.  Page 
Hortsman  v.  Henshaw 
House  V.  Adams 
Hyde,  Union  Bank  v. 


423 

131 

378 

2G1 

11 

57 

280 

691 

430 

57 

443 

469 


Ives,  Bank  of  Utica  v 556 

Jones,  Berkshire  Bank  v 468 

Jones  V.  Broadhurst 346 

Jones,  Lehman  v 450 

Jordan,  Frazer  v o60 

Juniata  Bank  v.  Hale 423 


Keith  V.  Goodwin  . 
Kelley  v.  Hemmingway 
Kimball,  Stoddard  v.  . 
King,  Thayer  v.  ^  .  . 
Kniglits  V.  Putnam  .  . 
Kouig  V.  Bayard 


597 
11 
269 
686 
277 
85 


Lake,  j\Iusson  v 

Lawrence,  Bank  of  Columbia  v. 


290 
404 


TABLIO    OF    CASES    REPOUTED. 


xli 


Lawson  V.  Farmers'  IJaiik 
Leavitt  r.  Putnam    . 
Lehman  v.  Jones 
Leland,  Fisher  i\      .     .     . 
Lightbody,  Ontai'io  liank  r, 
Little,  Baxter  i\       ... 
Loring,  Sohier  v.      .     .     . 


PAGE 

1.50 
4.0O 
258 
(',25 
271 
574 


Maidstone.  Mather  r 001 

Marietta,  jfcc.,  Trading  Co.,  Sterling  v 544 

Martin  v.  Hank  of  United  States 703 

Mather  v.  Lord  INIaidstone 001 

Mathews,  Sigersou  v 473 

Mayhevv  v.  Boyd 577 

McCardel,  Brewster  i' 225 

M'Koy,  Camden  r 112 

M'Connell,  Wallace  v 15 

M'Cready,  Davis  v ' 222 

M'Donahl,  Stalker  V lO'J 

M'Gruder  v.  The  Bank  of  Washington 447 

M' Kay,  Burke  w 355 

M'Kleroy  v.  Southern  Bank  of  Kentucky 002 

M'Lemore  v.  Powell 551 

M'Mechen,  Pannell  v 509 

Meacher  v.  Fort 59 

Merchants'  National  Bank  v.  National  Eagle  Bank 048 

Merchants'  National  •  Bank  of  Boston    v.  State   National    Bank    of 

Boston 739 

Mills  V.  Ba)ik  of  the  United  States 358 

Mix,  Shaylor  r 382 

Mohawk  Bank  v.  Corey 2()7 

Moucure,  Osborn  v 4'.»3 

Morrison  v.  Burgess 710 

Munn  V.  Baldwin 370 

Mussey  v.  Eagle  Bank 721 

Musson  V.  Lake '   .     .     .     .  290 

Natipnal  Bank  of  North  America,  Belknap  v 005 

National  Eagle  Bank,  Merchants'  National  Bank  r 048 

Newcomb,  Hall  v 131 

Newcomb  v.  Kaynor 508 

y 


Slii  TABLE    OF    CASES    REPORTED.      . 

PAGE 

Kewl.nll  V.  Clark 104 

Noland,  Blade  v 673 

Norton,  Windham  Bank  v 414 


Okie  V.  Spencer '.     .     .     547 

Ontario  Bank  v.  Lightbody 625 

Osborn  v.  Moncure 493 


Page,  Hoi)kirk  v. 430 

Pannell  v.  M'Mechen 569 

Paton  V.  Coit ;     ...  230 

Payne  v.  Commercial  Bank  of  Natchez 554 

Payson,  Coolidge  v 43 

Pearce  v.  Anstin 477 

Pettee  v.  Prout 217 

Philadelphia  Bank,  Chicopee  Bank  V 322 

Pha?nix  Insurance  Co.  v. 'Allen 637 

Piutard  v.  Tackington 671 

Pluraer,  Eastman  v 343 

Powell,  M'Lemore  v 551 

Pratt,  Spear  v 41 

Prout,  Pettee  v 217 

Putnam,  Knights  v 277 

Putnam,  Leavitt  v 156 


Rathbone,  Farmers'  and  Mechanics'  Bank  v 581 

Ray  nor,  Newcorab  v 568 

Renner  v.  The  Bank  of  Columbia 297 

Rev  I'.  Simpson 150 

Richardson,  Way  v 220 

Rockwell,  Smith  v.  ." 697 

Ross,  Swope  V 340 

Rowley  v.  Ball 680 

Russell,  Fales  v.* 683 


Satterlee,  Cook  v 8 

Sawyer,  Dana  v 310 

Sawyer,  Fogg  v 634 

Schimmelpennich  v.  Bayard 64 


TABLE  OF  CASES  REPORTED,  xHii 

rA(iE 

Sliaiwood,  Furze  v 371 

Slmyloi-  V.  ]Mix .'5)S2 

Sheldon,  Aymar  v • 7'>'J 

Slmiik;  Hayard  r G17 

Sigerson  v.  Matliews 473 

Sill,  United  States  IJank  r GUI) 

Sinionds,  Goodman  v 239 

Simpson,  Key  r 150 

Sim|).son  v.  Tiiniey 386 

Singleton.  Clicwiiing  r 688 

Sloan,  Thompson  r 1 

Small  /'.  Smith 261 

Smead,  Greenongh  r 143 

Smith  V.  Aylesworth 494 

Smith,  Estabrook  v 158 

Smith  V.  Rockwell 697 

Smith,  Small  v 264 

Smith  V.  The  Bank  of  Washington 490 

Snyder,  Taylor  v 313 

Si)hier  v.  Loring 574 

Southern  Iiatdv  of  Kentucky,  M'Kleroy  v 662 

Spear  and  Patten  v.  Pratt 41 

Spencer,  Okie  v 547 

Stalker  z',  M'Donuld 169 

Standish,  Tuttle  v 694 

Staples  V.  Franklin  Bank 480 

State  National  Bank  of  Boston,  Merchants'  National  Bank  of  Bos- 
ton V 739 

Sterling  v.  The  Marietta,  ifcc.  Trading  Company 544 

Stetson,  Walker  v 397 

Stevens  r.  Beals Ifil 

Stoddard  v.  Kiml)all 269 

Strong,  Commercial  liaidc  of  Albany  v 528 

Suydam,  Allen  i\ 26 

Swami,  Bank  of  Alexandria  I' 388 

Swift  t'.  Tyson 186 

Swope  V.  Boss 340 

Sylvester  v.  Downer i;i9 

Taber,  Bayley  v 226 

Tackington,  Pintard  r 671 

Taylor  v.  Snyder 313 


xliv  TABLE   OF   CASES  REPORTED. 

PAOE 

Thayer  v.  Crossmanli 5^2 

Thayer  v.  King G86 

Thompson  v.  vSloan  et  al 1 

Tiernan  v.  Woodruff •  •'"^58 

Tower  V.  Appleton  Bank G74 

Tovvnseiul  v.  Bush 507 

Turney,  Simpson  v 386 

Tuttle  V.  Standish G94 

Tyson,  Swift  v 186 


Union  Bank  v.  Hyde 469 

Union  Bank  of  Weymouth  and  Braintree  f.  Willis 124 

United  States  v.  Bank  of  the  Metropolis 88 

United  States  Bank  v.  Sill 699 


Walker  v.  Stetson 397 

Wallace  v.  M'Connell 15 

Waring,  Couch  v 563 

Watkins  v.  Crouch 463 

Way  V.  Richardson 220 

Wells  V.  Whitehead 498 

Wheeler  v.  Guild 331 

Whitehead,  Wells  V 419 

Whitraore,  Hascall  v 261 

Williams  v.  Bank  of  the  United  States 452 

Williams,  Holmes  v 280 

Willis,  Union  Bank  of  Weymouth  and  Braintree  I' 124 

Windham  Bank  v.  Norton 414 

Woodruff,  Tiei-nan  v 558 

Worden  v.  Dodge     .     .          7 


TABLE  OF  CASES  CITED. 


PAGE 

PAGE 

Al)el  V.  Sutton 

1(51 

Andrews  v.  Pond 

250 

Aborn  v.  Bosworth 

(iSO 

Androscoggin  Bank  v.  Kimball 

245 

Al)soloii  r.  Murks 

160 

Angel  V.  Felton 

672 

Adams  v.  Darin- 

441,  44:3 

Anonymous  v.  Stanton 

441 

,  442 

V.    JoIU'S 

49,  r>7 

Appersou  v.  Union  Ban 

k 

446 

r.  Lulaiul 

320,  449 

Appleton  Bank  v.  McGilvray 

648 

r.  Otti-rback 

307,  309 

Arbouin  v.  Anderson 

252 

259 

V.  Soulu 

211 

Arlington  v.  Hinds 

478 

Addy  V.  Grix 

110 

Armot  V.  Union  Bank 

703 

Adle  V.  Metoyer 

59G 

Armstrong  v.  C'bristiani 

375 

Agra,  In  re,  &c..  Bank 

42,  51 

V.  Thruston 

375 

Alden  v.  Barbour 

109 

Arnold  v.  Dresser 

296 

476 

Aldricb  v.  Jackson 

636 

V.  Kinloch 

375 

V.  Warren 

234 

V.  Rook  River,  &c.,  R 

.  Co 

9 

Alexander  v.  Bunbfield 

746 

V.  Sprague 

642 

c.  Byers 

636 

Arnot  0.  Woodburn 

276 

V.  Dennis 

636 

Arundel  Bank  v.  Goble 

654 

17.  McKenzie 

736,  737 

Asbpitel  V.  Bryan 

215 

V.  Oakes 

7 

Astor  V.  Benn 

715 

Allaire  v.  Hartsborn        200, 

207,  256, 

Atkinson  v.  Brooks 

195; 

203, 

208, 

270 

211 

256 

Allen  f.  Ilolkiiis 

509 

V.  Manks 

7 

109 

c.  Keuilile 

713,  714 

Attenborougb  v.  McKenzie 

;!41 

V.  King            201,  202 

203,  443 

Attwood  V.  Rattcnbury 

160 

V.  Merobants'  Bank  of  New 

Attwood  V.  Mnnnings 

736, 

737 

York 

715 

Aurora  v.  West 

234 

Allen  V.  Newbury 

478 

Austin  V.  Boyd 

129 

V.  State  B:ink 

708 

V.  Burns 

9 

Allin  V.  Sliadbnrni! 

478 

V.  Curtis 

203, 

211, 

213 

Allwood  V.  Iliseldon 

462 

Awde  V.  Dixon 

604, 

610 

r.  Ilazelton 

158 

Aver  V.  Hutcbins 

250 

Almy  V.  Reed 

676,  695 

Ayrey  v.  Fearnsides 

14 

American  Bank  v.  Baker 

576 

Aymar  v.  Sbeldon 

709, 

714, 

715 

Amniidown  v.  Woodman 

490 

Amoskeag  Bank  v.  Mt)ore 

476 

Anderson  v.  Drake  ;>14,  olO, 

317,  321, 

Babcoek,  In  re 

592 

327 

Baekiiouse  v.  Harrison 

.252 

Andrews  v.  Baggs 

108 

Backus  i'.  Sbipberd 

469 

V.  Boyd 

462 

Bacon  v.  Searles 

349, 

350, 

351 

i\  Franklin 

13 

Badeock  i'.  Steadmaq 

607 

V.  Hart 

214 

Badger  v.  Tbe  Bank  of 

Cun 

ber- 

V.  Herriot 

715 

land 

747 

xlvi 


TABLE    OF    CASES    CITED. 


PAGE 

Badnall  v.  Samuel    . 

554 

Bagnall  v.  Andrews 

687 

Bailey  v.  Bidwell 

233 

V.  I'orter 

443 

Baily  v.  Smith 

214 

Bain  r.  Wilson 

402 

Baii'd  V.  Coi'liran 

527 

Baizley,  J'Jx  parte 

425 

Baker  v.  Birch 

425 

V.  Bonesteel 

636 

V.  Briggs 

117,  128,  129 

V.  Dening 

110 

V.  Flower 

563 

V.  Walker 

207.  255 

Bancroft  v.  Hall 

410 

Bangs  V.  Moslier 

550 

Bank  v.  Flanders     • 

111 

Bank,  Tie  The,  &c. 

213 

Bank  of  Alexandria  v.  Swann  362, 

363,  388,  392 

Bank  ot  America  ik  Petit  462 

V.  Woodworth       316 

Bank  ofAujiUsta  v.  Earie  748 

Bank  of  Burlington  v.  Beach  598 

Bank  of  Chenango  v.  Hyde  598 

Bank  of  Columbia  v.  Fitzhugh         307 

V.  Lawrence,      377, 

382,  389,  399,  404, 

532 

V.  Magruder     307, 

410 

Bank  of  Commerce  v.  Union  Bank  62, 

648,  662,  665 

Bank    of  the  Commonwealth   c. 

Curry  612 

Bank  of  Cooperstown  v.  Woods  363 
Bank  of  England  v.  Xewnian  134,  669 
Bank  of  Geneva  v.  Howlett  410 

Bank  of  Georgetown  v.  Magruder  475 
Bank  of  Ireland  v.  Beresford  216, 

594 
Bank  of  Kentucky  v.  The  Schuyl- 
kill Bank  _  747 
Bank  of  Louisiana  v.  Tournillon  410 
Bank  of  Louisville  v.  Summers  674 
Bank   of  the  Metropolis  v.  The 

New  England  Bank  204,  207 

Bank  of  Michigan  v.  Ely  51,  56 

Bank  of  Missouri  v.  Hull  528 

Bank  of  Natchez  v.  King  393 

Bank   of  New  York  v.  Vander- 

horst  211 

Bank  of  Niagarh  v.  iNPCracken  677 
Bank  of  Pittsburgh  i'.  Neal  257 

Bank  of  the  Republic  v.  Carring- 

ton  208. 

Bank  of  Rochester  r.  Gould  363,  370 
Bank  of  Puitland  v.  Buck  183,  598 


Bank  of  Rutland  v.  Woodruff     42,  51 

Bank  of  Salina  v.  Babcock      172,  189, 

•  255,  268 

Bank  of  Sanduskv  v.  Scoviile         172, 

1S9,  268 
Bank  of  Scotland  v.  Hamilton    28,  30, 

34 
Bank  of  South  Carolina  v.  Flagg     328 
r.  flyers    462 
Bank  of  St.  Albans  v.  Farmers' 

and  Mechanics'  Bank  648,  664 

Bank  of  St.  Albans  v.  Gilliland        201 
Bank  of  Syracuse  t'.  Hollistcr  495 

Bank  of  the  United  States  r.  The 

Bank  of  Georgia         628, 

636,  642,  644,  646,  64«, 

650 

V.  Carneal     325,  328,  364, 

370.376,399,409,410, 

443 

V.  Davis  396,  745 

V.  Hatch  559,  563 

V.  Sill  680,  692,  699 

V.  Smith      16,  17,  23,  328, 

443 

V.  United  States  479 

Bank  of  Utica  v.  Bender  399 

V.  Davidson-  411 

V.  Smith  303,  312 

Bank  of  Vergennes  v.  Cameron        535 

V.  Warren         747 

Bank  of  Washington  v.  Triplett       39, 

237,  308 
Banorgee  v.  Hovev  .  57 

Barber  v.  Gingell'  646,  658,  661,  670 
Barclay,  Ex  x>arte  884 

Barker  v.  Parker  462 

V.  Prentiss  524 

V.  Valentine  276 

Barlow  v.  Scott  276 

•Barnes  v.  Ontario  Bank  748 

Barnet  v.  Smith  747 

Barough  v.  White  259 

Barr  v.  Greenawalt  616 

Barry  v.  Ransom  600 

Barstow  v.  Hiriart  376 

Barbour  r.  BaA'on  307 

Barclay  c.  Bai"ley  311,  312 

V.  Weaver  476 

Baring  v.  Lyman  57 

Barlow  v.  Bishop  162,  163 

V.  Broadhurst  10 

Barnes  v.  Gorman  7 

Barnet  v.  Smith  43 

Barney  r.  Earle  200.  207 

Barnsback  i'.  Reiner  616 

Barrett  v.  Wills  316 

Barry  County  v.  McGlolhli.n  478 


TABLE    OF   CASES    CITED. 


xlvU 


PAGE 

427 
•183 

2ir>,  216,  2G2 

2l;3 


Bartholomew  v.  Hill 
Barton  v.  Baker 
Bartruin  v.  ('aildy 
Bass  V.  Clivu 
Bassett  v.  Avery 

.0.  Dodgiii 

Batenian  t\  Joseph  4y8 

Bates  V.  Kem[)  27G 

BaiimganliiiT  r.  Reeves  458 

Bawden  r.  Howell  1(51 

Baxter  v.  Diireii  669 

i\  Stewart  9 
Bay  r.  Cod.iinfrtoii              171,  172,  189 

Ba^anl  c.  Lathy  50 

V.  Shiink  6:5-1 

Baverque  v.  San  Francisco  8 

Bayley  v.  Tabcr  226,  23o 

Beal  V.  McKii-niau  614 
Braie  V.  Parrish                        .  388,  413 

Bcals  ('.  Peck  363 

Bean  v.  Arnold  469 

Beardslee  f.  Ilorton  10 

Bear.bley  v.  Baldwin  12 

Beaucha:n[i  v.  Cash  363 

V.  Parry  259 

Beck  V.  Robley  350,  351 

Beckford  v.  Jackson  701 
Beckwith  v.  Angell    122,  124,  126,  130 

V.  Corrall  708 

Bceching  v.  Gower  410 

Beekinan  v.  Wilson  479 
licenian  c.  Du.k  62,  661,  670 
Beers  v.  The  Phcenix  Glass  Co.        747 

Helden  v.  Lamb  399 
Belmont  Branch  Bank  v.  Hoge  258 
Belknap  r.  National  Bank  of  North 

America  648,  (5G5 

Belshaw  V.  Bush  2U7 

Beltzlioover  v.  Blackstock  708 

Bene.lict  0.  CafFe  4^2 

Benior  j;.  Paqnin  216 

Bennett,  £.r  y)a;7e  614 

B(!noist  r.  Creditors  442 

Bent  V.  Baker  513,  523 

lienthall  V.  Jndkins  131 

Bentley  v.  Columbia  Ins.  Co.  614 

Benton  r.  Martin  543 

Berkshire  Bank  d.  Jones  468,  542 

Bernard  r.  Barry  715 

Berridge  v.  Fitzgerald  404 

Berry  c.  Robinson  158 

Bevan  V.  Eldridge  492 

Bray  v.  Iladwen  394 

IK  Manson  563 

Breckinridge  r.  Moore  201 

Brenzer  r.  Wiglitnian  393 

Beveridge  v.  Burgis  458 

Bibb  V.  Reid  605 


Bickford  v.  First  Nation 
Bigehjw  r.  Colton 
Bignold,  Ex  parte 
Bikerdike  v.  BoUman 

Bird  V.  Le  Blanc 
Birdseye  v.  Ray 
I  Bishop  V.  Dexter 
I  Bissidl  V.  Jellersonville 
j  Blackburne,  L'x  parte 
j  Pdaikenship  v.  Rogers 
I   Blackhan  c.  Doren 
1   Blai.-kiiaw  v.  Doren 
j   Blaekie  r.  Pidding 
I  Blade  v.  Noland 
i  BJake  v.  Wheadon 

Blanchard  v.  Stevens 
I   Bleaden  r.  Charles 
Bliss  r.  Nichols 
Bloodgood  V.  Hawthorn 
Bloxhani,  Ex  parte 
Boelim  r.  Sterling 
Bogy  V.  Keil 
Bolton  V.  Richard 
Bond  V.  Farnhara 

V.  Fitzpatrick 
Boody  V.  Bartlett 
Bookman  v.  Metcalf 
Boot  r.  Franklin 
Borrailale  v.  Lowe 
Bosanquety.  Corser 
V.  Dudnian 

V.  Forster 
Boss  V.  Hewitt 
Boston  Bank  v.  Hodges 
Bostwick  V.  Dodge 
Boultljee  V.  Stubbs   4G2 
Boulton  V.  Welsh      366, 
Bowcn  V.  XewcU 
Bowie  V.  Dnvall 
Bowling  V.  Harrison 
Bowyer  v.  Bamplon 
Boyce  v.  Edwards 
Boyd  V.  Emmerson 

V.  McCanu 

V.  Mr  Ivor. 

V.  Plumb 
Brabston  v.  Gibson 
Bradley  v.  Davis 
Bramah  r.  Roberts 
Branian  c.  Hess 
Brannin  r.  Henderson 
Brett  c.  Levett 
Bridgeford  v.  .Simonds 
Bridgepoit  City  Bank  /• 
Bristol  V.  Warner 
Bromley  v.  Holland 


al  V>£ 


l'\r,n 

747 

156 

462 

4;J0,  431.  432, 

433,  44(J,  442 

472 

171 

158 

744 

636,  669 

442 

432,  441 

588 

679 

673,  G94 

161 

200,  2t)7,  256 

335 

404 

442 

177,  179.  193 

746 

4G2 

G54 

427,  459,  461 

271 

210 

211,  212 

328 

426,  476 

198,  206 

193,  198, 

204.  208 

198,  206 

214 

484 

200,  207 

464,  575,  576 

373,  374,  375 

718 

23,  109,  479 

377,  532 

512 

49,  :)2 

746 

2(52 

257 

734,  735,  736 

109 

363 

177,  180,  193 

279 

43 

466 

543 

211 

6 

6'JO,  691,  692 


17; 


4<55, 


^\\ 


xlviii 


TABLE    OF    CASES    CITED. 


PACK 

Brooks  V.  Page 

7 

B rough  V.  Parkings 

292 

Brown,  ]Matter  of     442, 

588,  717, 

720 

V.  Barry 

41 

V.  Bunn 

715 

V.  Butchers'  and 

Drovers'* 

Bank 

110 

156 

V.  Davies 

250,  2G0, 

275 

V.  Fferguson 

393 

V.  Ilarraden 

308 

V.  Leavitt 

211 

V.  Lfckie 

747 

V.  London 

748 

V.  Maffey 

432, 

465 

V.  JNPDi-rniot 

426 

«r.  JNIott 

593 

j,\  Ne-vvell 

308 

V.  Pi-nfield 

214 

V.  Taber 

250 

V.  Turner 

393 

Browne  v.  Coit 

108 

Browning  v.  Kinnear 

458 

Bruce  v.  Bruee 

647,  657, 

665 

V.  Lytle 

330, 

451 

Bruen  w.  Marquand 

576 

Brush -y.  Reeves 

134 

V.  Seribner     194 

200,  207 

252 

Bryant  v.  Damariscotta 

677 

V.  Edson 

308 

Bryden  v.  Bryden 

410 

Buchanan  v.  Marshall 

469 

Buck  v.  Cotton 

462 

Buckler  i\  Buttivant 

288 

289 

Buckley  v.  Bentley 

472 

Buckner  v.  Finley 

500 

Buller  V.  Harrison 

176 

Bullet  V.  Bank  of  Penns 

ylvania 

678, 

703 

705 

Burbridge  v.  Mannei-s 

485 

Burchell  v.  Slocock 

6 

Burchfield.w.  Moore 

62 

Burgess  v.  Vreeland 

376 

Burgh  V.  Legge 

368 

Burnham  v.  ^Vebster 

469 

747 

Burns  r.  Rowland 

50,  57 

Burr  V.  Smith 

354 

Burridge  v.  Manners 

338 

341 

Burrough  v.  Moss 

274 

275 

Burrows  v.  Hannegan 

715 

Bush  V.  Peckard 

200 

207 

V.  Livingston 

279 

Bussard  v.  Levering 

488 

Butler  V.  Campbell 

• 

116 

V.  Damon 

525 

v.  Kimball 

490 

V.  Paine 

,7 

Cabot  Bank  v.  Morton  669 

CaldwelU.  Cassady  22,  109 

Callow  ?'.  Lawrence  351,  353 

Cameron  v.  Chappell  223 

Camidge  v.  Allenby  618,  620,  669 

Camp  V.  Bates  417 

Campbell  v.  Butler  115,  118 

V.  Pettengill  lOS,  443 

Canal  Bank  v.  Bank  of  Albany  61,  62, 
'C43,  669 
Carlisle  v.  Wishart 
Carnegie  v.  Morrison 
Carpenter  v.  Oaks 
Carr  v.  Moore 

V.  Rowland 
Carroll  v.  Upton 
V.  Weld 
Carstairs,  Ex  parte 

V.  Rolleston 
Carter  v.  P>urley 
V.  Flower 
Carver  v.  Warren 
Castrique  v.  Bernabo 
Cathell  V.  Goodwin 
Catskill  Bank  v.  Stall 
Caunt  f.  Thompson 


200,  207 
50,  57 
131,  143 
611 
143 
399 
124 
575 
354 
393 
443 
127,  129 
485,  492 
441 
411,  734 
375,  376,  428 
Cayuga  Bank  v.  Warden  363,  375 

Cavuga  Conntv  Bank  v.  Hunt  312 

Chaffee  v.  Jones  '  128 

Chalmers  v.  Mc^Iurdo  147 

Champion  v.  Griffith  145 

Chandler  v.  Mason  528 

Chanoine  v.  Fowler  383,  390,  426,  428 


Chapman  v.  Keane 
Chard  u.-Fox 
Charles  v.  Marsden 
Charnley  v.  Grundy 
Chaudron  v.  Hunt 
Cheetham  v.  Ward 
Chesmer  v.  Noyes 
Chester  v.  Doit 
Chick  V.  PiUsbury 
Chicopee  Bank  v.  Chapin 


384 

375 

216,  263 

297 

674 

576 

292 

217 

392,  394 

200,  203, 

256,  271 

V.     Philadelphia 

Bank     25,  109,  322 

Childs  V.  Wyman  131 

Chouteau  v.  Webster  401,  410 

Church  V.  Barlow  396,  592 

V.  Clark  484 

Churchill  v.  Suter   279,  514,  520,  522, 

523,  524,  525,  526 

Citizens'  Bank  v.  Payne  211 

City  Bank  v.  Cutter  309,  357,  484 

Clagett  V.  Salmon  576 

Claremont  Bank  v.  Wood  592 

Clark  National  Bank  v.  Bank  of 

Albion  748 


TAIJLK    OP   CASES   CITED, 


xlix 


Clapp  v.  Ilan-son 

PAOE 

527 

V.  Rice 

1:51 

Clarid^'C  r.  Dalton 

•111,  442,  0H6 

( 'lark's  ( 'ase 

511 

Clark  V.  Devlin 

505 

V.  Eldridge 

363,  375 

V.  Alinton 

462 

r.  Percival 

14 

V.  Merriaiu 

124,  143 

V.  Cock 

48,  49 

V.  Quince 

679 

V.  Kiisscl 

41 

Clason  r.  JJailcy 

14 

("laxton  V.  Swift 

564 

Clayton's  Case 

352 

Clavton  V.  Gosling 

14 

Cloi)i)cr  V.  Union  Bank    441,  592,  596 
Clotiston  V.  Harbiere  139 

Cobl)  V.  Doyle  211 

Cockerill  v.  Kirkpatrlck        T^  6 

Cocks  V.  Mastcnnan  615,  646 

Coddington  v.  Bay  169,  170,  172,  173, 
177,  184,  256 
V.  Davis         462,  471,  472 
Coggill   V.    American   Exchange 

Bank  61,  62 

Coggs  V.  Bernard  326,  744 

Cole  *;.  Wcndel  4 

Colelian  v.  Cooke  12 

Coleman  v.  Ewing  490 

V.  Riches  738 

V.  Sayer  307 

V.  Wise  513 

Colkett  V.  Freeman  486 

C'ollinge  v.  Ileywood  616 

Collins  V.  Butler  458 

r.  Emmett  61 

V.  Lincoln  6,  7 

V.  Martin       167,  176,  333,  334 

CoUis  ('.  Eiiiett  245 

CoUott  V.  Ilaij^h  590 

Colpoys  L\  Colpoys  5 

Commercial  Bank  v.  Benedict  708 

V.  Cunningham    592 

Commercial  Bank   of  Albanv  v. 

Clark        537 
V.  Iluiiiies       441 
Connnercial  Bank  of  Lake  Erie  o. 

Norton  747 

Commonwealth  v.  Alleghany  Co.     744 
V.  Pittst)urg  744 

V.  Stone  63(i 

Comparree  v.  Brockway  139 

Conalian  /•.  Smith  715 

Cone  r.  Baldwin  250,  257 

Conkling  c.  Vail  212 

Conner  v.  Routli  1)5 

Cony  V.  Wheelock  '  161 


PAGE 

Cook  V.  Litchfield  363 

V.  Martin  441 

V.  Satterlee  2 

V.  Southwick  143 

Cooke  V.  French  3(J8 

Cookendorfer  v.  Preston  306 

Cooley  V.  Lawrence  155 

Cooliijge  c.  Brigham  669 

V.  Payson  42,  49,  54,  55,  57, 

75,  192 

V.  Ruggles  12 

Cooper  V.  Le  Blanc  661 

V.  Meyer  63 

V.  Smith  613 

V.  VValdgrave  715 

Copeland  v.  IMercantile  Ins.  Co.      613 

Corbit  V.  Bank  of  Smyrna  036 

Cordery  v.  Colvin  *      542 

Corney  v.  Da  Costa         459,  460,  465, 

466 

Corp  V.  M'Comb  488 

Corson,  //(  re  353 

Cota  i\  Buck  8,  13 

Cotes  v.  Davis  163 

Cottrell  V.  Conklin  111* 

Couch  V.  AVaring  546 

Coursin  v.  Ledlie  G 

Cowles  V.  Harte  376 

Cowley  V.  Dunlop  288,  289 

Cowper  V.  Smith  576 

Craig  V.  Sibbett  225 

Cram  v.  Hendricks  285,  288 

Cramlington  v.  Evans  478 

Crawford  v.  Branch  Bank  375,  715 

Crawshay  v.  Collins  160 

Craythorne  v.  Swinburne  600,  601, 

602 
Creamer  t'.  Peny  462,  475,' 476 

Creery  r.  Holly  4 

Crenshaw  i\  McKiernan  490 

Cronise  v.  Kellogg  596 

Crook  V.  Jadis  253 

Crosse  v.  Smith  456 

Crowell  V.  Van  Bibber  42,  50,  51 

Crygter  v.  Long  494 

Cunlilfe  v.  Whitehead  502 

Cunningham  v.  Wardwell  43 

Curtis  V.  ]Mohr  212 

Cushman  v.  Ilaynes  14 

V.  Dement  124 

Cuthbert  v.  ILiley  283 

Cutter  V.  Powell  301 


Dabney  v.  Campbell 
Dailey  o.  De  Frees 
Dakin  v.  Anderson 
Darbishire  v.  Parker 


309 

216 

636 

40,  391,  410 


TABLE   OF   CASES   CITED. 


PAGE 

Darby  v.  Ouseley  •  641 

Davies  v.  Dodd  691,  692 

Daviess  v.  Barton  539 

Davis  V.  Beckham  409 

V.  Briggs  478 

V.  Williams  09 

Dawkes  v.  De  Lorane  8 

Dawson  r.  Chauinev  326 

Day  V.  Riddle         "  326 

Deacon  v.  Stodbart  364 

Dean  v.  Ilall  118 

V.  Hewit  477 

V.  Speakman        .  674 

De  Berdt  v.  Atkinson  459,  460 

Deberry  v.  Darnell  2,  3 

Decring  r.  The  Earl  of  Winchel- 

sea  600 

De  Forest  v.  Frary  14 

Dehers  v.  Harriot  297,  307 

De  la  Chanmette  v.  The  Bank  of 

England       193,  197,  202,  203,  205, 

715 
Delaney  v.  Stoddart  37 

De  la  Torre  v.  Barclay  676 

•Denison  v.  Tyson  7 

Dennett  v.  Goodwin  7 

Dennie  v.  Walker  316,  317,  488 

Dennistoun  v.  Stewart  303 

Dennv  v.  Palmer  462,  463 

Des  Arts  v.  Leggett         674,  679,  694 
Descadillas  v.  Harris  642 

'Desha  v.  Stewart  160,  478 

De  Silva  v.  Fuller  335,  338 

De  Tastet,  Ex  parte  353 

Devallar,  Executors  of,  v.  Herring 

174 
Dewey  v.  Washburn  7 

DeWolf  17.  Murray  375 

Deyraud  v.  Banks  328 

Dezell  V.  Odell  745 

Dickens  v.  Beal  399,  441 

Dod  V.  Edwards  338 

Dodge  V.  Bank  of  Kentucky  393 

Dole  V.  Gold  375 

DoUfus  V.  Frosch  441%  479 

Don  V.  Lippman  716 

Dougal  r.  Cowles  43 

Douglas  V.  Waddle  149 

Dowe  V.  Schutt  223 

Downer  v.  Remer  409 

Downs  V.  The  Planters'  Bank   392,  394 
Drake  v.  Henly  627 

Draper  v.  Weld  131 

Drinkwater  v.  Tebbetts  4G9 

Du'^an  V.  United  States  343,  479 

Duncan  v.  McCullough  317,  319,  329, 

451 
Dunn  V.  OTveefe  259 


Dupeau  v.  Waddington 
Duvall  V.  Farmers'  Bank 


PAGE 

255 

462,  471 


Eagle  Bank  v.  Chapin  393 

V:  Hathaway         381,  396 
Easter  v.  Minard  214 

East  India  Company  v.  Boddam      690 
Eastman  v.  Plumer  696 

East  River  Bank  y.  Butterworth      217 
Eccles  V.  Ballard  134 

Eckhert  v.  Cameron         214,  338,  343 
Edie  V.  The  East  India  Co.  158 

Edmunds  v.  Digges  636 

Edson  V.  Fuller  43 

Edwards  v.  Jones  171,  270 

Eicheberger  «.  Finley  443 

Elford  V.  Teed  311 

EUicott  V.  Martin  219,  258 

Elliot  V.  Abbott  747 

Elhs  V.  Brown  111,  139,  145,  148 

V.  Commercial  Bank  of  Natch- 
ez 715 
V.  Mason  13 
V.  Ohio  Life  Insurance  Co.      665 
V.  Wild                                       669 
Ellsworth  V.  Brewer                          616 
Elting  V.  Vanderlyn                           255 
Ely  V.  Adams  4 
Emly  V.  Lye                                       669 
Emmett  v.  Tottenham                       221 
English  V.  Darley                      563,  665 
V.  Derby                                 586 
V.  Wall                                  443 
Esdaile  v.  Sowerbv  291,  425,  459,  461, 

462,  465 
Essex  Company  r.Edmands  156 

Etheridge  v.  Ladd  297 

Etting  V.  Schuylkill  Bank        375,  388 
Evans  v.  Underwood  •        13 

Everard  v.  Heme  573 

V.  Watson  375 

Exchange  Bank  of  St.  Louis  v. 
Rice  50 


Fairbanks  v.  Metcalf  607 

Fairchild  v.  Ogdensburgh,  &c.,  R. 
Co.  109 

Fales  V.  Russell       675,  676,  678,  683, 

695,  696 

Farebrother  v.  Simmons  613 

Farmers'  Bank  v.  Gilson  616 

V.  Van  Meter  441 

Farmers'  Bank  of  Maryland  v.  Du- 
vall 393,  489 

Farmers'  Bank  of  Virginia  v.  Rey- 
nolds 708 


TABLE   OF   CASES   CITED. 


Farmers'  and  Mecbanics'  Bank  v. 

R;xtlibone  354,  581 

FariiiLTs'  and  Mechanics'  Bank  of 
Kent  Co.  v.  Butchers'  and  Drov- 
ers' Bank  7-27,  745,  747,  748 
Farmers'  Ins.  Co.  v.  Miller  7 
Fanners'  Loan  and  Trust  Co.  v. 

Curtis  744 

Farnsworth  v.  Allen  312 

Fariium  v.  Fowle  452,  483 

Farrington  v.  Brown  476 

r.  The  Park  Bank  214 

Farwell  v.  Kennett  G 

V.  Tyler       ■  -  478 

Fav  r.  Grimsteed  403 

Fear  v.  Dunlap  139 

Fegenbush  r.  Lang  124 

Fenn  r.  Harrison  G69 

Fentum  v.  Pocock  591,  594,  596 

Ferf^uson  v.  King  100,  478 

Ferrall  c.  Shaen  278 

Field  V.  Can-  .S52 

Findlav  r.  Ilinde  693 

Firth  V.  Thrush  394 

Fish  V.  Hubbard's  Adm'rs  5 

Fisher  v.  Beck  with  42 

V.  Bradford  479 

V.  Fisher  211 

V.  Marvin  343 

V.  Mershon  673 

Fitch  V.  Jones  233,  234 

Fleckner  i;.  Bank  of  United  States  747 


Fleming  v.  Potter 
Fletcher  v.  Austin 
V.  Chase 
V.  Dana 
V.  Gushee- 
Flint  V.  Day 
V.  Flint 
V.  Rogers 
Florance  r.  Adams 
Foard  v.  Womack 
Foden  v.  Sharp 
Foley  V.  Cowgill 
Folger  V.  Chase 
Foltz  V.  Pourie 
Ford  V.  Angelrodt 

V.  Beech 
Foster  v.  Julion 

V.  Pearson 
Fowler  r.  Brantly 
Fox  r.  Whitney 
Foy  r.  Blackstone 
Fralick  r.  Norton 
Francia  v.  Joseph 
Frankfort  Bank 


Franklin  v.  Twogood 
V.  Verbois 


109 

604 

211 

160,  478 

258 

140,  593,  600,  601 

276 

485 

614 

441,  443 

21 

606,  607 

112,  325 

161 

108 

^07,  561,  5(;2 

326,  330,  449,  452 

198,  253,  259 

235,  239,  250 

524,  526 

212 

10 

172 

Johnson  745 


PAGE 

Frazer  v.  Jordan  560 

Frazier  v.  Warfield  715 

Freakley  v.  Fox  479 

Fredd  v.  Eves  164 

Freeman  v.  Boynton  296,  (i!»0 

I'.  Bri'ttin  .")28 

Freemans'  Bank  v.  Perkins  393 

French  v.  The  Bank  of  Columbia  434, 

442 
Frontier  Bank  v.  Morse  636 

Fry  V.  Hill  40,  41 

Fuller  V.  Smith  669 

FuUerton  v.  Bank  of  United  States  325, 

393,  443 

V.  Sturges  610 

Fulton  V.  Williams  161 

Furze  v.  Sliarwood  371,  376 

Fydell  v.  Clark  669 


Gale  V.  Walsh 
Gallery  t\  Prindle 
Galpin  V.  Hard 
Gansvoort  v.  Williams 
Gardner  v.  Walsh 
Garnett  v.  Woodcock 
Gaskin  v.  Wells 
Gay  r.  Haseltine 
Gazzam  t'.  Armstrong 
Geary  v.  Physic 
Geill  V.  Jeremy 
Geljocke  v.  Dubuque 
Genesee   Bank   v.    The 

Bank 
George  v.  Surry 
Geralopulo  v.  Wieler 
Gerard  v.  Le  Coste 
Gibbs  V.  Fremont 
V.  Gannon 
Gibson  v.  Connor 
Gilford,  Ex  parte 
Gilbert  v.  Dennis 
Gill  V.  Cubitt  208,  216, 

Gillespie  v.  Cammack 
V.  PLannahan 
Gilman  r.  Peck 
Girard   Bank    v.    Bank 

Township 
Gist  r.  Lybrand 
Gladwell  v.  Turner 
Glendinning,  Ex  parte 


431 
8,  108 
320 
734,  735,  736 
599* 
311 
642 
543 


87 
110, 


Patchin 
110, 


200, 

575, 

296, 

253,  254, 

258, 

317, 
of  Penn 

330, 
575,  576, 


210 
468 


Gloucester  Bank  v.   The   Salem 
Bank  644,  646,  648,  656, 

Glynn  v.  Bank  of  England       691, 
(xoblet  V.  Beechey 
Goddard  v.  Lyman 


112 
394. 
744 

729 
111 
88 
6 
713 
426 
207 
576 
375 
257, 
259 
443 
451 
636 

747 
449 
542 
594, 
596 

657 

692 

6 

160 


lii 


TABLE  OF  Cases  cited. 


PACK 

Goddard  v.  Merchants'  Bank  GG5 

Goddin  V.  Shipley  308 

Gohlsmith  r.  Bland  454,  456 

Goodall  i\  DoUey  27,  431 

Goodloe  V.  Taylor  13 

Goodman  v.  Harvey        208,  216,  251, 

252,  253,  257,  258,  259 

V.  Simonds       208,  216,  219, 

223,  235,  239,  260,  261,  478 

Goodrich  v.  De  Forest  50 

Gorliam  v.  Carroll  528 

Goshen  &  j\I.  Turnpike  v.  Hurtin      13 

Goss  v.  Nelson  12 

Gould  V.  llobson  550,,  564,  565 

Goiipy  V.  Harden  40 

Gove  v.  Vining  476 

Gower  V.  Moore  428,' 429 

Grafton  Bank  v.  Cox  329,  451 

V.  Hunt  635 

Graham  v.  Adams  6 

V.  Gillespie  665 

V.  Sangston  375 

Grandin  v.  Leroy  216 

Granite  Bank  y.Ayres     452,  458,  462 

"Grant  v.  Norway  738 

V.  Vaughan   167,  175,  254,  257, 

333 

Graves  v.    American    Exchange 

Bank  339 

Gray  v.  Brown  576 

r.  Donahoe  6 

Greele  v.  Parker  60,  56 

Greeley  v.  Thurston  485 

Green  v.  London  Omnibus  Co.  744 
Greenway,  Ex  parte  682,  689,  690 
Grenaux  v.  Wheeler  258 

Griffin  v.  Goff  476 

Griswold  V.  Davis  203,  338 

V.  Slocum  155 

Grugeon  r.  Smith  368,  373 

Grutacap  v.  WouUouise,  10 

Guidon  V.  Robson  161 

Gurney  v.  Womersley  669 

Gwvnn  V.  Lee  252 


Hawden  v.  Mendizabel 

479 

Haines  v.  Dennett 

528 

Hale  V.  Andrews 

616 

V.  Burr 

330 

429 

451 

Hall  V.  Fuller 

661 

662 

665 

V.  Hale 

257 

V.  Newcomb    111, 

131, 

145, 

148, 

472, 

528 

Halsey  v.  Brown 

302 

Haly  r.  Lane 

174 

ILinimond  v.  Dufrene 

443 

Hancock  Bank  v.  Joy 

164 

Hansard  v.  Robinson  291,  293,  675, 

679,  690,  692,  698 

Hansbrough  v.  Gray  596 

Harker  v.  Anderson  41,  720 

Harley  v.  Thornton  636 

Harper  v.  West  43,  51 

Harphain  v.  Haynes  214 

HarreU  v.  Marston  14 

Harris  v.  Clark  149 

V.  Robinson  385 

Harrison  v.  Bailey  476 

V.  Courtauld  591,  595 

V.  HaiTison.  110 

Harrison  v.  Ruscoe  385,  386 

Hartford  Bank  v.  Steadman     390,  393 

Hartley  v.  Case 


363,  366,  372,  486, 
487 

Harvey  v.  Towers  199,  233 

Hasbrook  v.  Palmer  6 

Hasey  v.  White  Pigeon  Sugar  Co.    43 
Haskell  v.  Boardman  463 

Haslett  V.  Kunhardt  429 

Hatch  v.  Searles  215 

Hatcher  v.  McMorine  715 

Hawkes  v.  Phillips  131,  154 

V.  Salter  394,  535 

Hawkins  v.  Watkins  6 

Haxtun  v.  Bishop  274,  677 

Haynes  v.  Birks  394 

Hazelhurst  v.  Kean  715 

Hazelton  v.  Colburn  542 

Heane  v.  Rogers  539 

Heath  v.  Sansom  213 

Hedger  v.  Steavenson      367,  373,  374 
Hemmenway  v.  Stone  128 

Hemming  v.  Brook  352 

Henderson  r.  Bondurant  215 

Henry  v.  Jones  482 

V.  Lee  311 

Hepburn  v.  Toledano  321 

Herdnian  i\  Bratten  606 

Hern  v.  Nichols  732,  738,  745 

Herrick  v.  Carman  114,  115,  134,  135, 
136,  137,  147 
V.  Woolverton  214 

Hetherington  v.  Kemp  536 


Heywood  v.  Watson 

Hiatt  V.  Simpson 
Hickman  v.  Ryan 
Hicks  V,  Brown 
Higgins  V.  Watson 
Hill  V.  Lewis 
V.  Norris 
Hilton  V.  Smith 
Hine  V.  Allely 
Hinsdale  v.  Bank  of  Orange 
V.  Lamed 


177,  179,  193, 

198,  206 

607 

393 

710 

156 

134 

441,  442,  443 

271 

458 

677,  706 

677 


TABLE   OP   CASES   CITED. 


liii 


Hinsdale  v.  Miles  297 

Iliiitoii  V.  Bank  of  Columbus  03 

Ilirsdifield  V.  Smith  713,  714 

Ilitc  i'.  Tlie  State  6 

Iloailley  v.  Bliss  476 

Hoare  v.  Cazenove  88 

V.  Graham  505 

Ilobart  V.  Dodge  14 

Ilodi^es  V.  Shuler  10 

Holfman  v.  Miller  .             210 

V.  Smith  [441,  443 

Ilofje  V.  Lansing  215 

llnlcman  v.  Ilobson  271 

llollowell  r.  Curry  443 

Ilolnian  r.  fFoImson  234 

Holme  V.  Karsper  234 

Holmes  D.  D'Camp  G72 

Home  Ins.  Co.  v.  Green  363 

HoTues  i;.  Smyth        183,  184,  200,  207 

Hooker  v.  Gallagher  160 

Hopkins  v.  Liswell  475 

Ilopkirk  V.  Page       426,  430,  444,  543 

Hornl)lower  v.  Proud  255 
Hortsman  v.  Henshaw  57,  88,  338,  339, 
648,  661,  662 

Hough  V.  Barton  674 

Houghton  V.  Adams  636 

Houlditch  V.  Cauty  368,  373,  375 

House  V.  Adams  443,  543 

Housum  V.  Rogers  212 

Howard  v.  Ives  392 

Howe  i\  Bowes  458 

V.  Merrill  131 

Howell  V.  Crane  262 

Hoyt  V.  Lynch  6,  10 

Hubbard  v.  Chapin  235 

V.  Jackson  351 

Hume  r.  Peploe  488 

Humphries  c.  Blight  260 

V.  Chastain  161 

Hunt  V.  Adams  117,  127,  128 

V.  Bovd  642 

V.  Wadleigh  462 

Hunter  v.  Ingraham  108 

V.  Kibbe  219 

Hutchins  v.  Nichols  576 

Hyslop  V.  Jones  409 


Illinois,  State  of,  v.  Delafield  735 

Ilsley  V.  Jewett  642 

Imeson,  Ex  parte  1,2 

Ingalls  V.  Lord  38 

Ireland  v.  Archer  51 
V.  Kip                          409,  456 

Irick  V.  Black  615 

Irish  V.  Cutter  131 

Irvine  v.  Lowry  6 


Irving  Bank  v.  Wetherald 
Ives  V.  Farmers'  Bank 


Jackson  v.  Richards 


G65,  748 
211 


393,  459,  462. 
488 
V.  Ritter 
James  t\  Badger 
Jameson  v.  Swinton 
Janson  v.  Thomas 
Jarvis  v.  St.  Croix  Manuf.  Co. 
JelFcrson  County  Bank  v.   Chap- 
man 
Jenney  r.-Herle 
Jennings  v.  Thomas 
Jennison  v.  Parker 

V.  Stafford 

Jenys  v.  Fawler 

Jerome  v.  Whitney 

Johnson  v.  Baker 

V.  Catlin 

V.  Collins 

V.  Kennion 

V.  Weed 

Johnston,  Ex  parte 

Jones  V.  Bank  of  Iowa 

V.  Broadhurst 

V.  Brooke 

V.  Fales      1,  302,  685,  695,  696 

V.  Hibbert  271 

r.  Lewis  399 

V.  O'Brien  o39 

V.  Quinnipiack  Bank  615 

V.  Ryde  647,  651,  657,  669 

V.  Simpson  14 

V.  Thorn  160 

V.  AVardell  377 

Jordaine  v.  Lashbrooke  509,  510,  511, 

513,  522,  523 


460 
565 
384 
307 
410 

677 


139,  143 

639 

255 

658 

7 

604,  605 

478 

48 

350,  351 

632 

462 

50 

346 

279 


Josselyn  v.  Ames 

115, 

122, 

126 

V.  Lacier 

8 

Joyce  V.  Williams 

734 

Judah  V.  Harris 

2 

Juniata  Bank  v.  Hale 

384, 

423 

Kearney  v.  King 

715 

Kearslake  r.  Morgan 

207 

642 

672 

Kearsley  v.  Cole 

575 

Keene  v.  Beard 

718, 

745 

Keith  V.  Jones 

2,3 

Kelley  r.  Brooklyn 

7.8 

V.  Brown 

476 

V.  Hemingway 

8 

Kelly  V.  Solari 

648 

Kellogg  I'.  Dunn 

166 

V.  LawrencQ 

109 

Kemble  v.  Lull 

109 

liv 


TABLE   OF    CASES   CITED. 


PAGE 

Kondrick  v.  Lomax  550 

Kcniuird  v.  Knott  563 

Kennebeck  Bank  v.  Page  302 

Kennedy  v.  Carpenter  616 

V.  Geddes  51 

Kensington  v.  Inglis  701 

Kent  V.  Somervell  479 

V.  Warner  476 
Kenworthy  v.  Hopkins             600,  564 

Kerrison  v.  ("coke  591 

Ketcbell  r.  Bums  111 
Kiddell  v.  Ford                               .    462 

Kilgore  v.  Bulkley  308 

Killby  V.  Rochussen  542 

Kilsby  V.  Williams  746 

Kimball,  The  213 

V.  Huntington  6 

King  V.  Baldwin  559 

V.  Holmes  327 

Kingman  v.  Pierce  334 

King-sbury  v.  Butler  12 

Kingsley  v.  Robinson  441 

Kinsley  v.  Robinson  443 

Klein  V.  Currier  124 

Knapp  V.  Parker  140 

Knight  V.  Piigh  258 

Knox  Co.  V.  Aspinwall  744 
Kramer  v.  Sandford                  462,  463 

Kupfer  V.  Bank  of  Galena  441 


LaCoste  v.  Harper 
LaJdlaw  v.  Organ 
Lake  v.  Stetson 
Lambert,  Ex  jyarte 

V.  Ghiselin 

V.  Oakes 

V.  Sanford 
Lancaster  Nat.  Bank  v 
Landry  v.  Stansbury 
Lane  v.  Ridley 

V.  Steward 
Lange  v.  Kohne 
Langton  v.  Lazarus 
Lansing  v.  Gaine 
Lanusse  v.  Massicot 
Laverty  v.  Burr 
Lawrence  v.  Bowne 

V.  Dougherty 
V.  Langley 
Lawson  v.  Sherwood 

V.  Weston 
Laxton  v.  Peat 
Lazarus  v.  Cowie 
Lazell  V.  Lazell 
Leach  V.  Buchanan 
Leaf  r.  Gibbs 
Le  Breton  v.  Peirce 


Taylor 


442 
624 
156 
87 
413 
450 
596 
213 
429 
353 
469 
2 

62,  662 
734 
458 
734 
494 

7 

462 

535 

254,  708 

590,  591,  594 

345,  596 

C92 

63,  661 
604,  609 

202 


PAGE 

Lee  V.  Buford 

542 

V.  Levi 

563 

Lee  Bank  v.  Spencer 

452 

Leeds  v.  Vail 

164 

Leffingwell  v.  White 

476 

Leftley  v.  Mills         300,  311,  377,  485 

Legge  V.  Thorpe  432 

Leggett  V.  Jones  9 

V.  Raymond  111,  112 

Legro  V.  Staples  14 

Le  Guen  v.  Gouverneur  39 

Lehman  v.  Jones      316,  330,  449,  450 

Leiber  v.  Goodrich  1,  2 

Leland  v.  Farnliam  213 

Lenox  v.  Leverett  88 

V.  Prout  563 

V.  Roberts  389,  392 

Leonard  v.  Gary  476 

V.  Mason  10 

V.  Sweetzer  143 

V.  Vredenburgh  138 

Levy  V.  The  Bank  of  the  United 

States     620,  646,  654,  658,  660,  661 


Lewis  V.  Gompertz 
V.  Hanchman 
V.  Harvey 
V.  Kramer 
V.  Reilly 

Lickbarrow  v.  Mason 


367,  373,  375 
592 
131 
462 
161 
214,  262 


Life  and  Fire  Ins.  Co.  v.  Mechan- 
ics' Fire  Ins.  Co.  744 
Lightbody  v.  The  Ontario  Bank     619, 

625 
Lindas  v.  Bradwell 
Little  V.  Phoenix  Bank 
Livingston  v.  Clinton 

V.  Hastie 

V.  Littell 

V.  Livingston 

V.  Rogers 

Cohen 


104 
6,  720 
477 
734 
214 
693 

673,  701 
715 

604,  609 
279 


Lizardi  v. 
Lloyd  V.  Howard 

V.  Keach 

V.  The  West  Branch  Bank     747 
Lockwood  V.  Crawford  375,  393 
Loker  v.  Haynes  523 
Lorain  Bank  of  Elyria  v.  Town- 
send  399 
Loring  v.  Gurney  14 
Lovell  V.  Martin  334 
Low  V.  Chifney  258 
V.  Copestake  161 
V.  Howard  469,  476 
Lowe  V.  Waller  229,  512 
Lowery  v.  Scott  320 
Lowndes  v.  Anderson  177 
LoAvrey  v.  Murrell  636 
Luke  V.  Lyde  191 


TABLE   OP   CASES   CITED. 


Iv 


Lumley  v.  Palmer 

43 

Luiit  V.  Adams 

312 

Lyon  V.  Ewings 

212 

r.  Holt 

5G2 

Lysaght  o.  15rvant 

385 

IMacartiicy  r.  Graham 

GOO 

IMaidonald  r.  Hoviiijrton 

oG4 

]\IacH'  V.  Wc-lis 

5G0 

]MaclK'll  r.  Kinnear 

160 

;Matli.sh  ('.  Kkins 

175 

Madison,  The,  &c.,  Plank  Road 

Co.  V.  Stevens  606 

Magee  v.  Badger  258 

Magriider    v.    Union    Bank  of 

(ieorgetown  428 

Maiden  Bank  r.  Baldwin  328 

Mallet  V.  Thompson  575,  590 

Manchester  Bank  v.  Fellows  381,  541 

Manning  v.  !MtClure  211 

V.  Wheatland  277,  278 

IManrow  r.  Durham  111 

Mareal  v.  Melliet  215 

March  r.  Ward  128 

Marine  Bank  r.  Clements  234 

Marion,  &e.,  R.  Co.  v.  Ilodge  43 

INIarkle  i:  Hatfield    626,  632,  G35,  651 

Marr  v.  Johnson  38.S 

Marsh  v.  Barr  409 

V.  Xewell  479 

Marshall  v.  Mitchell  462,  476 

Martcl  c.  Tureauds  4G2 

Martin  v.  Bacon  42 

V.  Bank  of  United  States    678, 

703 

V.  Boyd  131 

V.  Channtry  7 

r.  TiigersoU  476 

Mason  v.  Franklin  328,  329 

v.  Hunt  47,  108 

Master  v.  IMiller  702 

Mather  v.  Lord  Maidstone  661,  670 

Matossv  ('.  Frosh  502 

IMatthews  v.  Povthress  258,  708 

[Matthey  v.  (ially  469 

Mauran  ik  Lamb  478 

May  V.  Chapman  251,  252 

V.  Quimby  212 

Mayor  r.  Johnson  702,  703 

v.  Lord  744 

McCalop  I'.  Fhiker  109 

IM'Clarin  v.  Xesliit  2 

ISrCormick  v.  Trotter  3 

]\Ic('ranier  D.  Thompson  615 

McDonald  v.  Bailey  469 

r.  :\ratrruder  593 

McDowell  v.  Keller  6 


PAGE 

McEvers  r.  Mason  49 

McFarland  v.  Pico  492 

Mcdarr  y.  Lloyd  674 

McGee  r.  Proiity  343 

MHi ruder  v.  Bank  of  Washington  317, 

319,  330 
McGuIre  v.  Bosworth  131 

McKenzie  v.  Durant  490 

M'Kinney  v.  Crawford  424 

MeKlcroy  v.  Southern   Bank  of 

Kentucky  648,  G62,  664 

McLemore  v.  Powell  546,  559 

M'Nairy  v.  Bell  24 

McNeil  V.  Wyatt  388 

Meacher  ?).  Fort  661 

Mead  v.  Engs  339 

V.     ^lerchants'     Bank     of 
Albany  748 

V.  Young  338 

Meads  v.  INIerchants'  Bank  747 

Mechanics'  Bank  v.  Griswold  462,  476 
V.  Hazard  346 

r'.  The  New  York  and  New 
Haven  Railroad  Company   738, 
739 
Meckles  v.  Colvin  211 

Mellish  V.  Rawdon  40,  41 

Mercer  Co.  «.  Hacket  744 

V.  Lancaster  410 

Merchants'  Bank  v.  Birch  429 

V.  Spicer         14,  111 
Merchants'  National  Bank  v.  Na- 
tional Eagle  Bank  648 
Merciiants'  National  Bank  v.  State 

National  Bank  739 

Merriam  c.  (Jranite  Bank  257 

V.  Wolcott  669 

Messenger  c.  Southey  367,  373 

Metcalfe  v.  Richardson  375,  376 

Midland  v.  Lagarde  452 

Michigan  Ins.  Co.  v.  Leavenworth     12 
State  Bank  r.  Leaven- 
worth  203,  211,  213,  546, 
557 
Middlesex,  &e.  v.  Davis  6 

^liddleton  Bank  r.  Morris  40 

Miers  v.  Brown  376,  428 

Miles  V.  O'Hara  424 

Miller  i\  Delamater  163 

r.  Hacklev  501,  536 

V.  Race  16G,  175,  254,  257,  333, 
617,  618,  619,  620,  628,  G54, 
702 
Millett  V.  Parker  612 

Mills  V.  The  Bank  of  the  United 

States  237,  308,  352,  368,  390 

V.  Barber  199,  234,  258 

Miln  V.  Prest  51 


Ivi 


TABLE   OF   CASES    CITED. 


Milne  V.  Graham  71o 

Minet  t'.  Gibson  61 

Misei"  V.  Trovinger  441 

Mitchell  V.  Culver  245 

V.  Deo-rand  392 

V.  Rice  479 

Mitford  V.  Wallicot  2T5 

Mobley  v.  Clark  443 

Moffat  V.  Edwards  13 

Mohawk  Bank  v.  Broderick  41 

Moics  V.  Bird  116,  118,  128 

Moline,  Ex  parte  485,  41)0 

Montague  v.  Perkins  245 

Montgomery  Bank  v.  Walker  592,  596 

Moore  v.  Denslow  160 

V.  Fall  679 

V.  Hardcastle  409 

V.  Isley  601 

Moran  v.  Miami  Co.  744 

Mores  v.  Conham  744 

Morgan  t\  Davison  312 

V.  Peet           ,  476 

Morley  v.  Culverwell  338 

Morris  v.  Bethell  661,  669 

V.  Sumnierl  37 

Morrison  v.  Buchanan  648 

V.  StockwcU  478 

Morton  v.  Burn  255 

V.  Navlor  8 

V.  Westcott  409 

Moses  v.  Ela  463 

Moss  V.  Hall  561,  562 

V.  Riddle  606 

Mossop  V.  Eadon      689,  690,  691,  692 

Muilman  v.  D'Eguino  40 

Mulherrin  v.  Hannum  24,  109 

Mullick  i\  Radakissen  40 

Munn  r.  Baldwin  376,  532,  533 

V.  Commission  Co.  279 

V.  Ruggles  285 

Murdock  v.  Mills  50 

Murray  v.  Judah  696 

V.  Lardner  257 

Mussey  v.  Eagle  Bank  729 

Mutford  V.  Walcot  158 


Nadin  v.  Battle  564 

Naglee  r.  Parrott  211 

Napier  v.  Elam  256 

National  Bank  of  North  America 

V.  Bangs  664 

National  Park  Bank  v.  Ninth  Na- 
tional Bank  665 
National  Savings  Bank  v.  Tranah    213 
Natwyn  v.  St.  Quintin  553 
New  York  and  New  Haven  Rail- 
road Co.  V.  Schuyler  745 


N.  B.  Savings  Inst. 

Bank 
Neal  V.  Wood 
Nelson  v.  Dubois 


V.  Fairhaven 


615 

541 

114,  115,  116.  118, 

134,  135 

556 

483 

8,  25 


Newell  and  Pierce  v.  Hamer 
N.  E.  Bank  v.  Lewis 
Newhall  v.  Clark  i 

New   York    M.    Iron    Works    v. 

Smith 
N.  Y^  &  Va.  State  Stock  Bank  v. 

Gibson 
Niagara    District 

Fairman,     &c., 

Co. 
Nichols  V.  Holgate 

V.  Norris 
Nicholls  V.  Bowes 
Nicholson  v.  Gouthit 


256 
234 


Bank    v.    The 
Manufacturing 

329 

528 

575,  576,  591 

19,  20 

425,  459,  460, 

461,  462,  465 

V.  Patton  257 

V.  Revill  576 

Noble  V.  Kennoway  302 

North  Bank  v.  Abbot  328 

Northern  Bank  v.  Farmers'  Bank    708 

North  River  Bank  v.  Aymar  735,  736, 

748 
Northam  v.  Latouche  233 

Norton  v.  Coons  600 

V.  Lewis  417 

V.  Waite  183,  200,  207 

Nott  V.  Beard  292 

Nutter  V.  Stover  211 


Ogden  V.  Cowley 

V.  Slade 
Ogilby  V.  Wallace 
O'Keefe  v.  Dunn 
Okie  V.  Spencer 


455 
6 
477 
259 
204,  213,  546 


Oliver  v.  Bank  of  Tennessee  441 

Ontario  Bank  v.  Lightbodv     619,  620, 
.  625,  634,  661 
V.  Worthington     42,  51, 
172,  189 
Ord  V.  Portal  160 

Orear  v.  McDonald  441,  443 

Oridge  v.  Sherborne  307,  308 

Oriental  Bank  v.  Blake  429 

Orono  Bank  v.  Wood  542 

Orr  V.  Maginnis  292,  443,  688 

Ory  r.  AVinter  715 

Osborn  v.  Moncure  487,  493 

Osgood  V.  Thompson  Bank  211 

Otsego  County  Bank  v.  Warren      463 
Oulds  V.  Harrison  276 

Outhwite  V.  Porter  211 

Overman  v.  Hoboken  City  Bank      650 


TABLE   OP   CASES   CITED. 


Ivii 


PAOE     1 

I-AGE 

Overton  v.  Tyler 

9 

Percival  v.  Franipton 

177, 

182,  194, 

Owen  V.  Ifjlanor 

108 

198,  206 

I'.  Liivine 

108 

Perkins  v.  Barstow 

150 

Owenson  v.  !Morse 

632 

V.  C'atlin 

124, 143 

Oxlurd  Bank  v.  Ilaynes 

129 

V.  Franklin  Bant 

480 

V.  Lewis 

657 

Perry  v.  Green 

V.  Harrington 
Peto  V.  Reynolds 

402 

8,  108 

14 

Pacific  Bank  v.  Mitchell 

354 

Petrie  r.  Clark 

184, 

200,  207 

Packard  v.  Richardson 

522 

Pettee  v.  Prout 

213,  478 

Pagan  i\  Wjlie 

66.-) 

Philadelphia  Bank  v.  Newkirk            14 

Palen  i'.  ShurtlefF 

388 

Philadelphia  and  Baltimore  R 

Co. 

Palmer  v.  Hughes 

109 

V.  Quigley 

744 

V.  Pratt 

12 

Phillips  V.  Cole 

259 

V.  Richard 

198, 

2on, 

2r,2 

r.  Frost 

43 

V.  Richards 

604 

6()9 

V.  Thum 

61,  62,  63,  88 

V.  Stej)hens 

14, 

111 

Phipps  r.  Chase 

443 

r.  Whitney 

543 

Pliipson  V.  Kneller 

465, 

466,  476 

Park  r.  Page 

482 

PhcL-nix  Bank  v.  Hussey 

88 

Park  Bank  v.  Watson 

212 

Phoenix  Ins.  Co.  v.  Allen 

542, 637 

Parker  v.  Gordon 

311 

V.  Gray 

542 

r.  Greele 

56 

Pickering  v.  Busk 

614 

V.  Hanson 

525 

Picquet  v.  Curtis 

219 

V.  Maconiber 

101 

Pidcock  V.  Bishop 

004 

Parks  V.  Ingiam 

596 

Pierce  v.  Cate    330,  429, 

449 

451,490 

Parr  v.  Eliason 

279, 

280 

V.  Kennedy 

112,  139 

Partridge  v.  Davis 

111, 

112, 

156 

V.  Pendar 

377,  382 

Pascoe  V.  Vyvyan 

M5;! 

Pierce  v.  Wiiitney 

327 

Pasmore  v.  North 

220 

Pierson  v.  Dunlop          46,  47 

',  48,  351 

Passunipsic  Bank  v.  Goss 

6in, 

615 

V.  Hooker 

475 

Paterson  v.  Hardacre 

21;?, 

3:53 

V.  Hutchinson 

672,  682 

Patience  r.  Towidey 

418, 

419, 

444 

Pillans  V.  Van  Mierop     46,  47,  48,  49, 

Patton  f.  Bank  of  South  Carolina 

703 

174,  192 

V.  State  Bank 

703 

Pine  V.  Smith 

214 

Pawling  V.  The  United  States  604, 

606, 

Pinkhara  v.  Macy 

375 

607, 

608, 

009 

Pinnes  v.  Ely 

112 

Payne  v.  Cutler 

172 

1.S9 

Pintard  v.  Tackington 

671 

680,  (582 

Payson  v.  Coolidge 

50 

Pitcher  r.  Barrows 

161,478 

Peabody  v.  Rees 

215 

Plato  V.  Reynolds 

543 

Peach  I'.  Kay 

43 

Plets  V.  Johnson 

61 

Peacock  v.  Purcell 

208 

210 

Plumnier  v.  Lyman 

50,  51 

V.  Rliodes     167 

,  176 

,  2o4 

,  333 

Poirier  v.  Morris       199, 

204 

206,  256 

Pearson  v.  Bank  of  Metropolis 

320 

,327 

Polk  V.  Spinks 

446 

r.  Crallan 

408 

Pollard  V.  Herries 

10 

r.  (iarret 

12 

Pons  V.  Kelly 

443 

r.  Stoddard 

156 

Poole  r.  Tumbridge 

490 

Pease,  Ex  jmrte 

204 

205 

Pope  V.  Nance 

648 

V.  Hirst 

354 

Porter  v.  Kemball 

472 

Peck  V.  Bli-h 

276 

Potter  r.  Brown 

711 

r.  Hibbard 

715 

V.  Lansing 

38 

Peckani  v.  Gilnian 

150 

Powell  I'.  Jones 

43 

Pcisch  V.  Dickson 

4 

V.  Waters 

216,  283 

Pendlebury  i\  Walker 

601 

Pownal  V.  Ferrand 

353 

Pendleton  v.  Bank  of  Kontut 

ky 

748 

Pratt  V.  Coman 

211 

People,  The,  r.  Bostwic 

k 

611 

Prentiss  v.  Danielson 

462 

r.  Wiley 

677 

Prentice  v.  Zane 

201,  2<i2 

Pepper  V.  The  State 

605, 

007, 

608, 

Prescott  Bank  r.  Caverl 

v 

528 

» 

609 

611 

,615 

Preslar  v.  Stalworth 

616 

Iviii 


TABLE   OP   CASES   CITED. 


] 

'AGE 

PAGE 

Prestwick  v.  Marshall 

163 

Richter  v.  Selin 

476 

Price  V.  P](hn()nds 

591 

Rideout  v.  Bristow 

255 

V.  Edmunds 

563, 

591 

Ridgway  v.  Day 

476 

V.  Neale  646,  655, 

656, 

657, 

658 

Ricraan  v.  Fisher 

669 

V.  Price 

206 

Riggs  V.  Waldo 

112,  139 

V.  Teal 

10 

Riley  ik  Gerrish 

528 

V.  Young 

429 

Ringgold  V.  Tyson 

528 

Pridcaux  v.  ('riddle 

396 

Ripka  V.  Pope 

109 

Prince  v.  Brunatte 

163 

Ripley  v.  Greenleaf 

308, 

546,  557 

Pring  V.  Clarkson 

546, 

549 

Robarts  v.  Tucker 

665 

Pringle  v.  Phillips 

258 

Robb  V.  Bailey 

160, 

161,  478 

Prossor  v.  Luqueer 

132 

Robins  v.  Maidstone 

271 

Puckford  V.  Maxwell 

632, 

642 

Robinson  v.  Abell 

145 

Purssord  v.  Peek 

350 

351, 

352 

V.  Ames 

441 

Putnam  v.  Sullivan  316, 

317, 

451, 

610, 
668 

V.  Bland 
V.  Reynolds 
?).  Smith 

715 

214,  262 
211 

Quin  V.  Sterne 

150 

V.  Yarrow 
Robson  V.  Bennet 
V.  Curlewis 

63 

746 

375 

Rabey  v.  Gilbert 

542 

Rogers  v.  Coit 

111 

Raborg  v.  Bank  of  Columbia 

V.  Stevens 

292, 

431,  476 

Radolph  V.  Cook 

490 

Rohde,  Ex  parte 

452 

Ranger  v.  Cary 

274 

Rolfe  V.  Caslon 

288 

V.  The  Great  Western  R. 

V.  Wyatt 

591 

Co. 

745 

Rordasnz  v.  Leach 

160 

Ransom  v.  Mack     363, 

375, 

377, 

382, 
410 

Rosa  V.  Brotherson 
Roscow  V.  Hardy 

172,  189 
386 

Ranson  v.  Sherwood 

124 

Rose  V.  Park 

715 

Raphael  v.  The  Bank  of  England 

252, 

V.  Sims 

288 

253 

v:  Van  Mierop 

46-49 

174,  192 

Ratcliff  V.  Planters'  Ban 

k 

330 

Rosher  v.  Kieran 

386 

Rayner  v.  Linthorne 

613 

Ross  V.  Bedell 

258 

Read  v.  Adams 

41 

444 

RothsL'hild  V.  Cnrrie 

712,  713 

V.  Brookraan 

690 

Routh  V.  Robertson 

363 

V.  Gamble 

502 

Rowan  r.  (\lenheimer 

363 

IK  Marsh 

50 

Rowe  v.  Tipper 

385 

Reakert  v.  Sanford 

164 

IK  Young      17, 

18,  21 

108,  329 

Reddick  v.  Jones 

200 

,  207 

Rowley  v.  Ball          673,  676 

680,  698 

Reedy  v.  Seixas 

363 

V.  Home 

708 

Rees  V.  Warwick 

42 

Royal  British  Bank  v. 

Tarquand      744 

Reg.  V.  Bateman 

215 

Rucker  et  nJ.  v.  Hiller 

433 

V.  Wilson 

215 

Ruggles  V.  Patten 

23,  109 

Reid  V.  Eurnival 

353 

Rundle  v.  Moore 

37 

V.  Morrison     317, 

329, 

330, 

449, 

Rushton  V.  Aspinwall 

305,  491 

451 

Russel  V.  Langstaflfe 

215 

245,  610 

Renner  v.  The  Bank  of  Columbia 

Russell  V.  Swan 

160 

237,  297,  362 

,  447 

,  505 

,  696 

V.  Turner 

38 

Reynolds  v.  Blackburn 

351 

353 

V.  Wiggin 

50,  51,  57 

V.  Doyle 

616 

Rutland  &  B.  R.  Co. 

V.  Cole 

478 

Rex  V.  Hart 

215 

Ryan  v.  Chew 

211 

V.  Johnson 

701 

Rhett  V.  Poe 

441 

,443 

Rice  V.  Mather 

288 

Safford  V.  Wyckoff 

729 

V.  Riatt 

211 

Salinas  v.  Wris/ht 

14 

Richardson  v.  Lincoln 

129 

,  221 

Salisbury  v.  AVilliams 

701 

V.  Rikeman 

672 

Samson  v.  Thornton 

129 

Richie  v.  McCoy 

443 

1   Sanderson  v.  Bo\\^s 

20,  23 

TABLE    OP   CASES   CITED. 


lix 


PAfiK 

Sandford  v.  Dillaway  452,  402 

Sanford  v.  Lainlieit  592 

V.  IMicklcs  161 

V.  Norton    112,  111,  142,  213, 

257 

Sard  V.  Rhodes  352 

Sargent  v.  Appleton         354,  443,  576 

V.  Soutiigate       273,  274,  275, 

520 

Saul  V.  Jones  543 

Saiindcrson  v.  Judge  377 

Savage  v.  King  103,  104 

Saver  r.  WagstalT  213 

Sehimnielpennifli  r.  Hayard  49,  54,  04 

Schneider  v.  Schiffman  131,  143 

Scholield  i\  Bayard  88,  422 

Schollenberger  v.  Nehf  124,  143 

Scott  V.  Greer  472 

V.  Ocean  Bank  210,  212 

r.  Lifford  377 

Scruggs  V.  (iass  619,  020 

Seabury  v.  Hungerford  132,  138 

Seacord  v.  Miller  403 

Schree  v.  Dorr  502 

Seely  v.  The  Peo[)le  003 

Seixas  v.  Woods  624 

Seneca  ( 'o.  Jiank  v.  Xeass       325,  410 

Serle  v.  Norton  740 

Seventh  Ward  Bank  v.  Ilanrick       392 

Bewail  V.  Russell  393 

Seymour  v.  Leyman  150 

Shaniburiih  v.  Connnagere  328 

Sharp  V.  United  States  008 

Shaver  v.  Elile  082 

Shaw  V.  Coates  383 

r.  Croft  383,  380 

V.  Reed   290,  328,  330,  451,  462 

Shaylor  v.  Mix  382,  409 

Shearni  r.  Burnard  502 

Shed  V.  Brett    :i77,  409,  458,  484,  496 

Sheldon  v.  Benhani  382,  390 

V.  ( 'hapnian  543 

r.  llorloii  470 

'  Shelton  i\  Urothwaile  308 

Shepj)anl  ifc  Co.  v.  Stewart  342 

Sherwood  i\  Barton  161 

r.  Roys  479 

Shirley  v.  Fellows  441 

Shute  (;.  Robins  40 

Shuttleworth,  Ex  parte  669 

Sigerson  v.  ^Mathews  542 

Simpson  v.  Moulden  6,  7 

V.  Turney  896 

Sinclair  r.  Lynch  375 

Slacum  r.  Pomerv  715 

Smedes  v.  The  lltica  Bank       380,  535 

Smith  ('.  Bank  of  Washington  490 

V.  Boulton  375 


I'AGE 

Smith  V.  Iha'me 

198, 

233,  258 

V.  ( 'hester 

63,  058 

r.  De  Witts 

193 

V.  P^arl  of  Jersey 

4 

V.  Iliscock 

202 

V.  Kendall 

6,  9 

V.  Knox 

203 

V.  Lusher 

161,  478 

V.  Mechanics'  Bank 

257 

V.  Mercer         046 

656, 

657,  058 

V.  IVIoberly 

612 

V.  IMullett 

382,  395 

V.  Nightingale 

10,  14 

V.  RockAvell 

695,  697 

V.  Thatcher 

442 

V.  Whiting 

363, 

364,  370 

V.  Winter 

576 

V.  A\"right 

303 

Snow  V.  Peacock 

708 

V.  Perkins 

363 

V.  Perry 

636 

Society  for  Savings  v.  New  I 

iOn- 

don 

744 

Solarte,  Ex  parte 

462 

V.  Palmer     300, 

307, 

372,  373, 
374,  375 

Solly  V.  Forbes 

576 

Solomons  v.  The  Bank  of  England  201 
Spangler  v.  ]Mcl)aniel  443 

Spaulding  v.  Andrews  42 

Spear  v.  Atkinson  441 

Spencer  v.  Harvey  462,  476 

Spies  V.  Gilmore      111,  139,  145,  156, 

451 

V.  Newbury  .  375 

Spooner  v.  Rowland  642 

Spring  I'.  Lovett  527 

Spiincfield  Ins.  Co.  v.  Tincher         543 

StalFord  v.  Rice  522,  528 

Stagg  v.  Elliott  215 

Staley  V.  Mathers  276 

Stalker  v.  IMcDonald        201,  250,  265 

Stanton  v.  Blossom  386,  388 

Staples  V.  Okines  402,  465,  466 

Starr  i'.  Sanford  542 

State  V.  Bodly  610 

V.  Chrisman  600,  012 

Bank  i\  Evans  Oil 

V.  Ilurd  827,  370 

V'.  Napier       109,  325,  328 

Steadman  v.  Gooch  206 

Stedman  v.  Gooch  642 

Steinhart  v.  Boker  216 

Steman  v.  Harrison  50 

Stephenson  r.  Dickson  396 

V.  Primrose  462 

Sterling  r.  ^larietta,  &c..  Trading 

Co.  644,  550 


Ix 


TABLE   OP   CASES    CITED. 


Stevens  v.  Blunt  13 
V.  CainplioU  211 
V.  Hoyland  211 
Stewart  v.  Eden  315,  575 
V.  Smith  ^214 
Stivers  v.  Prentice  328 
Stockman  v.  Parr  303 
Stoddard  v.  Kimball  211,  256 
Stones  V.  Butt  479 
Stoney  v.  The  American  Life  In- 
surance CompanJ'  728,  744 
Storer  v.  Logan  50,  57 
Storm  V.  Sterling  14 
Stothart  V.  Parker  462 
Stotts  V.  Byers  212 
Stout  w.  Benoist  661 
Straker  v.  Graham  40 
Strang  v.  Wilson  527 
Strange  v.  Price  368,  373 
V.  Wigney  708 
Strong's  Case  540 
Strong  V.  Foster  562 
V.  Ptiker  141,  143 
Stump  V.  Napier  528 
Sumner  v.  Gay  117,  129 
V.  Parsons  127 
Supervisors  v.  Schenck  744 
Sussex  Bank  v.  Baldwin  3'27,  328 
Sutcliffe  V.  McDowell  442 
Sutton  V.  Shelley  505 
Swan  V.  The  North  British  Austra- 
lian Company  604,  610,  745 
Swansey  v.  Breck  108 
Swetland  v.  Creigh  7 
Swift  V.  Tyson          168,  169,  177,  183, 
199,  2U0,  207,  210,  211,  212,  219, 
222,  235,  249,  252,  256,  261,  264, 

265 

Sylvester  v.  Crapo  259 

V.  Downer  112 


Talbot  V.  Bank  of  Rochester  62 

V.  Clark  393 

Talman  v.  Gibson  477 

Tarleton  v.  AUhusen  642 

V.  Benbow  689,  691 

Tarver  v.  Nance  441 

Taunton  Bank  v.  Richardson  476 

Tayler  v.  Mather  260,  275 

Taylor  v.  Beck  528 

V.  Snyder       25,  109,  326,  449, 

450,  451 

Taylor  v.  Craig  612 

Tebbetts  v.  Dowd  541 

Temple  v.  Seaver  161 

Tenney  v.  Prince  117,  129 

Teresy  v.  Gorey  691,  692 


Thackray  v.  Blackett 

442 

Thayer  v.  Boston 

745 

V.  BufFum 

161, 

478 

V.  Grossman 

522, 

527 

V.  King 

680, 

686 

Thomas  v.  Fenton 

352 

r.  Newton 

261 

V.  Todd 

636 

Thompson  v.  Ketcham 

327 

V.  Patrick 

744 

V.  Shepherd 

264 

Thornton  v.  Wynn 

475 

476 

Tillman  v.  Wheeler 

134 

Tillotson  V.  Rose 

616 

Timmis  v.  Gibbins 

636 

Tindal  v.  Brown  363, 365-371, 372, 374, 
384,  385,  391,  425,  428,  488 
Tinker  v.  McCauley  156 

Tobey  v.  Berly  476 

Tobias  v.  Rogers  600 

Todd  V.  Stafford       _  528 

Tomlinson  Co.  v.  Kinsella  214 

Toosey  v.  Williams  535 

TooteW,  Ex  jxnie  14 

Tower  v.  Appleton  Bank  674,  694 

Townsend  v.  Bush  523,  527 

V.  Crowdy  648 

V.  Lorain  Bank         375,  376 
Townsends  v.  Bank  of  Racine  636 

Townsley  v.  Springer  393 

V.  Sumrall      27,  49,  51,  192, 
500 
Treon  v.  Brown  527 

Triggs  V.  Newnham  311,  312 

Trimby  v.  Vignier  715 

Troy  City  Hank  v.  Lauman  329 

Trustees  v.  Hill  212 

Tunstall  v.  AValker  401 

Tyrner  v.  Leech  386,  387 

Twopenny  v.  Young  557 


Ubsdell  V.  Cunningham  13 

Uhler  V.  Semple  615* 

Ulen  V.  Kittredge  116 

Ulster  County  Bank  v.  McFarlan       56 
Union  Bank  v.  Hyde  357,  469,  472 

V.  Magruder  476 

V.  Stoker  409 

Union  Bank  of  Weymouth  v.  Wil- 
lis 144,  148,  156 
United  States  v.  Barker  91 
V.  Dunn  91 
V.  Hodge                      203 
V.  Le  filer             606,  607 
V.  Parker                     392 
United  States  Bank  v.  Goddard        386 
Upham  V.  Prince                                 113 


TABLE   OF   CASES   CITED. 


Ixi 


Uther  V.  Rich 
Utica  Ins.  Co. 


V.  Toledo 


I'Adi: 
G13 


200, 


Valette  v.  IVIason 
Valk  V.  Siniinons 
Vallance  v.  Siddel 
Vallett  V.  Tarker 
Vaiiaukt-n  v.  llornbeck 
Van  Duzer  17.  Howe  (rj, 

Van  Kaiigh  i\  Van  Arsdale 
Van  Vc'chten  r.  Pruyn 
Van  Wart  v.  WooUey    3U,  31 

Veazie  Bank  r.  Wynn 
Vere  v.  Lewis 
Vidal  V.  Thonipson 
Vincent  v.  lloiloik 
Vinton  V.  King 
Violctt  V.  Patton 
Vore  V.  Hurst 


207, 
441, 
173, 
233, 

215, 

39G, 

,32, 

38, 


131, 


271 
443 
174 
235 
673 
G02 
711 
410 
34, 
213 
490 
Gl 
308 
111 
214 
245 
139 


Waekerbatli,  Ex  jiarte  87 

Wade  V.  Buekner,  Stanton,  &  Co.   55G 

V.  New  Orleans  Canal  674 

V.  Wade  680 

V.  Withington  668 

Wain  V.  Bailey  297 

Wainwright  v.  Webster  636 

Wait  V.  Brewster  642 

Wakfield  v.  Crossman  539 

Walker  v.  Bank  of  The  State  of 

New  York  39,  329 

V.  Geisse  200,  207 

V.  Laverty  475 

V.  Rogers  441,  442,  476 

r.  Stetson  377,  413,  542 

Wall  V.  Bry  472 

Wallace  v.  Agry  •  715 

V.  M"(  onnell  109 

r.  Tellfiiir  37 

Walmsley  r.  Child  689,  691,  692 

Walter  v.  Kirk  •192 

Walton  V.  Mascall  255 

V.  Shelley   505,  509,  511,  513, 

517,  520,  622,  523, 

527 

Walwyn  v.  St.  Quintin     351,  432,  564 


Ward  r.  Allen 
V.  Evans 
V.  Lewis 
?■.  Berrin 
Warden  r.  Howell 
AVare  v.  Street 
Warner  v.  Lee 
Warren  r.  Gihnan 
V.  Lynch 


62,  662 
6:!2 
607 
404 
268 
636 
210 
219,  376,  381,  541 
171,  188 


i: 


Warren  v.  Merry 
Warrington  r.  Furbor 
Wasiiington  Bank  v.  Krum 
Wasiiington  Co.  Mut.  Ins.  Co 

Miller 
Waterbiiry  v.  Sinclair 
WatervHet  Bank  v.  AVhite 
Watkins  v.  Crouch 


I'AOE 

522,  523,  524 
291 
212 


13 
111,  139 
479 
22.  109, 
328,  462,  463 
200 
262 
124,  143 
276 
478 
719 
509 
485,  486 
124 
37 
616 
24,  109 
479 
Hathaway 


Watson  V.  Cabot  Bank 
V.  Flanagan  • 
V.  Hurt 
Way  V.  Lamb 

V.  Richardson 
Wavman  v.  Bend 
Webb  r.  Danforth 

V.  Fairmaner 
Webster  v.  Cobb 

r.  De  Tastet 
r.  Kirk 
Weed  V.  Van  Houten 
Welch  r.  Lindo 

Welland  Canal  Co.  r.  Hathaway     745 

Wells  V.  Jackson  139 

Wentworth  v.  Wentworth  635 

West  V.  Brown  328 

Westfall  V.  Braley  636 

Wetlierwax  v.  Paine  131 

Whak-y  v.  Houston  442 

Wheaton  v.  AVihnarth  363 

Wheeler  v.  Field      330,  399,  449,  452 

V.  Guild  218,  252,  331 

V.  Johnson  479 

V.  Slocuui  255 

Whistler  v.  Foster  210,«213,  339 

Whitaker  v.  Brown  261 

V.  Sumner  744 

White  V.  Hopkins  592 

v.  Howland  118,  128 

V.  Kibling  260,  338 

V.  Richmond  7 

V.  Springfield  Bank  256 

Whitefield  r.  Fausset  692 

Whitehead  c.  Walker  276 

Whitfield  V.  Savage  425 

Whitlock  ?;.  McKechnie  161 

Whittaker  v.  Ednmnds  258 

Whittier  v.  Graiiam  316,  317 

Wiiitwell  V.  Johnson  296,  39^ 

WilKn  V.  Roberts  271 

Wiggin  r.  Bush  250 

Wiggle  V.  Thomason  492 

Wild  V.  The  Bank  of  Fassama- 

quoddy  747 

«.  Rennards  20 

Wildes  V.  Savage  50,  57 

Wilkes  r.  Jacks  443 

Wilkins  r.  Jadis  311,312 


Ixii 


TABLE   OF   CASES   CITED. 


Wilkinson  v.  Adam 

V.  Johnson 
V.  Lutwidge 
Willcts  V.  Plifjenix  Bank 
Williams  v.  Brashear 
V.  Cheney 
V.  Germaine 
■V.  Little 
V.  Smith 


374 
63,  645,  605 
G58 
747 
441,  442 
235 


200,  203,  207 
200,  271 
United  States  Bank      378 


Wade 
Walbridge 
Winans 
I'.  Johnson 


Williamson 
Wilson,  Ex  parte 

V.  Clements 

V.  Holmes 

».  Lazier 

V.  Senier 

V.  Swabey 

V.  Williams 

V.  Williman 
Windham  v.  Wither 
Wintermute  v.  Post 
Winton  v.  Saidler 
Wiseman  v.  Lyman 
Wolcottu.  Van  Santvoord 

Wolfe  V.  Jewett 
WoUenweber  v.  Ketterlinus 
Wood  V.  Brown 

V.  Corl 
Woodcock  V.  Houldsworth 
Woodford  v.  Whiteley 
Woodman  v.  Churchill 


715 

622,  734 
42,  51 
111 
664 
50 
260 
715 
463 
384 
734 
489 
567 
108 
622 
642 
21,  22, 
109 
451 

441,  442 
476 
308 
399 
679 

213,  215 


PAGE 

Woodruff  V.  Merchants'  Bank         308, 

718,  720 

Woods  V.  Dean  476,  542 

V.  Neeld  409 

V.  Price  441,  476 

r.  Pugh  87,  88 

V.  Tyson  479 

Woodworth  v.  Huntoon  262 

Worcester  Bank  v.    Dorchester 

and  U.  Bank   257 
V.  Welh 
Wormley  v.  Lowry 
Worrall  v.  Gheen 
V.  Munn 
Wright  V.  Austin 
V.  Dannah 
V.  Maidstone 
V.  ]\Iorse 
V.  Shawcross 
V.  The  Shelby,  &c 
Wyat  V.  Campbell 
Wynn  v.  Alden 


715 
201 
648,  665 
607 
616 
613 
679 
156 
394 
606 
233 
375 


Co. 


Yallop  V.  Ebers  691 

Yeaton  v.  The  Bank  of  Alexan- 
dria 303 
York  County  Mut.  Fire  Ins.  Co. 


V.  Brooks 
Young  V.  Adams 

V.  Bryan 
V.  Grote 
Youngs  V.  Lee 
Youngue  v.  Ruflf 


604 

618,  619,  630,  635, 

651 

356 

62,  648,  665,  668 

255,  363 

441 


LEADING    AND    SELECT    CASES. 


LEADING  AND  SELECT  CASES 

UPON  BILLS  OF  EXCHANGE  AND  PROMISSORY  NOTES. 


FORM    AND    KEQUISITES. 


Thompson  v.  Sloan  et  al. 

(23  Wendell,  71.     Supreme  Court  of  New  York,  January,  1840.) 

Payable  in  Canada  money.  —  A  written  promise,  executed  in  New  York,  to  pay  in  that 

State  a  certain  sum  in  Canada  money  is  not  a  negotiable  note  ;  but  if  negotiable, 
parol  evidence  is  admissible  to  show  the  meaning  of  the  term  "  Canada  money." 

The  note  in  this  case  was  dated  at  Buffalo,  New  York,  signed 
by  James  Sloan  and  John  Wilkinson,  payable  to  the  order  of  John- 
son, Hodge,  &  Co.,  in  Canada  money,  at  the  Commercial  Bank  in 
Buffalo,  and  indorsed  by  the  payees.  The  makers  and  indorsers 
were  sued  jointly. 

The  questions  in  controversy  were,  first,  whether  the  paper  were 
a  negotiable  note  ;  and  secondly,  whether  parol  evidence  could  be 
received  to  explain  the  meaning  of  the  term  "  Canada  money,"  as 
understood  in  Buffalo. 

CowEN,  J.  A  promissory  note  must,  in  order  to  come  within  the 
statute,  like  a  bill  of  exchange,  be  payable  in  money  only,  in  current 
specie  ;  Bayl.  on  Bills  [1],  10  Am.  ed.  of  183G  ;  Ex  parte  Imeson, 
2  Rose,  225  ;  or  at  least  in  what  we  can  judicially  notice  as  equiva- 
lent to  money.  Accordingly,  a  note  payable  in  bills  of  country 
banks,  Jones  v.  Fales,  4  Mass.  245,  in  Pennsylvania  or  New 
York  paper  currency,  current  in  Pennsylvania  or  New  York,  Lei- 
ber  V.  Goodrich,  5  Cowen,  186,  in  notes  of  the  chartered  banks  of 
Pennsylvania,  though  the  note  was  made  and  payable  in  the  State 

1 


2  FORM   AND  REQUISITES. 

of  Pennsylvania,  M'Cormick  v.  Trotter,  10  Serg.  &  Kawle,  94 ;  see 
Cook  V.  Satterlec,  G  Cowen,  108  [  joos^,  8]  ;  in  paper  medium,  Lange 
t;-|:ohne,  1  M'Cord,  115  ;  see  M'Clarin  v.  Nesbit,  2  Nott  &  M'Cord, 
519,  or  in  cash  or  Bank  of  England  notes,  Ex  parte  Imeson,  before 
cited,  2  Buck,  1  S.  P.,  has  been  held  without  the  statute. 

The  farthest  we  have  gone  is,  to  say  that  a  note  drawn  and  pay- 
able here,  in  New  York  bills  or  specie,  Keith  v.  Jones,  9  Johns. 
120,  or  in  bank-notes  current  in  the  city  of  New  York,  Judah  v. 
Harris,  19  Johns.  144,  is  negotiable.  In  both  cases  the  Court 
went  on  the  ground  of  a  right  to  take  judicial  notice  that  New 
York  bills,  and  especially  bank-notes  current  in  the  city  of  New 
York,  were  customarily  considered  and  treated  as  equivalent  to 
specie.  And,  in  the  last  case,  they  said,  though  the  defendant 
might  have  a  right  to  pay  with  foreign  bills  current  in  the  city,  the 
note  was  still  to  be  regarded  as  payable  in  current  money. 

Admitting  that  the  note  in  question  imports  an  obligation  to  pay 
in  gold  and  silver,  current  in  Canada,  I  do  not  see  on  what  prin- 
ciple we  can  pronounce  it  to  be  payable  in  money,  within  the  mean- 
ing of  the  rule.  It  is  not  pretended  that  coins  current  in  Canada 
are,  therefore,  so  in  this  State.  As  gold  and  silver  they  might 
readily  be  received  :  and  so  might  the  coin  of  any  foreign  country, 
Germany  or  Russia,  for  instance ;  but  the  creditor  might,  and  in 
many  cases  doubtless  would,  refuse  to  receive  them,  because  igno- 
rant of  their  value.  In  law,  they  are  all  collateral  commodities, 
like  ingots  or  diamonds,  which,  though  they  might  be  received,  and 
be  in  fact  equivalent  to  money,  are  yet  but  goods  and  chattels.  A 
note  payable  in  either  would,  therefore,  be  no  more  negotiable  than 
if  it  were  payable  in  cattle  or  other  specific  articles.  The  fact  of 
Canada  coins  being  current  here  is  not,  at  any  rate,  so  notorious 
that  we  can  judicially  notice  them  as  a  universally  customary 
medium  of  payment  in  this  State  ;  and  if  not,  they  are  no  more  a 
part  of  our  currency  than  Pennsylvania  bank-bills.  Leiber  v. 
Goodrich,  before  cited.  Nor  do  I  perceive  in  the  case  any  proof, 
or  offer  to  prove,  that  such  coins  were  universal  currency. 

This  view  of  the  case  is  not  incompatible  with  a  bill  or  note  pay- 
able in  money  of  a  foreign  denomination,  or  any  other  denomination, 
being  negotiable,  for  it  can  be  paid  in  our  own  coin  of  equiva- 
lent value,  to  which  it  is  always  reduced  by  a  recovery.  Chit,  on 
Bills,  615,  616,  Am.  ed.  of  1839  ;  Deberry  v.  Darnell,  5  Yerg.  451. 
A  note  payable  in  pounds,  shillings,  and  pence,  made  in  any  coun- 


THOMPSON   V.    SLOAN.  3 

try,  is  but  another  mode  of  expressing  the  amount  in  dollars  and 
cents,  and  is  so  understood  judicially.  The  course,  therefore,  in 
an  action  on  such  an  instrument  is  to  aver  and  prove  the  valuo»of 
the  sum  expressed,  in  our  own  tenderable  coin.  It  is  payable  in 
no  other,  vide  Bayl.  on  Bills,  23,  Am.  ed.  of  18-30,  and  the  cases 
there  cited,  whereas  on  the  note  in  question,  Canada  money,  a 
specific  article,  would  be  a  lawful  tender ;  Canada  coppers,  for  aught 
I  see,  and,  under  our  own  decisions,  bank-bills  commonly  current 
in  Canada,  would  also  be  tenderable. 

Nor  is  it  necessary  to  deny,  that  had  this  note  been  made,  in 
dorsed,  and  payable  in  Canada,  it  would  have  been  negotiable.  It 
would  then  on  its  face  have  been  payable  in  the  current  coin  of  the 
country  where  it  is  made.  The  objection  is,  that  the  note  was 
made,  indorsed,  and  payable  here,  in  a  foreign  commodity,  which 
the  payee  was  entitled  to  demand  specifically ;  and  to  reject  gold 
and  silver  current  in  the  United  States.  It  is  of  course  the  same 
thing  under  the  extrinsic  evidence  offered  by  the  plaintiff,  and  re- 
ceived by  the  judge.  The  Canadian  statute  merely  proved  what 
coins  were  current  as  Canada  money ;  which  could  not  be  recog- 
nized as  the  money  of  this  country.  In  the  light  of  that  proof,  the 
note  must  be  read  as  necessarily  payable  in  Canada  money,  current 
by  law  in  that  province.  It  did  not  improve  the  case,  without  fol- 
lowing it  with  some  statute  making  that  money,  as  such,  current 
here ;  or,  at  least,  showing  that  it  was,  in  fact,  so  notoriously  cur- 
rent among  us  that  we  should  be  entitled  to  take  judicial  notice  of 
the  fact.  The  latter  is  the  utmost,  that,  by  our  cases,  the  plaintiff 
could  claim ;  though  we  have  gone  farther  than  the  cases  decided 
in  any  other  State  or  country,  so  far  as  they  were  cited  on  the 
argument,  or  have  come  under  my  observation,  except  a  case  in  Ten- 
nessee, Deberry  v.  Darnell,  5  Yerg.  451.  The  instrument  was  pay- 
able in  North  Carolina  notes,  yet  held  negotiable.  In  M'Cormick 
V.  Trotter,  I  fear  we  were  somewhat  justly  criticised  for  the  high 
ground  on  which  we  had  placed  all  our  State  bills  in  Keith  v.  Jones. 
At  any  rate,  Mr.  Justice  Diuicdti  very  truly  reminded  us  that  New 
York  State  bills  had  depreciated  in  common  with  those  of  Pennsyl- 
vania. A  remark,  which  he  made  as  to  the  note  in  that  case, 
which  was  payable  in  Pennsylvania  bills,  would,  I  apprehend,  be 
nearly  applicable  to  our  own  at  some  stages  of  our  currency ;  viz., 
that  "  it  was  payable  in  more  than  forty  kinds  of  paper  of  different 
value." 


4  FORM    AND   REQUISITES. 

The  evidence  offered,  that  the  makers  were  desirous  to  draw  the 
note  payahle  in  Canada  hills,  which  the  plaintiff  refused,  tended  to 
pri)ve  no  more  than  that  the  note  was  intended  to  be  payable  in 
Canadian  current  coin.  It  was,  therefore,  as  we  have  seen,  irrele- 
vant, besides  being,  as  I  think,  inadmissible,  because  it  was  direct 
independent  evidence  of  intention,  as  explained  by  the  parties  at 
the  very  time  of  drawing  the  note.  Every  thing  of  this  kind  which 
the  parties  declared  was  merged  by  the  written  agreement.  The 
legal  effect  of  a  written  agreement  cannot  be  controlled  by  this  kind 
of  evidence.  Creery  v.  Holly,  14  Wend.  26.  Nor,  in  general, 
can  a  patent  ambiguity  be  obviated  by  it.  See  Cowen  &  Hill's 
Notes  to  1  Phil.  Ev.  1384,  1388,  et  seq.  and  cases  there  cited.  I 
speak  of  the  confessions  or  declarations  of  the  parties,  which  go  to 
show  what  they  meant  by  the  words  used  in  the  writing.  I  do  not 
deny  that  in  such  a  case,  a  resort  may  be  had  to  collateral  circum- 
stances. Per  Bayley,  J.  in  Smith  v.  Doe,  ex  dem.  Earl  of  Jersey, 
2  Brod.  &  Bing.  558  ;  1  Phil.  Ev.  Cowen  &  Hill's  ed.  546,  note  957; 
p.  1399,  et  seq.;  Peisch  v.  Dickson,  1  Mason,  9,  11.  The  cases  of 
Cole  V.  Wendel,  8  Johns.  116,  and  Ely  v.  Adams,  19  id.  313, 
were  mentioned  to  us  on  the  argument.  I  much  doubt  whether  the 
latter  case  can  be  understood  as  conflicting  at  all  with  the  distinc- 
tion I  have  mentioned.  In  the  former,  it  was  doubtful  which  of 
two  subjects  mentioned  in  the  writing,  the  parties  intended  to  refer 
to,  and  the  judge  at  the  circuit,  received  evidence  of  the  form  in 
which  the  plaintiff  desired  the  contract  should  be  written,  and  to 
which  the  defendant  assented.  It  was  written  in  a  different  form, 
which  made  it  ambiguous  on  its  face.  Yet  the  verdict  was  sustained 
on  motion  for  a  new  trial,  and  an  opinion  expressed  that  the  evi- 
dence was  proper.  The  ambiguity,  though  patent,  lay  between  two 
objects  only,  and  the  decision  may  be  sustained  by  a  class  of  authori- 
ties which  make  such  cases  an  exception.  Vide  Cowen  &  Hill's 
Notes  to  1  Phil.  1388,  1392.  The  ambiguity  was  not,  in  its  own 
nature,  unexplainable ;  and  the  only  difficulty  is  on  the  kind  of 
proof.  There  was,  however,  as  the  Court  remarked,  enough  ap- 
pearing on  the  face  of  the  paper  itself  to  remove  the  doubt.  The 
case  is  sustainable  on  that  ground,  even  if  the  contemporaneous 
declarations  were  improperly  received. 

But  in  the  case  at  bar,  extrinsic  evidence  of  the  kind  offered  by 
the  defendants  was,  I  think,  admissible  to  prove  that  Canada  money 
meant,  in  general  mercantile  understanding  at  Buffalo  and  in  its 


THOMPSON   V.    SLOAN.  6 

vicinity,  Canadian  bank-bills,  and  not  specie,  whether  we  regard 
tlie  words  used  in  the  note  as  jn-ima  facie  importing  current  Cana- 
dian coin,  or  as  ambiguous  on  their  Face  ;  in  otlicr  words,  leaving  it 
doubtful  whether  they  meant  current  Canadian  coin  or  bank-notes. 
Such  evidence  was  not  necessary,  if  what  I  have  said  as  to  the  legal 
ellect  of  the  words  be  correct,  and  was  therefore  irrelevant,  and,  in 
that  view,  inadmissiljle.  But  suppose  I  am  mistaken  in  saying  that 
this  note  was  not  negotiable  as  being  payaljle  in  the  legal  money  of 
the  province,  then  it  was  competent  to  prove  the  customary  mean- 
ing of  the  words.  The  cases  are  quite  numerous,  that  though  tiie 
meaning  of  the  word  be  perfectly  well  settled  in  general  language, 
yet  if  a  secondary  meaning  has  been  affixed  to  it  in  commercial 
usage,  in  a  certain  region  of  country,  or  among  certain  classes 
of  men,  this  may  be  shown ;  and  when  the  proof  is  clear,  the  use 
of  the  word  in  that  region,  or  among  those  men,  carries  into  the 
contract  the  signification  thus  established.  The  general  rule  is 
clear,  and  hardly  calls  for  a  quotation  of  books,  vide  Cowen  &  Hill's 
Notes  to  1  Phil.  Ev.  1409,  1412,  and  the  cases  there  cited  ;  and  if 
a  word  of  known  general  signification  may  be  thus  qualified,  it  is 
difficult  to  perceive  how,  without  a  violation  of  the  very  principle 
on  which  this  is  allowed,  we  can  refuse  the  same  sort  of  testimony 
to  clear  up  a  doubtful  word.  The  latter  would  seem  to  be  a  less 
violent  exception  to  the  rule,  which  requires  that  language  shall 
have  an  effect  according  to  its  general  import. 

It  is  supposed  that  a  ])atent  ambiguity  is  more  stubborn  than  a 
direct  and  clear  expression.  This  conclusion  is  sought  to  be  de- 
rived from  the  famous  rule  of  Lord  Bacon,  which  declares  patent 
ambiguities  unexplainable.  I  had  occasion  in  a  late  case,  Fish  v. 
Hubbard's  Adin'rs,  21  Wend.  651,  to  show  that  the  rule  in  its 
general  sense  had  seldom,  if  ever,  been  acted  upon,  and  never 
should  be  so  applied  as  to  preclude  collateral  circumstances  in  ex- 
planation of  doubtful  words  or  phrases,  which, when  explained,  are 
found  to  be  significant  and  operative  of  themselves.  This  was  also 
sufficiently  shown  in  Colpoys  v.  Colpoys,  Jacob,  451.  Usage  is 
one  of  the  most  common  circumstances  receivable  for  the  purpose 
of  such  explanation.  It  is  from  this  that  we  derive  our  general 
knowledge  of  language,  which  knowledge  cannot  be  made  the  only 
test,  without  assuming  judges  and  jurors  to  be  familiar  with  words 
and  phrases  applicable  to  every  employment  of  life  in  different 
sections  of  the  country,  and  indeed  in  foreign  countries. 


6  FORM   AND   REQUISITES. 

It  is  obviously  as  necessary  to  ascertain  the  provincial  meaning 
of  words,  through  witnesses  who  are  acquainted  with  their  signifi- 
cation, as  to  translate  a  foreign  language  through  a  sworn  interpre- 
ter. Abbreviations  of  words  are  often  used,  generally  of  known 
import ;  but  sometimes  entirely  ambiguous,  not  to  say  absohitely 
obscure.  Such  was  the  word  mod  in  the  will  of  NoUekens,  the 
sculptor.  But  its  meaning  was  collected  through  the  medium  of 
witnesses  skilled  in  the  trade  of  the  testator,  and  from  proof  of  the 
surrounding  circumstances.  In  that  case,  too,  direct  evidence  of 
intention,  viz.,  the  declarations  of  the  testator  of  what  he  intended 
to  bequeath,  and  to  whom,  made  by  him  to  his  female  attendant  in 
his  sickness,  was  overruled.  Goblet  v.  Beechey,  3  Sim.  24,  more 
fully  reported  in  Wigr.  on  Bxtr.  Ev.  139,  et  seq. ;  and  see  Hite  v. 
The  State,  9  Yerg.  357,  381. 

The  motion  to  set  aside  the  nonsuit,  and  for  a  new  trial,  is 
denied. 

The  New  York  statute  as  to  negotiable  notes  is  as  follows :  ' '  All  jiotes 
in  writing,  made  and  signed  by  any  person  whereby  he  shall  promise  to  pay  to 
any  other  person,  or  his  order,  or  to  the  order  of  any  other  person,  or  unto 
the  bearer,  any  sum  of  money  therein  mentioned,  shall  be  due  and  payable  as 
therein  expressed ;  and  shall  have  the  same  effect,  and  be  negotiable  in  like  man- 
ner as  inland  bills  of  exchange,  according  to  the  custom  of  merchants."  1  Rev. 
L.  of  1813,  151 ;  1  Rev.  St.  768,  §  1.  This  is  substantially  the  statute  of  Anne, 
\  which  has  been  generally  adopted  in  this  country. '  Under  this  statute  it  is 
held  that  negotiability,  as  between  the  original  parties,  is  not  necessary  to  a 
promissory  note,  Burchell  v.  Slocock,  2  Ld.  Raym.  1645 ;  Smith  v.  Kendall,  6 
Term,  123 ;  Kimball  v.  Huntington,  10  Wend.  675 ;  Middlesex,  &c.  v.  Davis,  3 
Met.  133.  But  see  Bristol  v.  Warner,  1-9  Conn.  7,  for  the  rule  in  Connecticut. 
And  negotiability  is  not  essential  to  bills  of  exchange.  Coursin  v.  Ledlie,  31 
Penn.  State,  506.  See  also  Gerard  v.  Le  Coste,  1  Dallas,  194;  1  American 
Leading  Cases,  302,  and  note ;  Hoyt  v.  Lynch,  2  Sandf.  328. 

A  check  drawn  in  New  York,  payable  in  Mississippi,  in  current  bank-notes, 
is  not  negotiable.     Little  v.  Phoenix  Bank,  7  Hill,  .359,  affirming  2  Hill,  425, 

It  has  generally  been  held,  that  instruments  payable  in  current  bank-notes 
are  not  negotiable,  though  possessing  all  other  requisites  to  negotiability.  Simp- 
son V.  Moulden,  3  Cold.  429;  McDowell  v.  Keller,  4  Cold.  258;  Gray  v.  Dona- 
hoe,  4  Watts,  400 ;  Hasbrook  v.  Palmer,  2  McLean,  10 ;  Ogden  v.  Slade,  1  Texas, 
13  ;  Irvine  v.  Lowry,  14  Peters,  293  ;  Collins  v.  Lincoln,  11  Vt.  268  ;  Farwell  v. 
Kennett,  7  Mo.  595  ;  Graham  v.  Adams,  5  Ark.  (Pike)  261.  In  the  last-named 
case  it  was  held  that  a  note  or  bond  payable  "  in  good  current  money  of  the 
State,"  was  payable  in  gold  and  silver.  And  Cockerill  v.  Kirkpatrick,  9  Mo. 
688,  was  to  the  same  effect.  In  Hawkins  v.  Watkins,  5  Ark.  (Pike)  481,  it  was 
held  that  a  draft  payable  "  in  Arkansas  money  of  the  Fayetteville  Branch,'  was 
not  a  bill  of  exchange. 


WORDEN   V.    DODGE.  ♦ 

But  a  different  doctrine  has  been  held  in  the  followinf?  cases :  Swetland  v. 
Creigh,  15  Ohio,  118,  in  which  a  note  payable  "  in  current  Ohio  bank-notes," 
was  held  negotiable.  Read,  J.,  dissenting.  The  same  Judge  dissented  again  in 
White  V.  Richmond,  16  Ohio,  5,  in  which  a  note  payable  "  in  current  funds  of 
the  State  of  Ohio,"  was  held  negotiable ;  Butler  v.  Paine,  8  Minn.  324,  where  it 
was  held  that  an  order  payable  in  "  currency  "  was  payable  in  money. 

Tlie  mere  mention  of  a  particular  fund  in  a  bill  of  exchange  will  not  vitiate 
it,  if  it  was  inserted  only  as  a  direction  to  the  drawee  how  to  reimburse  himself. 
Kelley  ».  Brooklyn,  4  Hill,  263. 

In  Vermont,  a  contract  in  the  form  of  a  promissory  note,  payable  in  specific 
articles,  is  treated  as  a  proniissory  note  for  some  purposes.  Denison  v.  Tyson, 
17  Vt.  549 ;  Dewey  v.  Washburn,  12  Vt.  580;  Brooks  v.  Page,  1  D.  Chip.  840. 

As  in  regard  to  pleading  and  importing  consideration,  but  not  as  to  nego- 
tiability; as  a  note  payable  in  "current  bills"  is  not  negotiable.  Collins  v. 
Lincoln, .  11  Vt.  268.  See  also  Farmers'  Ins.  Co.  v.  Miller,  26  Vt.  77,  as  to 
premium  notes  being  promissory  notes  for  the  full  amount  expressed  therein. 

See  further  upon  the  subject  of  instruments  payable  in  specific  articles,  Jerome 
».  Whitney,  7  Johns.  321 ;  Lawrence  v.  Dougherty,  5  Yerg.  435 ;  Simpson  v. 
Moulden,  3  Cold.  429  ;  Alexander  v.  Oakes,  2  Dev.  &  B.  513 ;  Martin  v.  Chaun- 
try,  2  Stra.  1271;  Dennett  u.  Goodwin,  32  Maine,  44;  Atkinson  v.  Manks,  1 
Cowen,  691 ;  Barnes  v.  Gorman,  9  Rich.  Law,  297,  and  other  cases  cited  in 
this  and  the  following  notes. 


WoRDEN  V.  Dodge  et  al. 

(4  Denio,  159.    Supreme  Court  of  New  York,  January,  1847.) 

Payable  out  of  a  particular  fund.  —  An  instrument  by  which  a  party  promises  to  pay  a 
certain  sum  at  a  stated  time  out  of  the  net  proceeds  of  ore  to  be  raised  and  sold 
from  a  certain  ore  bed,  is  not  a  promissory  note,  it  being  payable  upon  a  con- 
tingency. 

Assumpsit  upon  a  written  instrument  in  the  form  of  a  promis- 
sory note,  except  that  it  was  payable  "  out  of  the  net  proceeds 
after  paying  the  costs  and  expenses  of  ore  to  be  raised  and  sold 
from  the  bed  in  the  lot  this  day  conveyed  by  Edward  Maiden  to 
Edwin  Dodge,  which  bed  is  to  be  opened,  and  the  ore  disposed  of 
as  soon  as  conveniently  may  be." 

Beardsley,  J.  The  nonsuit  was  proper.  A  promissory  note 
must  be  payable  absolutely,  and  not  upon  any  contingency  as  to 
time  or  event.  3  Kent,  5th  ed.  p.  74  ;  Smith  on  Merc.  Law,  113, 
116 ;  Story  on  Prom.  Notes,  §§  1,  22-26  ;  id.  on  Bills  of  Exch.  §§ 
46,  47  ;  Chit,  on  Bills,  10th  Amer.  ed.  pp.  132-139. 


8  FORM   AND   REQUISITES. 

This  was  not  such  an  engagement,  for  although  the  promise  was 
to  make  payments  at  certain  specified  times,  the  payments  were  to 
be  made  "  out  of  the  net  proceeds  "  "  of  ore  to  be  raised  and 
sold  "  from  a  certain  ore  bed.  Here  was  a  contingency  ;  the  fund 
might  turn  out  to  be  inadequate,  in  which  case  there  would  be  no 
obligation  to  pay  at  any  time.  It  was  not  a  promise  to  pay  "  abso- 
lutely and  at  all  events,"  as  a  promissory  note  always  is. 

New  trial  denied. 

That  an  order  or  promise  to  pay  out  of  a  particular  fund  is  not  a  bill 
of  exchange  or  promissory  note  see  Morton  v.  Naylor,  1  Hill,  583 ;  Josselyn 
V.  Lacier,  10  Mod.  294 ;  Gallery  v.  Prindle,  14  Barb.  186 ;  Jenney  v.  Herle, 
2  Ld.  Raym.  1361;  Dawkes  v.  De  Lorane,  3  Wilson,  207;  Bayerque  v.  San 
Francisco,  1  McAU.  175.  If,  however,  the  mention  of  a  particular  fund  was 
inserted  merely  as  a  direction  to  the  drawee  how  to  reimburse  himself,  the  in- 
strument will  not  be  vitiated  as  a  bill  of  exchange.  Kelley  v.  Brooklyn,  4 
Hill,  263. 

Acceptance  of  an  order  to  pay  a  certain  sum  out  of  the  fii'st  money  of  the 
drawer,  received  by  the  drawee  from  a  particular  source,  will  bind  the  acceptor 
to  pay  as  the  funds  come  to  the  hand  of  the  drawee.  Perry  v.  Harrington,  2 
Met.  368  ;  and  note  to  Newhall  v.  Clark,  post. 

See,  also,  Cota  v.  Buck,  7  Met.  588,  cited  at  length  in  note  to  Kelley  v.  H&m- 
mgv!&y,  post,  11. 


Cook  v.   Satterlee  and  Satterlee. 

(6  Cowen,  108.     Supreme  Court  of  New  York,  August,  1826.) 

Additional  directions.  —  An  order  directed  to  the  defendants  to  pay  to  the  plaintiff,  or 
bearer,  ninety  days  after  date,  §400 ;  "  and  take  up  their  note  given  to  William 
and  Henry  B.  Cook  for  that  amount,"  is  not  a  bill  of  exchange,  though  accepted 
by  the  defendants. 

Assumpsit  against  the  defendants,  as  acceptors  of  a  bill  of  ex- 
change, requesting  them  to  pay  the  plaintiff  8400  ninety  days 
after  date  ;  "  and  to  take  up  their  note  given  to  William  and 
Henry  B.  Cook  for  that  amount,  dated  April  19,  1825." 

The  question  in  the  case  was  whether  the  instrument  were  a  bill 
of  exchange. 

Savage,  C.  J.  The  essential  qualities  of  a  bill  or  note,  are  : 
1.  That  it  be  payable  at  all  events ;  not  dependent  on  any  con- 
tingency, nor  payable  -out  of   a  particular  fund ;    and    2.    That 


COOK   V.    SATTERLEE.  9 

it  be  for  the  payment  of  money  only,  and  not  for  the  per- 
formance of  some  other  act,  or  in  the  alternative.  (Chit,  on 
Bills,  55). 

Is  not  the  instrument  declared  on  payable  upon  a  contingency  ? 
From  the  face  of  the  instrument  itself,  it  appears  that  the  drawers 
had,  on  the  IDtli  of  Aj)ril  preceding  its  date,  given  their  note  for 
i460,  to  William  and  H.  B.  Cook  ;  and  the  object  of  drawing  the 
instrument  in  question  was  to  take  up  that  note.  The  engage- 
ment of  the  acceptors  must  be  construed  according  to  what  is 
required  of  them  by  the  drawers.  The  note  was  supposed  to  be 
in  possession  of  the  payee  or  holder  of  the  bill,  and  the  payment 
of  the  money  and  taking  up  the  note  of  the  drawers,  must  be  si- 
multaneous acts.  The  acceptors  could  not  take  up  the  note  till  it 
was  presented  ;  nor  were  they  bound  to  pay  the  money  till  the 
plaintiff  was  ready,  and  offered  to  enable  them  to  take  up  the  note. 
It  seems  to  me,  therefore,  that  substantially  this  instrument  is 
payable  upon  a  contingency,  and  is  the  same  as  if  it  had  said, 
"  Pay  W.  C.  8400,  on  his  giving  up  our  note,"  (fee.  Had  such  been 
the  form,  it  would  clearly  not  be  technically  a  bill  of  exchange. 
The  holder,  in  declaring  upon  it,  should  aver  his  readiness  to  de- 
liver up  the  note.  Upon  a  contrary  doctrine,  the  defendants  may 
be  compelled  to  pay  the  bill,  and  the  drawers  to  pay  the  note, 
provided  it  lias  been  transferred  before  due. 

The  defendants  are  entitled  to  judgment,  with  leave  to  amend 
on  the  usual  terms. 

Rule  accordingly. 

To  the  same  effect  on  very  similar  facts,  is  Austin  v.  Burns,  10  Barb.  643. 

So  an  instrument  in  the  usual  form  of  a  promissory  note,  to  which  i.s  added  an 
authority  to  any  attorney  to  enter  judgment  in  favor  of  the  holder  for  the  amount 
of  the  note  with  costs,  coupled  with  a  release  of  errors  and  a  waiver  of  stay  of 
execution  and  of  the  right  of  an  inquisition  and  an  appraisement,  is  not  a  prom- 
issory note,  so  as  to  be  entitled  to  days  of  grace.  Overton  v.  Tyler,  3  Penn. 
State,  34G. 

A  promissory  note,  however,  does  not  lose  its  character  as  such,  by  a  recital  in 
the  instrument  that  bonds  have  been  deposited  as  collateral  security  for  the  note, 
and  that  they  may  be  sold  in  case  of  non-pajaneut.  Arnold  v.  Rock  River,  &c., 
K.  Co.,  5  Duer,  207. 

So  a  Avritten  promise  to  pay  and  to  do  some  other  act  required  by  law,  as  a 
promise  to  pay  the  hire  of  slaves  and  clothe  them,  is  a  negotiable  instrument. 
Baxter  v.  Stewart,  4  Snecd,  213. 

An  instrument  by  which  the  maker  promises  to  pay  with  cui~rent  exchange,  haa 
been  held  a  promissory  note.     Smith  v.  Kendall,  9  Mich.  241 ;  Leggett  v.  Jones, 


10  FORM    AND   REQUISITES. 

10  Wis.  34.  In  the  former  case  Campbell,  J.,  dissenting,  said :  "  In  tbe  case  of 
Pollard  V.  Herrics,  3  Bos.  &  Pul.  335,  the  action  being  between  theimmediate  par- 
ties to  the  note,  no  question  arose  concerning  its  negotiable  character  ;  and  there  is 
no  English  case  that  I  am  aware  of,  which  has  given  any  countenance  to  innova- 
tion on  tliis  subject.  So  fir  as  any  practice  has  existed  in  this  State,  in  relation 
to  notes  payable  with  exchange,  I  believe  it  has  not  been  in  favor  of  their  nego- 
tiability. The  question  has  been  raised  several  times  in  the  Federal  Court  with- 
in my  own  experience,  and  every  case  I  have  known  has  held  them  not  to  possess 
that  character."  The  cases  refen-ed  to  by  Judge  Campbell  do  not  seem  to  have 
been  reported.  Grutacap  v.  WouUouise,  2  McLean,  581,  the  only  Michigan 
case  bearing  on  the  subject  in  the  Federal  Court,  was  an  action  on  a  note  paya- 
ble with  exchange.  But  the  question  was  not  raised  whether  this  vitiated  it  as  a 
promissory  note ;  the  question  was  whether  exchange  could  be  recovered,  and 
it  was  held  that  it  could  be.     See  also  Price  v.  Teal,  4  McLean,  201. 

If  the  instrument  recite  that  the  payee  is  to  receive  a  certain  sum  less  than  the 
principal  sum  named,  in  case  the  paper  is  paid  on  an  earlier  day  than  that  named, 
it  is  not  a  promissory  note.     Fralick  v.  Norton,  2  Mich.  130. 

A  written  promise  to  pay  S.,  or  order,  $1000,  or,  upon  surrender  of  "this 
note,"  to  issue  stock  for  the  same,  is  held  a  promissory  note.  Hodges  v.  Shuler, 
24  Barb.  68.  It  was  held  in  this  case,  that,  as  it  was  optional  with  the  holder  to  take 
the  stock,  there  was  no  condition  and  no  uncertainty  in  the  promise  to  pay  money. 
Another  reason  is  stated,  that,  as  the  instrument  purported  on  its  face  to  be  ne- 
gotiable, being  payable  "  to  order,"  and  using  the  expression  "this  note,"  the 
payee  and  indorser,  who  was  the  defendant,  was  estopped  to  deny  the  negotia- 
bility of  the  paper. 

In  Leonard  v.  Mason,  1  Wend.  522,  the  plaintiff  held  a  promissory  note  against 
one  Leonard,  underneath  which  was  written  an  order  in  these  words :  ' '  Levi 
Mason,  Esq.,  please  pay  the  above  note,  and  hold  it  against  me  in  our  settle- 
ment. N.  Leonard."  A  parol  acceptance  was  proved,  and  the  Court  held  the 
order  a  bill  of  exchange. 

So  an  order  drawn  underneath  an  account  directing  the  drawee  to  pay  the 
amount  of  the  same,  is  a  bill  of  exchange,  though  not  negotiable.  Hoyt  v. 
Lynch,  2  Sandf.  328. 

Nor  will  it  vitiate  the  instrument  as  a  promissory  note,  that  the  consideration 
for  which  it  was  given  is  stated  in  it.     Beardslee  v.  Horton,  3  Mich.  560. 

But  an  instrument  by  which  a  party  promises  to  pay  a  certain  sum  "  and  also 
all  other  suras  which  may  be  due,"  is  too  indefinite  to  constitute  a  promissory 
note.     Smith  v.  Nightingale,  2  Stark.  375  ;  by  Lord  Ellenborough,  in  1818. 

So  an  instrument  promising  to  pay  to  the  representatives  of  S.,  three  months 
after  his  death,  "  first  deducting  thereout  any  interest  or  money  which  S.  might 
owe  the  maker  on  any  account,"  is  not  a  note  for  the  payment  of  a  certain  sum 
at  all  events.     Barlow  v.  Broadhurst,  4  Moore,  471  (1820). 


KELLEY   V.  HEMMINGWAY.  11 

David  Kelley,  Appellant,  v.  Moses  Hemmingway,  Appellee. 

(l;5  Illinois,  G04.     Supreme  Court,  June,  18^2.) 

Ca-tatnti/  as  to  time  of  jtai/ineiit.  —  A  writing  promising  to  pay  a  certain  sum  when  K. 
shall  arrive  at  age,  is  not  a  promissory  note,  being  payable  upon  a  contingency 
which  may  never  happen  ;  and  it  does  not  alter  the  case  that  K.  actually  lived  to 
attain  his  majority. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Treat,  C.  J.  This  was  an  action  brought  by  Hemmingway 
against  Kelley  before  a  justice  of  the  peace,  and  taken  by  appeal  to 
the  Circuit  Court.  On  the  trial  in  the  latter  Court,  the  plaintiff 
offered  in  evidence  an  instrument  in  these  words  :  — 

"Castleton,  April  27th,  184-1. 

"  Due  Henry  D.  Kelley,  fifty- three  dollars  when  he  is  twenty-one 
years  old,  with  interest.  David  Kelley." 

On  tlie  back  of  which  was  this  indorsement :  — 

"  RocKTOX,  May  the  21st,  18-49. 

"  Signed  the  within,  payable  to  Moses  Hemmingway. 

Henry  Kelley." 

The  plaintiff  proved  that  the  payee  became  of  age  in  August, 
1849.  The  defendant  objected  to  the  introduction  of  the  instru- 
ment, because  it  was  not  negotiable,  but  the  Court  admitted  it  in 
evidence,  and  rendered  judgment  for  the  plaintiff. 

Our  statute  makes  promissory  notes  assignable  by  indorsement 
in  writing,  so  as  absolutely  to  vest  the  legal  interest  in  the  assignee. 
"Was  the  instrument  in  question  a  promissory  note  ?  To  constitute 
a  promissory  note,  the  money  must  be  certainly  payable,  not  de- 
pendent on  any  contingency,  eitlier  as  to  event,  or  the  fund  out  of 
which  payment  is  to  be  made,  or  the  parties  by  or  to  whom  pay- 
ment is  to  be  made.  If  the  terms  of  an  instrument  leave  it  un- 
certain whether  the  money  will  ever  become  payable,  it  cannot  bo 
considered  as  a  promissory  note.  Chitty  on  Bills,  134.  Thus,  a 
promise  in  writing  to  pay  a  sum  of  money  when  a  particular  per- 
son shall  be  married,  is  not  a  promissory  note,  because  it  is  not 


12  FORM    AND   REQUISITES. 

certain  that  he  will  ever  be  married.  Pearson  v.  Garret,  4  Mod. 
242  ;  Bcardsley  v.  Baldwin,  2  Strange,  1151.  So  of  a  promise  to 
pay  when  a  particular  ship  shall  return  from  sea,  for  it  is  not  cer- 
tain that  she  will  ever  return.  Palmer  v.  Pratt,  2  Bing.  185 ; 
Coolidge  V.  Ruggles,  15  Mass.  387.  In  all  such  cases,  the  promise 
is  to  pay  on  a  contingency  that  may  never  happen.  But  if  the 
event  on  which  the  money  is  to  become  payable  must  inevitably 
take  place,  it  is  a  matter  of  no  importance  how  long  the  payment 
may  be  suspended.  A  promise  to  pay  a  sum  of  money  on  the  death 
of  a  particular  individual,  is  a  good  promissory  note,  for  the  event 
on  which  the  payment  is  made  to  depend  will  certainly  transpire. 
Colelian  v.  Cooke,  Willes,  393  ;  s.  c,  2  Strange,  1217. 

In  this  case,  the  payment  was  to  be  made  when  the  payee  should 
attain  his  majority,  —  an  event  that  might  or  might  not  take  place. 
The  contingency  might  never  happen,  and  therefore  the  money  was 
not  certainly  and  at  all  events  payable.  The  instrument  lacked  one 
of  the  essential  ingredients  of  a  promissory  note,  and  consequently 
was  not  negotiable  under  the  statute.  'The  fact  that  the  payee 
lived  till  he  was  twenty-one  years  of  age  makes  no  difference.  It 
was  not  a  promissory  note  when  made,  and  it  could  not  become 
such  by  matter  ex  post  facto.  The  plaintiff  has  not  the  legal  title 
to  the  instrument.  If  it  presents  a  cause  of  action  against  the 
maker,  the  suit  must  be  brought  in  the  name  of  the  payee.  Tlie 
case  of  Goss  v.  Nelson  (1  Burr.  226),  is  clearly  distinguishable 
from  the  present.  There,  the  note  was  made  payable  to  an  infant 
when  he  should  arrive  at  age,  and  the  day  when  that  was  to  be  was 
specified.  The  Court  held  the  instrument  to  be  a  good  promissory 
note,  but  expressly  on  the  ground  that  the  money  was  at  all  events 
payable  on  the  day  named,  whether  the  payee  should  live  till  that 
time,  or  die  in  the  interim  ;  and  it  was  distinctly  intimated  that 
the  case  would  be  very  different  had  the  day  not  been  stated  in  the 
note.  It  was  regarded  as  an  absolute  promise  to  pay  on  the  day 
specified,  and  no  effect  was  given  to  the  words  that  the  payee  would 
then  become  of  age. 

The  judgment  must  be  reversed.  Judgment  reversed. 

When  no  time  of  payment  is  fixed,  the  presumption  is  that  the  bill  or 
note  is  payable  on  demand.  Michigan  Ins.  Co.  v.  Leavenworth,  30  Vt.  20. 
In- the  case  of  a  note  payable  "  when  demanded,"  the  statute  of  limitations  be- 
gins to  run  from  the  date  of  the  note ;  and  there  is  no  distinction  between  such 
a  note  and  one  on  demand.     Kingsbury  v.  Butler,  4  Vt.  458. 


KELLEY   V.    IIEMMINGWAY.  13 

"  Against  the  26th  of  December,  1819,  or  when  the  house  John  Mayficld  has 
undertaken  to  build  for  me  is  completed,  I  promise  to  pay,"  &c.  Held,  that  by 
tlic  first  clause  the  particB  iiad  fixed  upon  a  certain  time  of  payment,  constituting 
the  iustrinncnt  a  promissory  note.  Goodloe  v.  Taylor,  3  Hawks,  458.  Sec  also 
Stevens  v.  Blunt,  7  Mass.  240. 

"  For  value  received  I  promise  to  pay  J.  P.,  or  bearer,  $570,  it  being  for 
property  I  purchased  of  hiui  in  value  at  this  date,  as  being  payable  as  soon  as 
can  be  realized  of  the  above  amount  for  the  said  property  I  have  this  day  pur- 
chased of  said  P.,  which  is  to  be  paid  in  the  course  of  the  season  now  coming." 
JleM,  that  tlie  note  was  payal)le  at  all  events,  and  within  a  certain  time.  Cota  v. 
I'uck,  7  Mot.  588.  "  We  tiiink  the  meaning  to  be  this :  that  the  signer,  for 
value  received  in  the  purchase  of  jjroperty,  promised  to  pay  P.  or  bearer  the 
sum  named  as  soon  as  the  termination  of  the  coming  season,  and  sooner,  if  the 
amount  could  be  sooner  realized  out  of  the  fund.  Such  reference  to  the  sale  of 
the  property,  was  not  to  fix  the  fund  from  which  it  was  to  be  paid,  but  the  time 
of  payment.  The  undertaking  was  absolute,  and  did  not  depend  on  the  fund." 
Ibid.     Per  Shaw,  C.  J. 

A  note  payal)le  "  twenty-four  after  date  "  was  held,  in  Conner  v.  Routh,  7 
How.  (Miss.)  176,  not  void  for  uncertainty,  nor  a  note  on  demand,  but  payable 
at  some  time  after  date.  The  note,  with  other  evidence,  was  held  admissible 
to  show  that  the  time  of  payi^ent  was  intended  to  be  twenty-four  months  from 
date. 

In  Ubsdell  v.  Cunningham,  22  Mo.  (1  Jones)  124,  it  was  held  that  the  follow- 
ing were  promissory^  notes  :  "  Due  U.  &  P.  $100,  to  be  paid  over  to  them  as 
soon  as  collected  at  P.,  now  in  the  hands  of  P.,  of  that  place ;  "  and  "  Due  U.  & 
P.  §34.63,  for  goods  pm-chased  of  them  while  at  P.,  to  be  paid  as  soon  as  col- 
lected from  my  accounts  at  P."  There  are,  however,  no  authorities  cited  in  sup- 
port of  the  decision,  and  it  is  very  doubtful  if  any  can  be  found,  though  it  has 
been  held  in  England  that  it  is  suHiciently  certain  that  the  paper  is  made  paya- 
ble on  the  payment  of  money  due  for  wages  on  shipboard  from  the  Government. 
Andiewsr.  Franklin,  1  Stra.  24  ;  livans  i'.  Underwood,  1  Wil.  262.  The  ground 
taken  ceeina  to  have  been  that  the  Government  was  certain  to  pay  at  some  time. 

In  Ellis  V.  Mason,  7  Dowl.  P.  C.  598,  the  following  was  held  a  promissory 
note:  "  John  Mason,  14th  February,  1836,  borrowed  of  Marv  Ann  Mason,  his 
sister,  the  sum  of  £14,  in  cash,  as  per  loan,  in  promise  of  payment  of  which  I 
am  truly  thaiil<^ful  for;  it  shall  never  be  forgoUen  by  me,  John  Mason,  your  af- 
fectionate brother.     £14." 

No  question  wa-  raised  in  this  case  as  to  the  time  of  payment,  and  it  may- 
have  been  tacitly  considered  a  promise  to  pay  on  demand.  It  would  be  diflicult 
to  sustain  the  case  on  any  other  hypothesis. 

So  a  writing  promising  to  pay  "  in  such  manner  and  proportion,  and  at  such 
time  aiul  place,"  as  the  payee  shall  require,  is  a  promissory  note ;  being  payable 
in  instalments,  in  effect  on  demand,  at  the  election  of  the  payee,  (ioshen  and 
M.  Turnpike  v.  Ilurtin,  9  Johns.  217  ;  Washington  Co.  Mut.  Ins.  Co.  r.  Miller, 
26  Vt.  77. 

But  if  the  writing  is  payable  "  by  instalments  for  rent,"  without  further  quali- 
fication, it  has  been  held  not  to  possess  the  requisites  of  a  promissory  note,  in 
not  specifying  a  certain  time  ol  payment.     MoU'at  v.  Edwards,  Car.  &  M.  16. 


14  FORM   AND   REQUISITES. 

If,  in  this  case,  the  time  when  the  instalments  were  payable  had  been  stipulated, 
the  instrument  would  probably  have  been  held  a  promissory  note,  as  the  time  of 
payment  would  thus  have  been  made  certain. 

See,  also,  respecting  time  of  payment,  Loring  v.  Gurney,  5  Pick.  15 ;  Ho- 
bart  V.  Dodge,  1  Fairf.  156 ;  De  Forest  v.  Frary,  6  Cowen,  151 ;  Harrell  v. 
Marston,  7  Rob.  La.  34 ;  Salinas  v.  Wright,  11  Texas,  572 ;  Clayton  v.  Goshng, 
6  Barn.  &  C.  360;  Ex  parte  Tootell,  4  Ves.  372. 

In  addition  to  the  requisites  to  a  valid  promissory  note  or  bill  of  exchange, 
stated  in  the  preceding  cases  and  notes,  the  following  are  important :  — 

The  amount  must"  be  definite  and  certain.  See  Cushman  v.  Haynes,  20  Pick. 
132 ;  Philadelphia  Bank  v.  Newkirk,  2  Miles,  442 ;  Legro  v.  Staples,  16  Maine, 
252  ;  Jones  v.  Simpson,  2  Barn.  &  C.  318 ;  Clark  v.  Percival,  2  Barn.  &  Ad.  660 ; 
Smith  V.  Nightingale,  2  Stark.  375 ;  Ayrey  v.  Fearnsides,  4  Mees.  &  W.  168. 

There  must  be  certainty  as  to  the  parties,  as  the  maker  of  a  note.  Ferris  v. 
Bond,  4  Barn.  &  Aid.  679  ;  Clason  v.  Bailey,  14  Johns.  484.  The  payee  of  a  note 
or  bill  when  not  payable  to  bearer.  Storm  v.  Sterling,  3  El.  &  B.  832.  The  draw- 
er and  drawee  of  a  bill,  Peto  v.  Reynolds,  9  Exch.  410. 

But  the  initials  of  the  maker  were  held  sufficient  in  Palmer  v.  Stephens,  1 
Denio,  471.     So  of  an  indorser :  Merchants'  Bank  v.  Spicer,  6  Wend.  443. 

The  result  of  the  cases  upon  the  form  and  requisites  of  bills  of  exchange  and 
promissory  notes,  may  be  concisely  stated  thus  :  A  bill  of  exchange  is  a  written 
and  signed  order  or  request,  and  a  promissory  note  a  written  and  signed  promise, 
for  the  payment  to  a  person  named,  or  to  his  order,  or  to  bearer,  of  a  di.finite 
sum  in  money,  that  is,  legal  tender,  without  condition  or  contingency,  and  at  a 
definite  time.  And  each  should  be  dated,  though  this  is  not  absolutely  necessary. 
Chitty,  Bills,  148. 


WALLACE   V.    M'CONNELL.  15 


MAKER'S    LIABILITY. 


William  Wallace,  Plaintiff  in  Error,  v.  Corry  M'Connell, 
Defendant  in  Error. 

(13  Peters,  136.     Supremo  Court  of  the  United  States,  January,  1839.) 

Note  payable  at  particular  place.  No  demand  necessary  upon  maker.  —  In  an  action 
against  the  maker  of  a  note  payable  at  a  designated  place,  no  demand  need  be 
averred  and  proved  ;  if  the  maker  was  ready  and  offered,  at  the  time  and  place, 
to  pay,  it  is  a  matter  of  defence  to  be  pleaded  and  proved  by  him. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Thompson,  J.  This  case  comes  up  on  a  writ  of  error  from  the 
District  Court  of  the  United  States  for  the  Southern  District  of 
Alabama. 

The  action  in  the  Court  below  was  founded  upon  a  note,  which, 
althoiigh  under  seal,  is  considered  in  Tennessee  a  promissory 
note,  and  is  in  the  words  following  :  — 

"  Three  years  and  two  months  after  date,  I  promise  to  pay  Corry 
M'Connell  or  order,  at  the  office  of  discount  and  deposit  of  the 
Bank  of  the  United  States,  at  Nashville,  four  thousand  eight  hun- 
dred and  eighty  dollars,  ninety-nine  cents,  value  received."  The 
declaration  sets  out  this  note  according  to  its  terms,  and  alleges 
the  promise-  to  pay  at  the  office  of  discount  and  deposit  of  the 
Bank  of  the  United  States,  at  Nashville,  without  averring  that  the 
note  was  presented  at  the  bank  or  demand  of  payment  made  there. 
The  defendant  pleaded  payment  and  satisfaction  of  the  note  ;  and 
issue  being  joined  thereupon,  the  cause  was  continued  until  the  next 
term  thereafter,  at  which  time  the  defendant  interposed  a  plea 
puis  darrein  continuance,  alleging  that  the  plaintiff,  as  to  the  sum 
$4204,  part  and  parcel  of  the  sum  demanded  in  the  declaration, 
ought  not  further  to  have  and  maintain  his  action  therefor  against 
him,  because  that  sum  had  been  attached  by  Blocker  and  Co.,  by 
proceedings  commenced  by  them  against  the  plaiutifiF  in  this  cause, 


16  maker's  liability. 

under  the  attachment  law  of  Alabama,  in  which  he  was  summoned 
as  garnishee ;  and  setting  out  the  proceedings  against  him 
according  to  the  requirements  of  that  law,  and  under  which  he 
was  examined  on  oath  ;  and  did  declare,  that  he  executed  the 
note  to  the  said  M'Connell,  the  plaintiff  in  this  cause,  as  set  out 
in  the  declaration  ;  that  he  had  paid  on  the  note  $372.34,  and  that 
the  remainder  of  the  said  note  was  due  by  him  to  said  M'Connell. 
And  the  plea  further  sets  out,  that,  under  the  proceedings  on  the 
attachment,  the  Court  had  given  judgment  against  him  for  84204, 
and  costs ;  but  with  a  stay  of  all  further  proceedings  until  the 
further  disposition  of  tlie  case,  and  which  remains  yet  undeter- 
mined. 

To  this  plea  the  plaintiff  demurred.  And  the  Court  sustained 
the  demurrer,  and  gave  judgment  for  the  plaintiff  for  $675.39,  the 
residue  of  the  plaintiff's  debt  in  his  declaration  mentioned,  by 
default ;  and  thereupon  gave  a  final  judgment  for  the  plaintiff  for 
the  full  amount  of  the  note,  $4880,  the  debt  aforesaid,  and  $394, 
the  interest  assessed  by  the  clerk  together  witli  his  cost.  And  the 
plaintiff  remits  upon  the  record  the  sum  of  $351.28 ;  and  the 
questions  arising  upon  this  record  have  been  made  and  argued 
under  the  following  objections  :  — 

1.  That  the  declaration  is  bad  for  want  of  an  averment  that  the 
note  was  presented,  and  payment  demanded  at  the  office  of  dis- 
count and  deposit  of  the  Bank  of  the  United  States,  at  Nashville. 

2.  That  the  matters  pleaded  of  the  proceedings  under  the  at- 
tachment laws  of  Alabama,  were  sufficient  to  bar  the  action,  as  to 
the  amount  of  the  sum  so  attached  ;  and  that  the  demurrer  ought 
therefore  to  have  been  overruled. 

3.  That  the  judgment  by  nil  dicit,  for  the  $676.39,  was  erro- 
neous. 

The  question  raised  as  to  the  sufficiency  of  the  declaration  in  a 
case  where  the  suit  is  by  the  payee  against  the  maker  of  a  promis- 
sory note,  never  has  received  the  direct  decision  of  tliis  Court.  In 
the  case  of  the  Bank  of  the  United  States  v.  Smith,  11  "Wheat. 
171,  the  note  upon  which  the  action  was  founded  was  made  pay- 
able at  the  office  of  discount  and  deposit  of  the  Bank  of  the 
United  States,  in  the  city  of  Washington ;  and  the  suit  was  against 
the  indorser,  and  the  question  turned  upon  the  sufficiency  of  the 
averment  in  the  declaration  of  a  demand  of  payment  of  the 
maker.     And  the  Court  said,  when  in  the  body  of  a  note,  the  place 


WALLACE   V.    M'CONNRLL.  17 

of  payment  is  designated,  the  indorser  has  a  right  to  presume  that 
the  maker  has  provided  funds  at  such  place  to  pay  the  note  ;  and 
has  a  right  to  require  the  holder  to  apply  at  such  place  for  pay- 
ment. In  the  opinion  delivered  in  that  case,  the  question  now 
presented  in  the  case  hefore  us  is  stated  ;  and  it  said,  whether 
where  the  suit  is  against  the  maker  of  a  promissory  note,  or  the 
acceptor  of  a  bill  of  exchange,  payable  at  a  particular  place,  it  is 
necessary  to  aver  a  demand  of  payment  at  such  place,  and  upon 
the  trial  to  prove  such  demand;  is  a  question  upon  which  con- 
flicting opinions  have  been  entertained  in  the  courts  in  Westmin- 
ster Hall.  But  that  the  question  in  such  case  may,  perhaps,  be 
considered  at  rest  in  England,  by  the  decision  of  the  late  case  of 
Rowe  V.  Young,  2  Brod.  &,  Bing.  IGo,  in  the  House  of  Lords ; 
where  it  was  held,  that  if  a  bill  of  exchange  be  accepted,  payable 
at  a  particular  place,  the  declaration  on  such  bill,  against  the 
acceptor,  must  aver  presentment  at  that  place,  and  the  averment 
must  be  proved.  But  it  is  there  said  a  contrary  opinion  has  been 
entertained  by  courts  in  this  country  ;  that  a  demand  on  the 
maker  of  a  note,  or  the  acceptor  of  a  bill  payable  at  a  specified 
place,  need  not  be  averred  in  the  declaration  or  proved  on  the  trial ; 
that  it  is  not  a  condition  precedent  to  the  plaintiff's  right  of  re- 
covery. As  matter  of  practice,  application  will  generally  be  made 
at  the  place  appointed,  if  it  is  believed  that  funds  have  been  there 
placed  to  meet  the  note  or  bill.  But  if  the  maker  or  acceptor  has 
sustained  any  loss  by  the  omission  of  the  holder  to  make  such 
application  for  payment,  at  the  place  appointed,  it  is  matter  of 
defence  to  set  up  by  plea  and  proof.  But  it  is  added,  as  this  ques- 
tion does  not  necessarily  anse  in  this  case,  we  do  not  mean  to  be 
understood  as  expressing  any  decided  opinion  upon  it,  although 
we  are  strongly  inclined  to  think,  that  as  against  the  maker  of  a 
note  or  the  acceptor  of  a  bill,  no  averment  or  proof  of  a  demand 
of  payment  at  the  place  designated  would  be  necessary.  The 
question  now  before  the  Court  cannot,  certainly,  be  considered  as 
decided  l)y  the  case  of  the  Bank  of  the  United  States  v.  Smith,  11 
Wheat.  171.  But  it  cannot  be  viewed  as  the  mere  obiter  opinion 
of  the  judge  who  delivered  the  judgmenl  of  the  court.  The  atten- 
tion of  the  Court  was  drawn  to  the  question  now  before  the  Court, 
and  the  remarks  made  upon  it,  and  the  authorities  referred  to, 
show  that  this  Court  was  fully  apprised  of  the  conflicting  opinions 
of  the  English  courts  on  the  question  ;  and  that  opinions,  contrary 


18  maker's  liability. 

to  that  of  the  House  of  Lords,  in  the  case  of  Rowe  v.  Young,  2 
Brod.  ct  Bing.  1G5,  had  been  entertained  by  some  of  the  courts 
in  this  country  ;  and  under  this  view  of  the  question,  the  Court 
say  they  are  strongly  inclined  to  adopt  the  American  decisions. 
As  the  precise  question  is  now  presented  by  this  record,  it  becomes 
necessary  to  dispose  of  it. 

It  is  not  deemed  necessary  to  go  into  a  critical  examination  of 
the  English  authorities  upon  this  point ;  a  reference  to  the  case  in 
the  House  of  Lords,  which  was  decided  in  the  year  1820,  shows  the 
great  diversity  of  opinion  entertained  by  the  English  judges  upon 
this  question.  It  was,  however,  decided  that  if  a  bill  of  exchange 
is  accepted,  payable  at  a  particular  place,  the  declaration  in  an 
action  on  such  bill  against  the  acceptor,  must  aver  presentment 
at  that  place,  and  the  averment  must  be  proved.  The  Lord  Chan- 
cellor, in  stating  the  question,  said  this  was  a  very  fit  question  to 
be  brought  before  the  House  of  Lords,  because  the  state  of  the  law, 
as  actually  administered  in  the  courts,  is  such,  that  it  would  be 
infinitely  better  to  settle  it  in  any  way  than  to  permit  so  contro- 
versial a  state  to  exist  any  longer.  That  the  Court  of  King's  Bench 
has  been  of  late  years  in  the  habit  of  holding  that  such  an  accept- 
ance as  this  is  a  general  acceptance  ;  and  that  it  is  not  necessary 
to  notice  it  as  such  in  the  declaration,  or  to  prove  presentment, 
but  that  it  must  be  considered  as  matter  of  defence  ;  and  that  the 
defendant  must  state  himself  ready  to  pay  at  the  place,  and  bring 
the  money  into  court,  and  so  bar  the  action  by  proving  the  truth 
of  that  defence.  On  the  contrary,  the  Court  of  Common  Pleas 
was  in  the  habit  of  holding,  that  an  acceptance  like  this  was  a 
qualified  acceptance,  and  that  the  contract  of  the  acceptor  was  to 
pay  at  the  place ;  and  that  as  matter  of  pleading  a  presentment  at 
the  place  stipulated  must  be  averred,  and  that  evidence  must  be 
given  to  sustain  that  averment ;  and  that  the  holder  of  the  bill  has 
no  cause  of  action  unless  such  demand  has  been  made.  In  that 
case  the  opinion  of  the  twelve  judges  was  taken  and  laid  before 
the  House  of  Lords,  and  will  be  found  reported  in  an  appendix  to 
the  report  of  the  case  of  Rowe  v.  Young,  2  Brod.  &  Bing.  180. 
In  which  opinions  all  the  cases  are  referred  to  in  which  the  ques- 
tion had  been  drawn  into  discussion  ;  and  the  result  appears  to 
have  been,  that  eight  judges  out  of  the  twelve  sustained  the  doc- 
trine of  the  King's  Bench  on  this  question,  notwithstanding  which 
the  judgment  was  reversed. 


WALLACE   V.    M'CONNELL.  ,       19 

It  is  fairly  to  be  inferred  from  an  act  of  parliament  passed 
immediately  thereafter,  1  A:  2  Geo.  IV.  c.  7H,  that  this  decision 
was  not  satisfactory.  By  that  act,  it  is  declared  that  "  after  the 
1st  of  Augnst,  1821,  if  any  person  shall  accept  a  bill  of  exchange 
payable  at  the  house  of  a  banker  or  other  place,  without  further 
expression  in  his  acceptance,  such  acceptance  shall  be  deemed  and 
taken  to  be,  to  all  intents  and  purposes,  a  general  acceptance  of  such 
bill.  But  if  the  acceptor  shall,  in  his  acceptance,  express  that  he 
accepts  the  bill  payable  at  a  banker's  bous6  or  other  place  only, 
and  not  otherwise  or  elsewhere  ;  such  acceptance  shall  be  a  qual- 
ified acceptance  of  such  bill ;  and  tiie  acceptor  shall  not  be  liable 
to  i)ay  the  bill  except  in  default  of  j)ayment,  when  such  payment 
shall  have  been  first  duly  demanded  at  such  banker's  house  or 
other  place."     Bayley  on  Bills,  200,  note. 

In  most  of  the  cases  which  have  arisen  in  the  English  courts, 
the  suit  has  ))een  against  the  acceptor  of  the  bill,  and  in  some 
cases  a  distinction  would  seem  to  be  made  between  such  a  case 
and  that  of  a  note  when  the  action  is  against  the  maker,  and  the 
designated  place  is  in  the  body  of  the  note.  But  there  can  be  no 
solid  grounds  upon  which  such  a  distinction  can  rest.  The 
acceptor  of  a  bill  stands  in  the  same  relation  to  the  drawee  as  the 
maker  of  a  note  does  to  the  payee  ;  and  the  acceptor  is  the  princi- 
pal debtor  in  the  case  of  a  bill,  precisely  like  the  maker  of  a  note. 
The  liability  of  the  acceptor  grows  out  of,  and  is  to  be  governed  by, 
the  terms  of  his  acceptance,  and  the  liability  of  the  maker  of  a  note 
grows  out  of,  and  is  to  be  governed  by,  the  terms  of  his  note  ;  and 
the  place  of  payment  can  be  of  no  more  importance  in  the  one 
case  than  in  the  other.  And  in  some  of  the  cases  where  the 
point  was  made,  the  action  was  against  the  maker  of  a  promissory 
note,  and  the  place  of  payment  designated  in  the  body  of  the  note. 
The  case  of  NichoUs  v.  Bowes,  2  Camp.  498,  was  one  of  that  de- 
scription, decided  in  the  year  1810 ;  and  it  was  contended  on  the 
trial,  that  the  ])laintiff  was  bound  to  show  that  the  note  was  pre- 
sented at  the  banking  house  where  it  was  made  payable.  But 
Lord  Elh'nhorovijh^  before  whom  the  cause  was  tried,  not  only 
decided  that  no  such  proof  was  necessary,  but  would  not  suffer 
such  evidence  to  be  given ;  although  the  counsel  for  the  plaintiff 
said  he  had  a  witness  in  court  to  prove  the  note  was  presented  at 
the  banker's  the  day  it  became  due  ;  his  lordship  alleging  that  he 
was  afraid  to  admit  such  evidence  lest  doubts  should  arise  as  to 


20     „  maker's  liability. 

its  necessity.  Aryi  in  the  case  of  Wild  v.  Kennards,  1  Camp.  425, 
note,  Mr.  Justice  Bayle.y,  in  the  year  1809,  ruled  that  if  a  promis- 
sory note  is  made  payable  at  a  particular  place,  in  an  action  against 
the  maker,  there  is  no  necessity  for  proving  that  it  was  presented 
there  for  payment. 

The  case  of  Sanderson  v.  Bowes,  14  East,  500,  decided  in  the 
King's  Bench  in  the  year  1811,  is  sometimes  referred  to  as  contain- 
ing a  different  rule  of  construction  of  the  same  words  when  used 
in  the  body  of  a  promissory  note,  from  that  which  is  given  to  them 
when  used  in  the  acceptance  of  a  bill  of  exchange.  But  it  may 
be  well  questioned  whether  this  use  warrants  any  such  conclusion. 
That  was  an  action  on  a  promissory  note  by  the  bearer  against  the 
maker.  The  note,  as  set  out  in  the  declaration,  was  a  promise  to 
pay  on  demand  at  a  specified  place,  and  there  was  no  averment 
that  a  demand  of  payment  had  been  made  at  the  place  designated. 
To  which  declaration  the  defendant  demurred  ;  and  the  counsel  in 
support  of  the  demurrer  referred  to  cases  where  the  rule  had  been 
applied  to  acceptances  on  bills  of  exchange  ;  but  contended  that 
the  rule  did  not  apply  to  a  promissory  note,  when  the  place  is  desig- 
nated in  the  body  of  the  note.  Lord  Ellenhorough  ^  in  the  course 
of  the  argument,  in  answer  to  some  cases  referred  to  by  counsel, 
observed :  "  Those  are  cases  where  money  is  to  be  paid,  or  some- 
thing to  be  done  at  a  particular  time  as  well  as  place,  therefore 
the  party  (defendant)  may  readily  make  an  averment,  that  he  was 
ready  at  the  time  and  place  to  pay,  and  that  the  other  party  was 
not  ready  to  receive  it ;  but  here  the  time  of  payment  depends  en- 
tirely on  the  pleasure  of  the  holder  of  the  note."  It  is  true  Lord 
Ellenhoro'ugh  did  not  seem  to  place  his  opinion,  in  the  ultimate 
decision  of  the  cause,  upon  this  ground.  But  the  other  judges  did 
not  allude  to  the  distinction  taken  at  the  bar  between  that  case 
and  the  acceptance  of  a  bill  in  like  terms ;  but  placed  their  opin- 
ions upon  the  terms  of  the  note  itself,  being  a  promise  to  pay  on 
demand  at  a  particular  place.  And  there  is  certainly  a  manifest 
distinction  between  a  promise  to  pay  on  demand,  at  a  given  place, 
and  a  promise  to  pay  at  a  fixed  time  at  such  place.  And  it  is 
hardly  to  be  presumed  that  Lord  EUenhorong-h  intended  to  rest 
his  judgment  upon  a  distinction  between  a  promissory  note  and  a 
bill  of  exchange,  as  both  he  and  Mr.  Justice  Bayley  had  a  very 
short  time  before,  in  the  cases  of  Nicholls  v.  Bowes,  2  Camp.  498, 
and  Wild  v.  Reunards,  1  Camp.  425,  note,  above   referred  to, 


WALLACE   V.    m'CONNELL.  21 

applied  the  same  rule  of  construction  to  jjroraissory  notes  where 
the  promise  was  contained  in  the  body  of  the  note.  Where  the 
promise  is  to  pay  on  demand  at  a  particular  place,  there  is  no 
cause  of  action  until  the  demand  is  made,  and  the  maker  of  the 
note  cannot  discharge  himself  by  an  olTer  of  payment,  tl*  note 
not  being  due  until  demanded. 

Thus  we  see  that  until  the  late  decision  in  the  House  of  Lords  in 
the  case  of  Rowe  i\  Young,  and  the  act  of  parliament  passed 
soon  thereafter,  this  ([ucstion  was  in  a  very  unsettled  state  in  the 
English  courts  ;  and  without  undertaking  to  decide  between  those 
conflicting  opinions,  it  may  be  well  to  look  at  the  light  in  which 
this  question  has  been  viewed  in  the  courts  in  this  country. 

This  question  came  before  the  Supreme  Court  of  the  State  of 
New  York,  in  the  year  1809,  in  the  case  of  Foden  and  Slater  v. 
Sharp,  4  Johns.  1S3,  and  the  Court  said  the  holder  of  a  bill  of 
exchange  need  not  show  a  demand  of  payment  of  the  acceptor 
any  more  than  of  the  maker  of  a  note.  It  is  the  business  of  the 
acceptor  to  show  that  he  was  ready  at  the  day  and  place  appointed, 
but  that  no  one  came  to  receive  the  money,  and  that  he  was  always 
ready  afterwards  to  pay.  This  case  shows  that  the  acceptor  of  a 
bill  and  the  maker  of  a  note  were  considered  as  standing  on  the 
same  footing  with  respect  to  a  demand  of  payment  at  the  place 
designated.  And  in  the  case  of  Wolcott  v.  Van  Santvoord,  17 
Johns.  248,  which  came  before  the  same  court  in  the  year  1819, 
the  same  question  arose.  The  action  was  against  the  acceptor  of 
a  bill,  payable  five  months  after  date  at  the  Bank  of  Utica,  and  the 
declaration  contained  no  averment  of  a  demand  at  the  Bank  of 
Utica,  and  upon  a  demurrer  to  the  declaration  the  Court  gave 
judgment  for  the  plaintill".  Chief  Justice  Spencer,  in  delivering 
the  opinion  of  the  Court,  observed,  that  the  question  had  been 
already  decided  in  the  case  of  Foden  v.  Sharp  ;  but  considering 
the  great  diversity  of  opinion  among  tlie  judges  in  the  English 
courts  on  tiie  question,  he  took  occasion  critically  to  review  the 
cases  which  had  come  before  those  courts,  and  shows  very  satis- 
factorily that  the  weight  of  authority  is  in  conformity  to  that 
decision,  and  the  demurrer  was  accordingly  overruled  ;  and  the 
law  in  that  State  for  the  last  thirty  years  has  been  considered  as 
settled  upon  this  point.  And  although  the  action  was  against  the 
acceptor  of  a  bill  of  exchange,  it  is  very  evident  that  this  circum- 
stance had  no  influence  upon  the  decision  ;  for  the  Court  say  that 


22  maker's  liability. 

in  this  respect  the  acceptor  stands  in  the  same  relation  to  the 
payee  as  the  maker  of  a  note  does  to  the  indorsee.  He  is  the 
principal,  and  not  a  collateral  debtor. 

And  in  the  case  of  Caldwell  v.  Cassady,  8  Cowen,  271,  decided 
in  theieame  court  in  the  year  1828,  the  suit  was  upon  a  promissory 
note  payable  sixty  days  after  date  at  the  Franklin  Bank  in  New 
York,  and  the  note  had  not  been  presented  or  payment  demanded 
at  the  bank  ;  the  Court  said,  this  case  has  been  already  decided  by 
this  court  in  the  case  of  Wolcott  v.  Van  Santvoort.  And  after 
noticing  some  of  the  cases  in  the  English  courts,  and  alluding  to 
the  confusion  that  seemed  to  exist  there  upon  the  question,  they 
add :  "  That  whatever  be  the  rule  in  other  courts,  the  rule  in  this 
court  must  be  considered  settled,  that  where  a  promissory  note  is 
made  payable  at  a  particular  place  on  a  day  certain,  the  holder  of 
the  note  is  not  bound  to  make  a  demand  at  the  time  and  place  by 
way  of  a  condition  precedent  to  the  bringing  of  an  action  against 
the  maker.  But  if  the  maker  was  ready  to  pay  at  the  time  and 
place,  he  may  plead  it  as  he  would  plead  a  tender  in  bar  of  dam- 
ages and  costs  by  bringing  the  money  into  court." 

It  is  not  deemed  necessary  to  notice  very  much  at  length  the 
various  cases  that  have  arisen  in  the  American  courts  upon  this 
question  ;  but  barely  to  refer  to  such  as  have  fallen  under  the  obser- 
vation of  the  Court ;  and  we  briefly  state  the  point  and  the  decision 
thereupon ;  and  the  result  will  show  a  uniform  course  of  adjudi- 
cation, that  in  actions  on  promissory  notes  against  the  maker,  or 
on  bills  of  exchange,  wiiere  the  suit  is  against  the  maker  in  the 
one  case,  and  acceptor  in  the  other,  and  the  note  or  bill  made 
payable  at  a  specified  time  and  place,  it  is  not  necessary  to  aver 
in  the  declaration,  or  prove  on  the  trial,  that  a  demand  of  pay- 
ment was  made  in  order  to  maintain  the  action.  But  that  if  the 
maker  or  acceptor  was  at  the  place  at  the  time  designated,  and  was 
ready  and  offered  to  pay  the  money,  it  was  matter  of  defence  to  be 
pleaded  and  proved  on  his  part. 

The  case  of  Watkins  v.  Crouch  &  Co.,  in  the  Court  of  Appeals 
of  Virginia,  5  Leigh,  522,  was  a  suit  against  the  maker  and  in- 
dorser,  jointly,  as  is  the  course  in  that  State  upon  a  promissory 
note  like  the  one  in  suit.  The  note  was  made  payable  at  a  speci- 
fied time,  at  the  Farmers'  Bank,  at  Richmond,  and  the  Court  of 
Appeals,  in  the  year  1834,  decided  that  it  was  not  necessary  to 
aver  and  prove  a  presentation  at  the  bank  and  demand  of  pay- 


WALLACE    V.    M'CONNELL.  23 

meiit,  in  order  to  entitle  the  plaiutifTto  recover  against  the  maker ; 
but  tiiat  it  was  necessary,  in  order  to  entitle  him,  to  recover 
against  the  indorser ;  and  th6  president  of  the  Court  went  into  a 
very  elaborate  consideration  of  the  decisions  of  the  English  courts 
upon  the  question  ;  and  to  show  that,  upon  common-law  principles, 
applicable  to  bonds,  notes,  and  other  contracts  for  the  payment  of 
money,  no  previous  demand  was  necessary  in  order  to  sustain  the 
action,  but  that  a  tender  and  readiness  to  pay  must  come  by  way 
of  defence  from  the  defendant ;  and  that,  looking  upon  the  note 
as  commercial  paper,  the  principles  of  the  common  law  were 
clearly  against  the  necessity  of  such  demand  and  proof,  where  the 
time  and  place  were  specihed,  though  it  would  be  otlierwise  where 
the  place,  but  not  the  time,  was  specified  ;  a  demand  in  such  case 
ought  to  be  made  ;  and  he  examined  the  case  of  Sanderson  v. 
Bowes,  to  show  that  it  turned  upon  that  distinction',  the  note  being 
payable  on  demand  at  a  specified  place.  The  same  doctrine  was 
held  by  the  Court  of  Appeals  of  Maryland,  in  the  case  of  Bowie  v. 
Duvall,  1  Gill  &  Johnson,  175 ;  and  the  New  York  cases,  as  well 
as  that  of  the  Bank  of  the  United  States  v.  Smith,  11  Wheat.  171, 
are  cited  with  approbation,  and  fully  adopted :  and  tiie  Court  put 
the  case  upon  the  broad  ground  that,  when  the  suit  is  against  the 
maker  of  a  promissory  note,  payable  at  a  specified  time  and  place, 
no  demand  is  necessary  to  be  averred,  upon  the  principle  that  the 
money  to  be  paid  is  a  debt  from  the  defendant,  that  it  is  due  gen- 
erally and  universally,  and  will  continue  due,  though  there  be  a 
neglect  on  the  part  of  the  creditor  to  attend  at  the  time  and  place 
to  receive  or  demand  it.  That  it  is  matter  of  defence,  on  the 
part  of  the  defendant,  to  show  that  he  was  in  attendance  to  pay, 
but  that  the  plaintiff  was  not  there  to  receive  it ;  which  defence 
generally  will  be  in  bar  of  damages  only,  and  not  in  bar  of  the 
debt.  The  case  of  Ruggles  v.  Patten,  8  Mass.  480,  sanctions  the 
same  rule  of  construction.  The  action  was  on  a  promissory  note 
for  the  payment  of  money,  at  a  day  and  place  specified  ;  and  the 
defendant  pleaded  that  he  was  present  at  the  time  and  place,  and 
ready  and  willing  to  pay,  according  to  the  tenor  of  his  promises,  in 
the  second  count  of  the  declaration  mentioned,  and  avers  that  tlie 
plaintifTwas  not  then  ready  or  present  at  the  bank  to  receive  pay- 
ment, and  did  not  demand  the  same  of  the  defendant,  as  the  jilaiii- 
tiff  in  his  declaration  had  alleged  ;  the  Court  said  this  was  an 
immaterial  issue,  and  no  bar  to  an  action  or  promise  to  pay  money. 


24  maker's  liability. 

So,  also,  in  the  State  of  New  Jersey,  the  same  rule  is  adopted.  In 
the  case  of  Weed  v.  Van  Houten,  4  Halst.  (N.J.)  189,  the  Chief  Jus- 
tice says  :  "  Tlie  question  is,  whether,  in  an  action  by  the  payee  of  a 
promissory  note,  payable  at  a  particular  place,  and  not  on  demand, 
but  at  time,  it  is  necessary  to  aver  a  presentment  of  the  note  and 
demand  of  payment  by  the  holder  at  that  place,  at  the  maturity  of 
the  note."  And,  upon  this  question,  he  says  :  "  I  have  no  hesita- 
tion in  expressing  my  entire  concurrence  in  the  American  decisions, 
so  far  as  is  necessary  for  the  present  occasion  ;  that  a  special 
averment  of  presentment  at  the  place  is  not  necessary  to  the  validity 
of  the  declaration,  nor  is  proof  of  it  necessary  upon  the  trial.  This 
rule,  I  am  satisfied,  is  most  conformable  to  sound  reason,  most 
conducive  to  public  convenience,  best  supported  by  the  general 
principles  and  doctrines  of  the  law,  and  most  assimilated  to  the  deci- 
sions, which  bear  analogy  more  or  less  directly  to  the  subject." 

The  same  rule  has  been  fully  established  by  the  Supreme  Court 
of  Tennessee,  in  the  cases  of  M'Nairy  v.  Bell,  and  Mulherrin  v. 
Hannum,  1  Yerg.  502,  and  2  Yerg.  81,  and  the  rule  sustained 
and  enforced  upon  the  same  principles  and  course  of  reasoning 
upon  which  the  other  cases  referred  to  have  been  placed.  And  no 
case,  in  an  American  court,  has  fallen  under  our  notice,  where  a 
contrary  doctrine  has  been  asserted  and  maintained.  And  it  is  to 
be  observed,  that  most  of  the  cases  which  have  arisen  in  this  country, 
where  this  question  has  been  drawn  into  discussion,  were  upon 
promissory  notes,  where  the  place  of  payment  was,  of  course,  in  the 
body  of  the  note.  After  such  a  uniform  course  of  decisions  for  at 
least  thirty  years,  it  would  be  inexpedient  to  change  the  rule,  even 
if  the  grounds  upon  which  it  was  originally  establislied,  might  be 
questionable  ;  which,  however,  we  do  not  mean  to  intimate.  It  is 
of  the  utmost  importance  that  all  rules  relating  to  commercial  law 
should  be  stable  and  uniform.  They  are  adopted  for  practical  pur- 
poses, to  regulate  the  course  of  business  in  commercial  transactions ; 
and  the  rule  here  established  is  well  calculated  for  the  convenience 
and  safety  of  all  parties. 

The  place  of  payment  in  a  promissory  note,  or  in  an  acceptance 
of  a  bill  of  exchange,  is  always  matter  of  arrangement  between  the 
parties  for  their  mutual  accommodation,  and  may  be  stipulated  in 
any  manner  that  may  best  suit  their  convenience.  And,  when  a 
note  or  bill  is  made  payable  at  a  bank,  as  is  generally  the  case,  it  is 
well  known  that,  according  to  the  usual  course  of  business,  the  note 


WALLACE   V.    M'CONNELL.  25 

or  bill  is  lodged  at  the  bank  for  collection  ;  and,  if  the  maker  or 
acceptor  calls  to  take  it  up  when  it  falls  due,  it  will  be  delivered 
to  him,  and  the  business  is  closed,  IJut,  should  he  not  find  his 
note  or  l)ill  at  the  bank,  he  can  deposit  his  money  to  meet  the  note 
when  presented  ;  and  should  he  be  afterwards  prosecuted,  he  would 
be  exonerated  from  all  costs  and  damages,  upon  proving  such  ten- 
der and  deposit.  Or,  should  the  note  or  bill  l)e  made  payable  at 
some  place  other  than  a  bank,  and  no  deposit  could  be  made,  or  he 
should  choose  to  retain  his  money  in  his  own  possession,  an  offer 
to  pay  at  the  time  and  place,  would  protect  him  against  interest 
and  costs,  on  bringing  the  money  into  court ;  so  that  no  practical 
inconvenience  or  hazard  can  result  from  the  establishment  of  this 
rule,  to  the  maker  or  acceptor.  But,  on  the  other  hand,  if  a  pre- 
sentment of  the  note  and  demand  of  payment  at  the  time  and  place, 
are  indispensable  to  the  right  of  action,  the  holder  might  hazard  the 
entire  loss  of  his  whole  debt. 

See  note  to  Xewhall  v.  Clark,  j^ost ;  Taylor  v.  Snyder,  and  Chicopee  Bank  v. 
Philadelphia  Bank,  and  note,  post,  as  to  the  rule  respecting  indorsers  of  paper 
payable  at  a  place  designated. 


DRAWER'S    LIABILITY. 


The  liability  of  the  drawer  of  a  bill  of  exchange  being  in 
general  that  of  an  indorser,  the  subject  will  not  be  separately 
introduced  here.  Tlie  cases  and  notes  will  be  found  under  Pre- 
seulniciit  fur  Acceptance,  and  ruocEEUiNGS  upon  Non-Payment, 
post. 


26  ACCEPTANCE. 


ACCEPTANCE. 


S.  &  M.  Allen  v.  Suydam  and  Boyd. 

(20  Wendell,  321.     Court  of  Errors  of  New  York,  December,  1838.) 

Agent's  duty  to  present  for  acceptance.  —  An  agent  who  receives  a  bill  of  exchange,  pay- 
able after  date,  for  collection,  which  has  not  been  accepted,  is  bound  to  present  the 
same  for  acceptance  without  unreasonable  delay,  or  he  will  be  liable  to  his  prin- 
cipal for  the  damages  which  the  latter  may  sustain  by  the  agent's  negligence-  In 
case  the  debt  is  lost  by  the  agent's  negligence,  the  measure  of  damages  is  prima 
facie  the  amount  of  the  bill  ;  but  evidence  of  facts  may  be  produced  tending  to 
reduce  the  recovery  to  a  nominal  sum. 

Action  on  the  case  against  S.  <fe  M.  Allen  for  negligence  in  omit- 
ting for  seventeen  days  to  present  for  acceptance  a  bill  of  ex- 
change sent  them  by  Suydam  and  Boyd  for  collection,  and 
payable  two  months  after  date. 

By  the  Chancellor.  Two  questions  of  importance  to  the  com- 
mercial community  are  presented  for  oar  consideration  and  decision 
in  this  cause :  1.  Whether  an  agent,  or  broker,  who  receives  for 
collection  a  draft  or  bill  of  exchange  payable  at  a  particular  day, 
or  a  certain  number  of  days  after  its  date,  is  under  any  obliga- 
tion to  present  the  same  to  the  drawee  for  acceptance  immediately, 
and  before  the  time  when  the  draft  is  due  and  payable  ?  And, 
2.  If  he  is,  whether  the  person  who  has  given  him  such  draft 
or  bill  for  collection,  can,  in  case  of  his  neglect  to  present  the 
same  before  tlie  day  of  payment,  recover  the  whole  amount  due 
thereon,  with  interest ;  although  the  owner  has  not,  in  fact,  sus- 
tained damage  to  that  extent,  by  the  neglect  of  his  broker  or 
agent  to  present  the  bill  for  acceptance  without  any  unnecessary 
delay  ? 

A  bill  payable  at  sight,  or  a  certain  number  of  days  after  sight, 
must  be  presented  for  acceptance  and  payment,  or  for  acceptance 
only,  without  unreasonable  delay,  or  the  drawer  and  indorsers  will 
be  discharged,  for  they  have  an  interest  in  having  the  bill  accepted 
immediately,  in  order  to  shorten  the  time  of  payment,  and  thus  to 


ALLEN   V.    SUYDAM.  27 

put  a  limit  to  the  period  of  their  liahility  ;  and  also,  to  enahle 
them  to  protect  themselves  by  other  means,  before  it  is  too  late,  if 
the  bill  is  not  accejjted  and  paid  within  the  time  originally  contem- 
plated by  them.  But  in  relation  to  a  bill  payable  at  a  day  certain^ 
as  at  a  fixed  time  after  its  date,  it  is  perfectly  well  settled,  not 
only  in  this  country  and  in  England,  but  also  in  Scotland  and  in 
France,  that  the  drawer  or  indorser  of  the  bill  is  not  discharged 
by  the  neglect  of  the  holder  to  present  the  same  for  acceptance 
immediately,  or  until  the  time  when  it  becomes  due  and  payaljle. 
If,  however,  such  a  bill  is  actually  presented  for  acceptance,  and  is 
dishonored  before  it  becomes  due,  notice  of  such  dishonor  must  Ije 
given  to  the  drawer  or  indorser  without  delay,  or  he  will  be  dis- 
charged. 3  Kent,  Comra.  2d  ed.  82  ;  Townsley  v.  Sumrall,  2 
Peters,  U.  S.  170;  Goodall  v.  Dollcy,  1  Term,  712;  Bayley  on 
Bills,  21!2 ;  Glen,  109  ;  Byles,  102  ;  Evans,  80  ;  Muir,  22  ;  2  Par- 
dessus,  No.  358,  p.  417,  2d  Paris  ed.  All  the  writers  agree, 
however,  that  the  owner  of  the  bill  has  an  interest  in  having  it 
presented  for  acceptance  without  delay,  although  such  present- 
ment is  not  necessary  in  the  case  of  a  bill  payable  on  a  day  certain, 
to  enable  him  to  retain  his  claim  against  the  drawer  or  indorser  of 
such  bill ;  and  that  if  the  ai>-rnt  who  has  been  intrusted  with  the 
bill  for  the  purpose  of  getting  it  accepted  and  paid,  or  accepted 
only,  neglects  to  comply  with  the  direction  of  the  owner,  to  get 
the  bill  accepted  without  any  unnecessary  delay,  he  will  be  liable 
to  the  owner  for  the  damage  which  the  latter  has  sustained  by 
such  negligence.  Pardessus  says  that  the  right  to  require  an 
acceptance  in  such  a  case,  is  one  which  the  holder  of  the  bill  may 
use  or  not,  as  he  thinks  proper,  but  that  it  is  certainly  an  advan- 
tage to  him  to  demand  such  acceptance  ;  for  if  the  drawer  is  in 
credit,  the  drawee  will  probably  accept,  and  the  holder  will  thus 
obtain  an  additional  security  for  his  debt ;  whereas,  if  he  delays 
to  present  the  bill  for  accoj)tance  until  it  becomes  due,  and  the 
drawer  fails  in  the  mean  time,  the  drawee  may  then  refuse  to 
accept ;  and  he  mii^ht  have  added,  for  such  is  the  rule  of  the 
French  law  on  the  subject,  that  if  the  bill  was  protested  for  non- 
acceptance  before  it  became  due,  the  holder  would  then  have  been 
entitled  to  demand,  both  of  the  drawer  and  of  the  indorsers, 
security  for  the  payment  of  the  bill  when  it  should  become  due, 
or  for  reimbursement,  with  the  expenses  of  protest  and  re-exchange. 
Pardessus  also  says  that  the  bearer  of  the  bill  may  hold  it  as  a 


28  ACCEPTANCE. 

mere  agent,  to  do  what  is  necessary  for  the  interest  of  his  prin- 
cipal ;  in  which  case,  he  ought  to  act  according  to  the  express  or 
implied  duties  which  are  derived  from  his  relation  to  such  princi- 
pal ;  and  among  the  duties  whicli  his  situation  imposes  upon  the 
agent,  is  that  of  presenting  the  bill  for  acceptance  whenever  the 
law  or  prudence  imposes  such  an  obligation  on  him.  2  Pard. 
No.  358,  pp.  417,  420 ;  No.  583,  p.  GG9.  It  was  upon  this  ground 
that  the  case  of  The  Bank  of  Scotland  v.  Hamilton,  referred  to  in 
a  note  to  Bell's  Commentaries,  and  also  in  Cliitty  on  Bills,  was 
decided.  And  Glen,  who  also  has  a  brief  note  of  that  case,  states, 
as  exceptions  to  the  rule,  that  it  is  not  necessary  to  present  a  bill, 
payable  at  a  time  certain,  for  acceptance,  before  it  becomes  due; 
the  case  of  a  direction  to  the  payee  or  holder  of  the  bill  to  present 
it  immediately ;  and  the  case  of  a  bill  sent  to  an  agent  for  negotia- 
tion.    Glen  on  Bills,  109. 

The  counsel  for  the  plaintiffs  in  error,  however,  attempted  to 
take  the  case  out  of  this  last  exception  to  the  general  rule,  on  the 
ground  that  these  agents  only  received  the  bill  for  collection,  and 
that  they  received  no  instructions  to  present  it  for  acceptance 
before  it  came  due.  I  infer,  however,  from  the  note  of  the  case  of 
The  Bank  of  Scotland  v.  Hamilton,  as  given  by  Glen,  that  the 
present  case  cannot  be  distinguished  from  that  in  this  respect. 
For  it  there  appears  that  the  bill  then  in  question  was  finally  pre- 
sented for  acceptance  on  the  evening  of  the  fourth  day  from  its 
date,  after  the  drawer  had  failed,  and  then  only  in  consequence  of 
a  letter  from  Dunlop,  who  had  sent  the  bill  to  the  agents  in  Glas- 
gow three  days  before.  From  that  statement  of  the  case,  I  think 
we  may  fairly  presume  there  were  no  special  directions  to  the 
agents  to  present  the  bill  for  acceptance  when  it  was  originally 
sent  to  them  for  collection,  especially  as  it  had  but  four  days  to 
run  when  it  was  originally  discounted  by  Dunlop.  On  this  subject, 
Pothier  says,  in  regard  to  the  indorsement  of  a  bill  by  the  owner 
thereof  to  another,  as  a  mere  agent  to  receive  the  amount  due 
thereon  for  the  indorser  and  as  his  proxy :  "  The  contract  which 
such  an  indorsement  implies,  and  which  it  makes  between  the 
indorser  and  the  person  to  whom  he  makes  his  order,  is  a  contract 
of  agency,  and  creates  the  ordinary  obligations  of  an  agent ;  and 
consequently,  he  to  whom  the  order  is  given  is  liable  in  the  char- 
acter of  an  agent,  as  regards  his  indorser,  the  owner  of  the  bill,  to 
obtain  acceptance  if  it  has  not  already  been  accepted,  and  to  go 


ALLEN  V.   SUYDAM.  29 

when  the  bill  becomes  due  to  receive  payment  thereof,  and  remit 
him  the  amount ;  and  also  in  default  of  acceptance  or  of  payment, 
to  make  the  protests,  i^c,  which  are  necessary  in  such  cases,  and 
the  indorser  on  his  part  is  bound  to  make  good  the  whole  of  the 
expenses  which  have  been  incurred  therefor  by  the  indorsee." 
Poth.  Traite  Du  Cont.  DcChange,  c.  4,  No.  H2.  Again :  "  The 
bearer  of  the  bill,  where  he  is  merely  the  agent  of  the  owner, 
ought  to  present  it  as  soon  as  possible  to  the  drawee  to  have  it 
accepted.  It  is  very  important  to  have  it  accepted,  as  it  is  only  by 
accepting  it  that  the  drawee  becomes  bound  to  pay  it.  Without 
such  acceptance,  the  owner  of  the  bill  has  for  his  debtor  only  the 
drawer  of  the  1)111,  to  whom  he  has  paid  its  value.  Therefore,  if 
the  drawer  should  happen  to  fail,  the  bearer  of  the  bill  who  had 
neglected  to  present  it  for  acceptance  would  be  liable  to  damages, 
if  it  was  his  fault,  in  favor  of  the  owner  of  the  bill  for  whom  he 
was  agent."  Id.  No.  128.  The  principles  thus  laid  down  by 
Pothier  are  recognized  by  Beawes  and  Paley  as  sound  and  correct, 
in  relation  to  the  duties  and  liabilities  of  agents  who  are  employed 
in  negotiating  or  collecting  f5ifls  of  exchange  ;  and  I  can  see  no 
good  reason  why  they  should  not  be  applied  to  the  case  now  under 
consideration.  If  the  receiving  a  bill  by  an  agent,  to  collect, 
implies  an  obligation  on  his  part  to  take  the  necessary  steps  to 
charge  the  drawer  and  indorsers,  by  protest  and  notices,  in  case  it 
is  not  accepted  and  paid  by  the  drawee,  I  do  not  see  why  due  dili- 
gence on  the  part  of  the  agent,  in  procuring  the  acceptance  of  the 
draw^ee  without  delay,  when  it  may  be  necessary  or  beneficial  to 
the  interests  of  the  principal,  should  not  also  be  implied,  as  it  is 
the  duty  of  a  faithful  agent  to  do  for  his  principal  whatever  the 
principal  himself  Avould  probably  have  done  if  he  was  a  discreet 
and  prudent  man.  Even  where  the  principal  is  habitually  negli- 
gent in  attending  to  his  own  interests,  it  forms  no  excuse  for 
similar  negligence  on  the  part  of  his  agent.  The  fact,  therefore, 
that  the  bill  in  this  case  was  not  put  into  the  hands  of  the  agents 
for  collection  until  some  time  after  it  bore  date,  was  no  legal 
excuse  for  their  negligence  in  not  sending  it  on  for  acceptance  and 
payment  without  unnecessary  delay.  For  these  reasons,  I  agree 
with  the  Court  below,  that  the  Aliens  were  legally  liable  to  the 
owners  of  this  bill  for  the  damages,  if  any,  which  the  latter 
sustained  by  the  non-presentment  of  the  bill  to  the  drawee  for 
acceptance  previous  to  the  time  it  became  due. 


30  ACCEPTANCE. 

In  relation  to  the  amount  of  damages,  however,  I  think  the 
charge  of  the  judge,  who  tried  the  cause,  was  clearly  wrong ;  and 
that  it  has  unquestionably  produced  great  injustice  in  this  case. 
As  we  have  before  seen,  the  relation  between  the  drawer  or 
indorser  of  the  bill  and  the  person  to  whom  it  is  transferred  for 
the  mere  purpose  of  negotiation  or  collection,  is  not  the  relation 
of  indorser  and  indorsee,  so  as  to  throw  the  loss  of  the  whole 
amount  of  the  bill  upon  the  latter,  if  he  neglects  to  present  the 
same  for  acceptance  and  payment  in  time,  or  to  give  notice  of  its 
dishonor  to  the  indorser,  as  required  by  law.  Nor  will  the  pay- 
ment of  the  damages,  by  the  agent,  have  the  effect  to  subrogate 
him  to  all  the  rights  and  remedies  of  the  person  from  whom  he 
received  the  bill,  as  against  other  parties  who  may  be  liable  for  the 
payment  thereof;  but  it  is  a  mere  contract  of  agency,  which  leaves 
the  indorser  to  all  his  rights  and  remedies  for  the  recovery  of  his 
debt  as  against  other  parties,  and  only  renders  the  indorsee  liable 
as  agent  for  the  actual  or  probable  damages  which  his  principal 
has  sustained  in  consequence  of  the  negligence  of  such  agent. 
This  principle  was  distinctly  recd^ized  by  the  Court  of  King's 
Bench  in  England,  in  the  case  of  Van  Wart  v.  Woolley,  5  Dowl. 
&  Ryl.  374,  where  the  plaintiff  had  not  lost  his  remedy  against 
the  drawers  of  the  bill,  or  the  persons  from  whom  he  received  it, 
by  reason  of  the  neglect  of  the  agents  to  present  it  for  acceptance 
in  due  time  ;  the  drawers  of  the  bill  in  that  case  having  drawn 
without  authority  when  they  had  no  funds  in  the  hands  of  the 
drawees,  and  Irving  &  Co.,  who  had  sent  the  bill  to  the  plaintiffs 
in  payment,  not  standing  in  the  situation  of  indorsers  of  the  bill, 
as  their  names  did  not  appear  upon  it.  In  that  case,  however,  if 
there  had  been  any  evidence  to  warrant  the  belief  that  the  bill 
would  have  been  accepted  if  an  immediate  acceptance  or  rejection 
of  tbe  bill  by  the  drawees  had  been  insisted  on,  according  to  the 
decision  in  the  case  of  The  Bank  of  Scotland  v.  Hamilton,  the  loss 
which  had  arisen  from  the  neglect  of  the  defendant  in  not  pressing 
for  an  acceptance,  or  in  not  giving  due  notice  of  the  dishonor  of 
the  bill  immediately,  if  it  could  then  probably  have  been  collected 
from  the  drawees,  should  have  fallen  upon  Woolley  &  Co.  instead 
of  Irving  &  Co.,  who  had  remitted  the  same  to  Van  Wart ;  and 
tlie  plaintiff  would  then  have  l^een  permitted  to  recover  whatever 
damages  had  been  sustained  by  such  negligence,  for  the  benefit  of 
Irving  &  Co.     In  that  respect  Irving  &  Co.  stood  in  the  same  rela- 


ALLEN    V.    SUYDAM.  31 

tive  situation  to  Van  Wart,  as  Dunlop  did  to  tlie  Bank  of  Scotland, 
ill  the  case  before  referred  to ;  and  Woolley  Sc  Co.  occupied  the 
situation  of  Ilainiltoii  ct  Co.,  who  were  hpld  lialjle  in  that  case,  in 
exoneration  of  J)uiil<)|t\s  liability.  The  only  difference  in  principle 
which  I  can  see  Itetween  the  two  cases  is,  that  in  the  Scotch  case 
it  was  evident  that  the  bill  would  probably  have  been  accepted  and 
saved,  if  it  had  been  presented  for  acceptance  on  Saturday,  when 
it  was  received  by  the  agent  in  Glasgow,  instead  of  being  kept 
back  until  Tuesday  evening,  when  news  of  the  drawers'  failure 
had  reached  that  place ;  and  therefore,  to  exonerate  Dunlop,  who 
remitted  the  bill,  the  agents  in  Glasgow  were  very  properly  ciiarged 
Avith  the  amount  of  the  bill,  the  whole  of  which  had  been  lost 
through  their  negligence,  except  the  small  amount  of  dividend 
wliich  the  bank  would  be  entitled  to  out  of  the  drawers'  estate 
under  the  commission  of  bankruptcy  against  him  ;  whereas,  in  the 
case  of  Van  Wart  /•.  Woolley,  there  was  no  reason  to  believe  that 
the  Ijill  would  have  been  accepted  if  the  agent  had  insisted  upon 
an  answer  immediately,  and  there  was  as  little  j)rol»ability  that 
any  thing  would  have  been  obtained  from  the  drawers  if  Van  AVart 
or  Irving  &  Co.  had  received  notice  of  the  di>honor  of  the  bill 
immediately  after  it  was  received  by  the  agent  in  London.  In  the 
latter  case,  therefore,  the  damage  which  either  Van  Wart  or  those 
who  had  transmitted  him  the  bill  in  payment  had  sustained,  was 
merely  nominal.  Besides,  the  Supreme  Court  of  this  State  having 
decided,  that  neither  the  drawers  nor  Irving  &  Co.  were  discharged 
from  their  liability  to  the  idaintitf  by  this  neglect  of  his  agent, 
neither  of  them,  in  fact,  having  been  injured  by  such  neglect,  the 
plaintiff  upon  the  second  trial  was  of  course  only  held  to  be 
entitled  to  such  damages  as  he  had  sustained,  and  which  were 
noiniiial  only.  If  the  rule  laid  down  by  the  judge  who  tried  the 
j)reseiit  case  was  correct,  that  the  princij>al  was  entitled  to  recover 
the  whole  amount  of  the  bill  and  interest,  because  there  was  no 
other  evidence  to  enable  the  jury  to  discover  what  the  damage  was, 
then  the  plaintitV  in  the  case  of  Van  Wart  /'.  Woolley  should  have 
been  permitted  to  retain  his  verdict  upon  the  lirst  trial ;  as  it  did 
not  then  appear  whether  he  could  actually  succeed  in  collecting 
the  money,  either  from  the  drawers  of  the  bill,  or  from  Irving  & 
Co. ;  neither  did  it  then  appear  whether  by  the  laws  of  this  S'tate, 
where  they  resided,  they  were  not  actually  discharged  from  liability, 
so  that  no  judgment  could  be  recovered  against  them,  in  conse- 


32  ACCEPTANCE. 

quence  of  the  negligence  of  the  agent.  The  granting  of  the  new 
trial  in  that  case,  therefore,  proceeded  upon  the  principle  that  the 
agent  was  not  liable  for  the  whole  amount  of  the  bill,  unless 
damages  to  that  extent  had  been  sustained  by  his  neglect,  and 
that  to  recover  damages  to  that  extent  it  was 'incumbent  upon  the 
party  claiming,  to  give  sufficient  evidence  to  satisfy  the  Court  and 
jury  that  it  was  at  least  probable  that  he  had  sustained  damages  to 
that  amount.  Neither  the  Scotch  or  the  English  case,  therefore, 
is  an  authority  to  sustain  the  charge  of  the  judge  in  relation  to  the 
amount  of  damages  in  the  present  case  ;  on  the  contrary,  the  case 
of  Van  Wart  v.  Woolley  is  a  direct  authority  to  show  that  the 
agent  ought  not  to  be  charged  with  the  whole  amount  of  the  bill, 
unless  tliere  is  sufficient  evidence  to  render  it  at  least  probable 
that  tlie  whole  amount  of  the  debt  would  have  been  saved  if  the 
agent  had  discharged  the  duty  which  his  situation  imposed  upon 
him. 

Where  there  is  a  reasonable  probability  th.at  the  bill  would  have 
been  accepted  and  paid  if  the  agent  had  done  his  duty ;  or  where, 
by  the  negligence  of  the  agent,  the  liability  of  a  drawer  or  indorser 
who  was  apparently  able  to  pay  the  bill  has  been  discharged,  so 
that  the  owner  of  the  bill  cannot  legally  recover  against  such 
drawer  or  indorser,  I  admit  the  agent  by  whose  negligence  the 
loss  has  occurred  is  prima  facie  liable  for  the  whole  amount 
thereof,  with  interest,  as  damages ;  unless  he  is  able  to  satisfy  the 
Court  and  jury  that  tha  whole  amount  of  the  bill  has  not  been 
actually  lost  to  the  owner  in  consequence  of  such  negligence. 
The  case  under  consideration,  however,  is  one  of  a  very  diiferent 
description.  Here  it  is  perfectly  evident,  from  the  testimony  of 
one  of  the  drawees,  that  the  draft  would  not  have  been  accepted  at 
any  time  after  it  was  received  by  the  Aliens  for  collection,  as  the 
drawees  had  received  express  directions  from  the  drawer  not  to 
accept ;  nor  would  they  have  accepted  it,  even  without  such  a 
prohibition,  unless  they  had  previously  been  advised  so  to  do  by 
the  drawer.  The  fact,  also,  that  tiie  drawer's  credit  was  not  good 
at  the  time  this  draft  was  received  for  collection,  lie  having  suf- 
fered his  note  to  Boyd  and  Suydam  to  lie  under  protest  for  some 
time,  and  the  express  directions  given  by  him  to  the  drawees  not 
to  accept  this  draft,  rendered  it  highly  improbable  that  he  would 
liave  paid  the  draft  himself  to  save  liis  credit,  if  it  had  been  sent 
back  protested  at  an  earlier  day.     From  the  facts  of  the  case, 


ALLEN   V.    SDYDAM.  33 

tlicrcforc,  I  think  thoro  was  no  ground  for  supposing  tliat  the 
owners  had  sustained  any  actual  damage  from  the  mistake  of 
the  Aliens,  in  not  sending  on  the  bill  for  acceptance  immediately 
after  they  received  it  for  collection  in  New  York ;  or  that  their 
chance  of  obtaining* payment  from  the  drawer  was  materially 
impaired  by  the  delay  of  the  protest  for  a  few  days.  Under  the 
circumstances  of  this  case,  therefore,  I  think  the  jury  should  have 
been  instructed  that,  upon  the  evidence,  the  plaintiffs  were  only 
entitled  to  nominal  damages ;  or  at  least  they  should  have  been 
told  to  (iiiil  only  such  damages  as  they  should,  fi-om  the  evidence, 
believe  it  jjrobable  the  plaintiflfs  might  have  sustained  by  the  delay 
in  presenting  the  draft  for  accci)taiice  immediately ;  for  I  do  not 
see  how  it  is  possible  for  any  one  to  believe,  or  even  to  suppose  it 
probable  from  this  evidence,  that  the  whole  amount  of  this  draft 
was  in  fact  lost  to  the  plaintiffs  below,  by  the  delay  of  the  Aliens 
in  presenting  it  to  the  drawees,  and  giving  notice  of  the  dishonor 
thereof  immediately  to  the  drawer,  who  never  intended  that  it 
should  be  accepted  and  paid. 

For  these  reasons  I  am  of  opinion  that  the  judgment  of  the 
Court  below  should  be  reversed,  and  that  a  venire  cle  novo  should 
be  awarded  ;  to  the  end  that  no  more  damages  may  be  recovered 
than  such  as  a  jury  may  believe  it  probable,  from  the  evidence 
adduced,  that  the  plaintiffs  may  have  sustained  from  the  negligence 
of  their  agcnte. 

By  Senator  Verplanck.^  In  this  case  the  defendants  in  the 
Court  below  were  agents  for  collecting,  for  a  commission,  a  draft 
on  another  State,  payable  after  date.  What  are  the  duties  and 
responsil)ilities  of  agents  in  regard  to  presenting  such  paper  for 
acceptance  ?  Legal  authority,  as  well  as  commercial  usage,  has 
long  settled  as  a  genei-al  rule,  that  the  holder  of  a  bill  of  exchange, 
payable  at  a  specific  time,  is  not  obliged  to  present  such  bill  for 
acceptance  in  order  to  iiold  the  drawer  or  prior  indorser.  It  is, 
indeed,  usual  as  well  as  prudent,  to  do  so,  both  for  the  sake  of  the 
added  security  a*nd  better  credit  of  the  paper,  and  because  in  case 
of  refusal,  recourse  may  be  had  immediately  to  the  drawer.  It  is, 
therefore,  the  duty  of  an  agent  for  collection,  to  exert  the  cus- 
tomary prudence,  and  present  such  paper  for  acceptance  without 

1  Tliis  opinion  is  given  as  exceedingly  interesting  and  able  ;  though  that  part  of  it 
relating  to  the  damages  was  not  adopted. 

3 


34  ACCEPTANCE. 

delay,  since,  by  neglect,  his  principal  may  either  lose  the  drawee's 
security,  and  the  credit  it  gives,  or  else  be  prevented  from  malting 
such  inquiries  and  demands,  or  using  such  legal  or  precautionary 
measures  towards  the  drawer  or  other  parties,  as  might  tend  to 
secure  his  debt.  Tiiis  distinction  was  long  ago  stated  by  Pothier, 
who  points  out  the  different  obligations  of  him  who  holds  a  bill  as 
ail  agent  ("  mandataire  "),  "  who  ought  to  present  it  for  acceptance 
as  soon  as  possible ; "  and  those  of  him  who  holds  as  owner 
("  lorsque  le  porteur  est  en  meme  temps  le  proprietaire  "),  who 
may  present  it  when  he  thinks  fit.  Contract  du  Ciiange,  partie 
1,  c.  5,  art.  128.  This  distinction  was  recognized  in  the  English 
elementary  books  (see  earlier  editions  of  Chitty  on  Bills,  and 
other  writers  there  cited)  as  part  of  the  general  commercial  law 
of  Europe,  before  any  express  judicial  decision  to  that  point.  The 
modern  case  of  Van  Wart  v.  Woolley,  5  Dowl.  &  Ryl.  374 ;  3 
Barn.  &  Ores.  439,  has  sanctioned  the  principle  judicially,  by 
deciding  that  the  delay  of  an  agent  to  give  notice  of  non-acceptance 
of  bills,  subjected  him  to  damages,  even  when  the  drawer  was  not 
discharged.  The  case  of  tiie  Bank  of  Scotland  v.  Hamilton,  cited 
in  1  Bell's  Commentary  on  the  Laws  of  Scotland,  409,  decided  by 
the  Scotch  Court  of  Sessions,  is  remarkable  for  its  similarity  to  the 
present  case,  and  is  entitled  to  the  same  authority  with  us,  as  it 
receives  in  England  (see  Chitty  on  Bills,  300,  who  refers  to  that 
case  as  an  authority  to  this  point),  as  well  on  adcount  of  the 
general  uniformity  of  the  law  of  negotiable  paper  in  the  civilized 
world,  as  because  it  is  evident  from  the  books  that  on  this  head 
the  Scotch  law  conforms  to  the  English,  and  is  much  governed  by 
its  usages  and  decisions.  In  that  case,  a  bill  payable  at  Glasgow, 
three  days  after  date,  was  sent  to  an  agent  at  that  city  for  collec- 
tion. It  is  stated  "  that  it  is  not  customary  for  porteurs  (bearers) 
of  bills  at  short  dates  to  present  them  for  acceptance."  Before  the 
day  of  payment  the  drawer  failed,  and  the  Glasgow  Bank  refused 
to  accept.  It  was  not  clear  whether  the  bank  would  have  accepted 
the  draft  if  it  had  been  immediately  presented,  for  the  bank  had  no 
funds  of  the  drawer,  and  the  practice  had  been  to  make  provisions 
for  such  drafts  at  the  day  of  payment.  The  action  was  against  the 
agents.  "  The  Court  held,  that,  as  ag-ents,  they  were  bound  imme- 
diately to  present  the  bill  for  acceptance." 

Thus,  it  seems  to  be  the  general  commercial  law  of  the  civilized 
■world,  that  when  a  bill  is  payable  at  a  day  certain,  the  drawer  and 
indorser  are  not  discharged  if  the  bill  is  not  presented  until  the 


ALLEN    V.   SUYDAM.  85 

day  of  payment.  Yet  it  is  still  the  duty  of  the  a^•entJor  collection 
to  present  the  bill  for  acceptance  without  delay,  and  to  give  imme- 
diate notice  of  refusal  to  accej)t.  The  reason  of  this,  I  take  to  be, 
that  the  drawer,  by  fixing  a  day  certain  for  payment,  assumes  the 
responsibility  of  providing  funds  at  that  time,  whatever  may  have 
been  his  previous  credit  with  the  drawee.  Again:  an  indorser 
makes,  as  the  phrase  is,  "  a  new  bill  on  the  same  terms ;  and 
besides,  he  waives  liis  right  of  immediate  acceptance,  by  not 
enforcing  it,  but  putting  his  bill  into  circulation  without  accept- 
ance." Not  so  he  who  places  a  bill  in  his  agent's  hands  for 
collection.  He  makes  no  waiver  or  postponement  of  any  of  his 
rights,  l)ut  looks  directly  to  the  means  necessary  or  expedient  for 
his  own  security.  In  the  present  instance,  the  draft,  which  the 
payees  might  have  retained  until  the  day  of  payment,  had  they 
thought  fit,  was  placed,  directly  upon  receiving  it,  in  the  hands  of 
agents,  who  were  to  receive  "  a  commission  or  compensation  for 
collecting  the  same."  It  was  retained  for  seventeen  days  by  the 
agents,  who  could  have  forwarded  it  for  acceptance  the  next  day. 
Nor  after  it  had  been  refused  acceptance  did  they  again  present  it 
for  payment.  In  the  delay  of  presentation  for  acceptance,  there 
was  want  of  due  diligence.  The  principle  is  familiar,  that  an 
agent  for  pay  is  bound  to  use  such  means,  care,  skill,  and  pre- 
caution, as  are  adequate  to  the  due  execution  of  his  trust.  He 
must  use  the  ordinary  diligence  of  a  skilful  and  prudent  man  in 
such  affairs.  '  Now  an  early  presentment  for  acceptance  is  an 
obvious  precaution  which  a  prudent  man  of  business  would  take, 
to  insure  collection  of  a  questionable  draft.  By  this  neglect  or 
delay,  the  payees  were  prevented  from  making  those  demands  and 
taking  such  immediate  measures  as  to  the  drawer,  on  receipt  of 
notice  of  non-acceptance,  as  might  possibly  have  secured  the  payees 
in  some  way  or  other.  At  the  late  period  at  which  they  did  receiye 
such  notice,  they  preferred  looking  to  the  responsibility  of  their 
agents.  These  must  be  held  responsible  for  the  consequences  of 
their  negligence  to  the  amount  of  the  damage  so  caused.  Nor  is 
it  a  sufficient  defence  of  the  agents,  that  the  bill  would  not  have 
been  accepted  if  immediately  presented,  because  the  drawer  had 
directed  that  it  should  not  be,  nor  that  it  was  uncertain  whether 
the  funds  in  the  hands  of  the  drawees  were  sufficient  or  not,  to 
meet  the  draft  at  the  day  fixed  for  payment.  At  and  after  the 
time  when  the  draft  sliould  have  been  presented,  the  drawer  was 
in  business  at  New  York,  struggling  for  and  obtaining  credit,  and 


36  ACCEPTANCE. 

having  the  command  of  funds  which  he  applied  to  pay  other  drafts 
presented  subsequently  to  the  date,  when,  with  due  diligence, 
notice  of  the  non-acceptance  of  this  bill  would  have  been  received. 
Whatever  might  have  been  his  first  intention,  it  was  not  for  a 
court  and  jury  to  assume  the  broad  presumption  that  an  imme- 
diate demand,  upon  return  of  the  draft,  with  such  other  legal 
measures  as  the  state  of  business  between  the  parties  or  other 
circumstances  might  render  advisable,  would  not  have  led  to  the 
ultimate  payment.  As  a  mere  conjectural  inference  from  the 
character  and  course  of  business  of  Eastabrook,  as  incidentally 
presented  in  the  evidence,  I  should  think  the  probability  rather 
the  other  way,  and  that  immediate  and  urgent  measures  might 
perhaps  have  prevented  loss.  His  death,  and  the  consequent 
insolvency  of  his  estate,  have  left  all  this  mere  matter  of  con- 
jecture ;  but  it  is  quite  immaterial  as  to  the  question  of  the 
agent's  duty,  and  the  right  of  action  against  him,  though  were  it 
distinctly  in  evidence  either  way,  it  might  affect  the  measure  of 
damages. 

Thus  far,  then,  I  think  the  law  quite  clear  as  to  the  rights  of 
holders  of  bills,  and  the  duties  of  collecting  agents  ;  but  I  have 
had  more  hesitation  as  to  the  rule  of  damages.  Is  the  plaintiff,  in 
similar  cases,  to  be  obliged  to  make  out  in  evidence  the  precise 
actual  amount  of  the  damage  he  sustained,  and  thus  to  give  to  the 
party  in  fault  all  the  numerous  and  great  advantages  of  doubt, 
uncertainty,  and  difficulty  in  the  proof?  Or  are  we  to  apply  to 
these  cases  the  doctrine  of  laches  in  commercial  paper,  as  between 
the  holder  and  other  parties,  and  consider  the  agent  as  liaving 
made  the  paper  his  own  by  his  neglect  ?  Contradictory  as  these 
rules  are,  they  have  yet  each  their  share  of  authority,  and  are  just 
and  wise  when  applied  to  other  questions  ;  but  I  am  not  satisfied 
with  the  equity  in  the  commercial  policy  of  either,  when  applied  to 
a  collecting  agency,  and  I  have  sought  in  the  decisions  for  some 
safer  and  more  equitable  doctrine  on  that  head. 

Considering  the  subject  in  regard  to  commercial  policy,  there  is, 
on  one  side,  the  vast  amount  of  paper  daily  collected  through  our 
banks,  the  great  public  necessity  for  giving  every  facility  and 
inducement  to  such  collections,  the  serious  drawback  on  those 
facilities  and  inducements  that  would  be  occasioned,  and  the 
opportunity  of  fraud  afforded  if  worthless  paper  deposited  for 
collection  can,  whenever  parties  are  discharged  by  the  blunder 


ALLEN   V.    SUYDAM.  37 

of  a  clerk,  be  saddled  irrevocably  on  responsible  a<j:ents  and 
"made  their  own  "  absolutely,  and  without  allowing  any  defence 
or  nuli<i;atiun  of  danuigos.  On  the  other  band,  the  policy  of  hold- 
ing sucii  agents  to  strict  accountability  is  e([ually  clear.  Our 
whole  system  of  negotiable  paper,  and  its  responsibilities,  formed, 
as  it  is,  by  long  experience,  and  admirably  adjusted  to  the  varied 
uses  of  commerce,  rests  upon  the  single  princii)le  of  strict  punc- 
tuality in  demands,  j)resentments,  and  notices,  as  well  as  in  pay- 
ments. Now^  the  policy  and  necessity  of  that  punctuality,  apply 
with  the  same  force  to  the  agent  of  such  paper  that  they  do  to  the 
principal.  I  can,  therefore,  find  no  sounder  rule  of  damages,  nor 
one  better  protecting  and  reconciling  all  these  claims  of  policy  and 
justice,  than  that  pointed  out  by  the  decisions  in  a  large  class  of 
cases  of  agency,  and  by  the  analogy  of  the  measure  of  damages  in 
trover.  In  those  cases,  the  presumption  is,  in  the  first  instance, 
to  the  full  nominal  amount  of  the  loss,  as  if  appears  on  the  face  of 
the  transaction  against  the  agent  wanting  in  diligence,  or  the  party 
guilty  of  the  tortious  conversion.  Thus,  where  an  agent  or  factor 
neglects  to  insure  for  his  principal,  according  to  order,  he  is  held 
responsible  for  the  default,  prima  facie,  to  the  total  amount  which 
he  ought  to  have  covered  by  insurance.  But  at  the  same  time  he 
is  allowed  to  put  himself  in  the  place  of  the  underwriter,  and  to 
prove  fraud,  deviation,  or  any  other  defence  which  would  have 
been  good,  bad  the  insurance  been  made,  or  which  would  go  to 
show  that  nothing  at  all,  or  how  much,  was  actually  lost  by  the 
neglect.  Delaney  v.  Stoddart,  1  T.  R.  22  ;  Wallace  v.  Teimiir,  2 
id.  18S  ;  Wel)ster  /•.  De  Tastet,  7  id.  157.  In  the  courts  of  this 
State,  lUmdle  v.  Moore,  o  Johns.  Cas.  30.  And  in  the  courts  of 
the  United  States,  Morris  v.  Summerl,  2  Wash.  203.  See  also 
1  Phil,  on  Ins.  r)21,  and  the  cases  there  cited.  So,  too,  in 
actions  against  sheriffs,  where  those  official  public  agents  become 
chargeable  with  the  debt  of  another,  by  their  own  negligence  or 
misconduct.  When  the  default  is  established,  the  amount  due 
the  plaintiff  in  the  original  suit  is  the  j/rima  facie  evidence  of  the 
measure  of  damages.  This  presumjttion  may  be  controlled  or 
rebutted,  and  the  sheriff  may  give  in  evidence  any  fact,  showing 
cither  that  the  party  has  not  been  aciually  injured,  or  to  a  much 
less  amount.  He  may  show,  for  instance,  the  insolvency  of  the 
original  debtor.  But  the  burden  of  proof  is  upon  him  ;  if  lie 
leaves  the  presumption  uncontradicted,  that  establishes  the  meas- 


38  ACCEPTANCE. 

ure  of  damages.  This  has  been  frequently  ruled  at  our  Circuits, 
nor  can  I  find  that  it  has  ever  been  questioned  in  our  Supreme 
Court,  and  is  substantially  recognized  in  Potter  v.  Lansing,  1 
Johns.  R.  215 ;  Russell  v.  Turner,  7  id.  189.  The  Massachusetts 
decisions  are  particularly  full  and  express  on  this  very  point. 
See  10  Mass.  470;  11  id.  89;  ib.  188;  13  id.  187.  Similar 
decisions  may  be  found  in  tlie  reports  of  other  States.  So  again 
in  trover.  In  Ingalls  v.  Lord  (1  Cowen,  240),  in  trover  for  a 
note,  it  was  held,  that  the  prima  facie  measure  of  damages  was 
the  face  of  the  note ;  but  that  evidence  might  be  given  to  reduce 
the  amount,  by  proving  payment  in  part,  or  the  insolvency  of  the 
maker,  or  any  other  fact  invalidating  the  note  or  lessening  its  value. 

It  is  true,  that  Lord  Tenterden^  in  Van  "Wart  v.  Woolley,  above 
cited,  held  that  damages  must  be  shown,  and  that  the  face  of  the 
bill  is  not  the  conclusive  measure ;  but  this  I  think  is  not  in  con- 
tradiction to  the  view  tliat  I  have  taken.  I  therefore  take  the 
cases  before  mentioned  to  point  out  the  sound  doctrine  here.  The 
face  of  the  bill  is  tlie  prima  facie  measure  of  damages.  These 
may  be  reduced  by  any  positive  evidence  proving  the  real  damage 
to  be  less ;  but  the  burden  of  that  proof  must  be  upon  the  negli- 
gent agent,  and  not  on  the  party  who  suffers  by  his  negligence. 
Circumstances  like  those  of  the  present  case,  may  often  render  it 
difficult  or  impossible  for  either  party  to  prove  or  even  to  form  a 
probable  estimate  of  tlie  precise  damages  incurred  by  the  agent's 
neglect.  In  such  cases,  is  it  not  just  that  those  chances  of  loss 
which  must  fall  upon  one  or  the  other,  should  be  thrown  upon  the 
party  in  default,  and  not  upon  the  innocent  sufferer  ?  It  was, 
then,  for  the  defendants  here  to  show  that  the  debt  would  not 
have  been  paid  had  due  diligence  been  used,  or  that  there  were 
any  other  circumstances  to  diminish  the  actual  damages  below  the 
nominal  amount.  I  do  not  see  that  this  was  done,  and  therefore 
think  that  Chief  Justice  Jones  was  right  in  his  charge :  "  That  the 
Court  and  jury  having  no  knowledge  what  the  amount  of  damages 
was  except  from  the  proof  of  the  amount  of  the  draft,  the  jury 
should  fiitd  for  the  plaintiffs  for  tlie  amount  of  the  draft,  and 
interest  from  the  day  it  became  due." 

Perhaps  the  case  was  a  hard  one.  So  are  many  others  that 
arise  under  our  law  of  negotiable  paper,  in  consequence  of  laches 
of  parties.  In  all  such  instances,  the  hardship  of  the  particular 
case  must  yield  to  the  necessity  of  adhering  to  some  general  rule 


ALLEN    V.    SUYDAM.  39 

founded  on  broad  considerations  of  public  policy.  I  can  find  no 
such  rule  safer  or  more  conducive  to  commercial  convenience,  or 
sanctioned  by  stronger  authority,  than  tiie  one  1  have  stated. 

If,  however,  we  abandon  this  rule,  the  only  alternative,  in  my 
judgment,  so  far  as  authority  governs,  is  to  adopt  the  stricter  doc- 
trine of  our  Supreme  Court,  in  Le  Guen  v.  Gouverneur  and  Kem- 
ble,  1  Johns.  Cas.  4<;7,  and  affirmed  in  1800,  in  this  Court:  '^  Tliat 
where  the  property  consists  of  credits,  the  agent  whose  breach  of 
orders  causes  damages,  is  bound  to  answer  to  the  amount  of  the 
credits,  and  the  principal  may  al)andon  to  him."  The  only  defence 
distinctly  recognized  as  valid  in  those  doctrines,  is  that  of  fraud, 
♦  or  some  similar  one  going  to  invalidate  the  whole  contract. 

Upon  this  principle,  the  agents  here  would  be  held  to  have  made 
the  paper  their  own  by  their  default,  if  the  plaintiffs  below  thought 
fit  to  abandon  it  to  them  ;  and  this,  perhaps,  is  the  ground  on 
which  the  Superior  Court  rested  their  decision  in  this  case  ;  the 
reasons  of  which  I  regret  that  we  have  not  before  us. 

Under  tiie  circumstances  of  the  case,  either  this  rule  or  that 
which  I  have  stated  before,  would  affirm  the  judgments  of  the 
courts  below ;  but  I  place  my  own  vote  for  affirmance  upon  the 
ground  first  stated,  as  being  the  most  equitable,  the  most  condu- 
cive to  public  policy,  and  as  supported  by  the  analogy  and  autiiority 
of  many  modem  decisions. 

Judgment  reversed. 

In  the  rule  for  judgment  of  reversal,  the  following  entry  was 
made:  "It  is  further  ordered  and  adjudged,  that  an  ag'ent  who 
receives  a  bill  of  exchange  for  roUvrtion  which  has  not  been 
accepted,  is  bound  to  present  the  same  for  acceptance  without 
unreasonable  delay,  as  well  as  to  present  the  same  for  payment 
when  it  becomes  due,  or  he  will  be  liable  to  his  prineijjdl  for  the 
damages  which  the  latter  sustains  by  such  negligence." 

The  doctrine  of  this  case  is  again  held  in  the  Court  of  Appeals  in  Walker  v. 
Bank  of  The  State  of  New  York,  9  N.  Y.  (5  Seld.)  582,  decided  in  185-1 ;  and 
upon  the  rulin<j  respectinfj  dama<xes  seems  just  and  reasoiiahle.  But  it  is  held 
in  Bank  of  Washington  v.  Triplett,  I  Peters,  25,  (1828)  in  the  case  of  a 
bank  to  which  a  bill  had  been  sent  for  collection,  that  a  settled  usage  of  the 
bank,  not  to  note  the  bill  as  dishonored,  after  calling  on  the  drawer  for  accept- 
ai^e,  is  a  good  defence  against  the  charge  of  negligence.  And  it  must  be  ad- 
mitted that  the  language  ol"  Chief  Justice  Marshall  is  against  the  rule  letjuiring 
the  agent  to  present  such  bills  as  the  one  in  question  for  acceptance ;  but  no 
authorities  were  before  him,  and  the  case  was  actually  decided  upon  the  ques- 
tion of  usage. 


40  ACCEPTANCE.  . 

With  respect  tp  the  time  when  bills  payable  at  or  after  sight  should  be 
presented  for  acceptance,  the  only  rule,  whether  the  bill  be  foreign  or  inland, 
and  whether  payable  at  sight  or  so  many  days  after  sight,  or  in  any  other  man- 
ner, is,  that  they  must  be  presented  within  a  reasonable  time  ;  and  as  the'  drawer 
may  sustain  a  loss  by  the  holder's  keeping  it  any  great  length  of  time,  it  is  ad- 
visable in  all  cases  to  present  it  as  soon  as  possible ;  but  he  is  not  obliged  to  send 
it  by  the  first  opportunity.  (Shitty,  Bills,  274 ;  Story,  Bills  of  Exchange, 
§   231  ;   Muilman  v.  D'Eguino,  2  H.  Bl.  565. 

In  the  case  of  a  foreign  bill,  payable  after  sight,  it  is  no  laches  to  put  it  into 
circulation  before  acceptance,  and  to  keep  it  in  circulation  without  acceptance, 
as  long  as  the  convenience  of  the  successive  holders  may  require  ;  and  it  has 
been  even  laid  down  that,  if  such  a  bill  drawn  at  three  days'  sight  were  kept  out 
in  that  way  for  a  year,  this  would  not  be  laches.  Chitty,  Bills,  275  ;  Story, 
Bills  of  Exchange,  §  231.  So  .in  the  case  of  a  bill  payable  in  India  sixty  days» 
after  sight,  it  would  not  necessarily  be  negligence  to  omit  presenting  it  for  accept- 
ance for  twenty-six  days  after  its  arrival ;  but  if,  instead  of  putting  it  into  cir- 
culation, the  holder  were  to  lock  it  up  for  any  length  of  time,  this  would  be 
laches.     Muilman  v.  D'Eguino,  2  H.  Bl.  5(35. 

In  this  case,  Eijre,  C.  J.,  said  :  "  It  is  not  necessary  to  lay  down  any  new  rule 
as  to  bills  of  exchange  payable  at  sight,  or  within  a  given  time  afterwards.  ... 
It  would  be  a  very  serious  and  difficult  thing  to  say  that  a  person  buying  a  for- 
eign bill  in  the  way  these  were  bought,  should  be  obliged  to  transmit  it  by  the 
first  opportunity  to  the  place  of  its  destination.  There  would  also  be  a  great 
difficulty  in  saying  at  what  place  such  a  bill  should  be  presented.  The  courts 
have  been  very  cautious  in  fixing  any  time  for  presenting  for  acceptance  an  in- 
land bill,  payable  at  a  certain  period  after  sight,  and  it  seems  to  me  more  neces- 
sary to  be  cautious  with  respect  to  a  foreign  bill  payable  in  that  manner.  I 
think,  indeed,  the  holder  is  bound  to  present  the  bill  ii>  a  reasonable  time." 

Per  Buller,  J.  "  Due  diligence  is  the  only  thing  to  be  looked  at,  whether 
the  bill  be  foreign  or  inland.  .  .  .  But  I  think  a  rule  may  be  thus  laid  down  as 
to  laches,  with  regard  to  bills  payable  at  sight,  or  a  certain  time  after  sight, 
viz.,  tJtat  they  ouglit  to  he  put  into  circulation ;  and  if  a  bill  drawn  at  three 
days'  sight  were  kept  out  in  that  way  for  a  year,  I  cannot  say  that  there  would 
be  laches ;  but  if,  instead  of  putting  it  into  circulation,  the  holder  were  to  lock 
it  up  for  any  length  of  time,  I  should  say  that  he  would  be  guilty  of  laches  ;  but 
further  than  this  no  rule  can  be  laid  down." 

A  similar  question  as  to  laches  arose  in  Goupy  v.  Harden,  7  Taunt.  159,  in  an 
action  upon  a  foreign  bill  payable  thirty  days  after  sight.  Gibbs,  C.  J.,  said  : 
"  The  distinction  is  between  bills  payable  at  a  certain  number  of  days  after  date, 
and  bills  payable  at  a  certain  number  of  days  after  sight.  In  the  former  the 
holder  is  bound  to  use  all  due  diligence,  and  to  present  such  bill  at  its  maturity ; 
but  in  the  latter  case  he  has  a  right  to  put  the  bill  into  circulation  before  he  pre- 
sents it,  and  then,  of  course,  it  is  uncertain  when  it  will  be  presented  to  the 
drawee.  It  is  to  the  prejudice  of  the  holder  if  he  delays  to  do  it,  and  he  loses 
his  money  and  his  interest."  See  also  Straker  v.  (Jraham,  4  Mees.  &  W.  7il ; 
Middleton  Bank  v.  Morris,  28  Barb.  616  ;  Mullick  v.  Radakisscn,  28  Eng.  Law 
&  E4.  86;  Mellish  v.  Rawdon,  9  Bing.  416;  Fry  v.  Hill,  7  Taunt.  3'J7  ;  Shute 
V.  Robins,  Mood  &  M.  133;  s.  c,  3  Car.  «&  P.  80;  Darbishire  v.  Parker,  6  East, 
12;  Chitty,  Bills,  274-279.     If  there  is  a  clear  and  determinate  usage  of  trade 


SPEAR    V.    PRATT.  41 

wlil'h  ascertains  and  fixes  a  definite  time  within  wliieh  the  presentment  must  be 
mad"',  the  usage  will  .nrovern.  Stury,  Bills  of  Exehan^^e,  §  231  ;  Mellish  v. 
Rawdon,  i»  Hiiig   410. 

The  kuld'T  uf  an  inland  bill  payable  after  j-ight,  is  not  bound  instantly  to 
transmit  the  bill  for  aceeptance ;  he  may  put  it  into  cireulation,  and  if  he  ilo  not 
circulate  it,  he  may  take  a  reasonable  time  to  present  it  for  acceptance ;  and  the 
keepin<(  it  an  entire  day  after  he  received  it,  and  a  delay  to  present  tintil  the 
<burlh  day  a  bill  on  Loudon,  yiven  within  twenty  miles  of  that  city,  is  not  unrea- 
sonable. C^liitly,  Hills,  27;»;  Fry  v.  Hill,  7  Taunt.  'Ml;  Ilarker  i;.  Anderson, 
21  Wend.  ;)72,  and  casts  cited  by  the  Court. 

I  Respecting  the  question,  What  is  reasonable  time,  see  Ilarker  v.  Ander.son, 
21  Wend.  372,  and  Mohawk  Bank  v.  Broderick,  13  Wend.  133. 

Though  there  has  been  some  conflict  in  England  as  to  whether  this  is  a  ques- 
tion of  law  or  fact  (see  cases  above  cited),  the  rule  has  become  pretty  well  set- 
tled in  this  country,  that  the  determination  of  the  (juestion  must  depend  on  t'ue 
particular  circumstance  of  the  case;  that  if  the  facts  are  found,  it  becomes  ex- 
clusively a  question  for  the  Court;  if  not,  it  is  a  mixed  question  of  law  and  f.ut, 
to  be  determined  l)y  the  jury,  under  proper  instructions  from  the  Court. 

The  result  of  the  cases  upon  this  subject  may  be  stated  thus  :  — 

1.  Presentment  fur  acceptance,  though  always  proper  and  advisable,  is  abso- 
lutely necessary  only  in  the  case  of  bills  payable  on  demand  or  (d  or  after  si<jht ;. 
and  it  should  be  made  within  a  rcastjnable  time.     It  is  always  the  wisest  course, 
when  practicable,  to  present  the  bill  for  acceptance  before  it  is  put  into  circula- 
tion, though  the  law  does  not  require  this. 

2.  If  a  bill  payable  at  a  certain  time  aj'ler  date  is  presented  for  acceptance.  — 
the  advisable  but  not  a  necessary  proceeding,  —  and  the  drawee  refuses  to  ac- 
cept, iuimcdiate  notice  should  be  given  to  the  prior  parties  to  charge  them.  But 
in  Pennsylvania,  protest  and  notice  of  non-acce[)tauce  in  the  case  of  foreign  bills 
is  not  necessary.  Read  v.  Adams,  6  Serg.  &  R.  356 ;  Brown  v.  Barry,  3  Da!l. 
365 ;  Clarke  v.  llussel,  3  Dall.  415.     See  Story,  Bills  of  Exchange,  §  273,  note. 


Spear  and  Patien  v.  Pratt. 

(2  Hill,  f>S2.     Supreme  Court  of  New  York,  May,  1842.) 

What  const  it  iilos  arcf  planer.  —  If  the  drawee  of  a  bill  of  exchange  write  his  name  across 
the  face  of  tlie  hill,  tliis  binds  him  as  an  acceptor ;  and  this  too,  tii()U_u:h  tlie  statute 
requires  accciUauce  to  lie  in  writintr,  and  signed  by  tlie  aecci)tor  or  his  agent. 

The  defendant,  drawee  of  a  bill  of  exchange,  wrote  his  name 
across  the  face  of  the  bill.  He  was  a  resident  of  New  York.  The 
question  was  wlictlicr  he  was  bound  as  an  accej)tor. 

CowEN,  J.  Any  words  written  by  the  drawee  on  a  bill,  not  put- 
ting a  direct  negative  upon  its  request,  as  "  accepted,"  "  presented," 


42  ACCEPTANCE. 

"  seen,"  the  day  of  the  months  or  a  direction  to  a  third  person  to 
pay  it,  is  prima  facie  a  complete  acceptance,  by  the  law  merchant. 
Bayley  on  Bills,  163,  Am.  ed.  of  1880,  and  the  cases  there  cited. 
Writing  his  name  across  the  bill,  as  in  this  case,  is  a  still  clearer 
indication  of  intent,  and  a  very  common  mode  of  acceptance.  This 
is  treated  by  the  law  merchant  as  a  written  acceptance,  —  a  signing 
by  the  drawee.  "  It  may  be,"  says  Chitty,  "  merely  l)y  writing  his 
name  at  the  bottom  or  across  tlie  bill ; "  and  he  mentions  this  as 
among  the  more  usual  modes  of  acceptance.  Chitty  on  Bills,  320, 
Am.  ed.  of  1839. 

It  is  supposed  that  the  rule  has  been  altered  by  1  Rev.  St.  757, 
2d  ed.  §  6.  This  requires  the  acceptance  to  be  in  ivriting,  and 
sig-ncd  by  the  acceptor  or  his  agent.  The  acceptance  in  question 
was,  as  we  have  seen,  declared  by  the  law  merchant  to  be  both  a 
'writing-  and  signing.  The  statute  contains  no  declaration  that  it 
should  be  considered  less.  An  indorsement  must  be  in  writing 
and  signed  ;  yet  the  name  alone  is  constantly  holden  to  satisfy  the 
requisition.  No  particular  form  of  expression  is  necessary  in  any 
contract.  The  customary  import  of  a  word,  l)y  reason  of  its  appear- 
ing in  a  particular  place,  and  standing  in  a  certain  relation,  is  con- 
sidered a  written  expression  of  intent  quite  as  full  and  effectual  as 
if  pains  had  been  taken  to  throw  it  into  the  most  labored  periphrase. 
It  is  said  the  revisers,  in  their  note,  refer  to  the  French  law  as  the 
basis  of  the  legislation  which  they  recommended  ;  and  that  the 
French  law  requires  more  than  the  drawee's  name, —  the  word 
accepted,  at  least.  That  may  be  so ;  but  it  is  enough  for  us  to  see 
that  both  the  terms  and  the  spirit  of  the  act  may  be  satisfied  short 
of  that  word,  and  more  in  accordance  with  the  settled  forms  of 
commercial  instruments  in  analogous  cases.  The  whole  purpose 
was  probably  to  obviate  the  inconveniences  of  the  old  law,  which 
gave  effect  to  a  parol  acceptance. 

New  trial  denied. 

Verbal  acceptance  is  valid  in  the  absence  of  statute,  if  communicated  to  bim 
who  takes  the  bill,  and  he  takes  it  on  the  credit  of  such  acceptance.  Fisher  v. 
Beckwith,  19  Vt.  31 ;  Bank  of  Rutland  v.  Woodruff,  34  Vt.  89  ;  Martin  v.  Ba- 
con, 4  Const.  132  ;  Spaulding  v.  Andrews,  48  Penn.  State,  411 ;  Ward  v.  Allen, 
2  Met.  53;  Williams  v.  Winans,  2  Green  (N.  J.),  339;  Ontario  Bank  v.  Worth- 
ington,  12  Wend.  593;  Rees  v.  Warwick,  2  Barn.  &  Aid.  11;];  C'rowell  v.  Van 
Bibber,  18  La.  An.  637  ;  In  re  Agra,  &c.,  Bank,  Law  Rep.  2  Ch.  391  ;  Coolidge 
V.  Payson,  infra,  and  note. 

Where  a  corporation  draws  upon  itself,  or  a  partner  draws  on  his  firm  for 


COOLIDGE   V.    PAYSON.  43 

partnership  purposes,  or  an  individual  on  liimsclf,  formal  acceptance  is  unnec- 
essary;  tlie  act  of  drawing  is  deemed  acceptance.  Ilasey  v.  White  Pigeon  Su- 
gar Co.,  1  Doug.  (Mich.)  19.3;  Dougal  v.  Cowles,  5  Day,  oil ;  Cunningham  v. 
Wardwell,  3  Fairf.  4GG  ;  Marion,  &c.,  II.  Co.  ».  Hedge,  9  Ind.  163. 

If  the  drawee's  agent  write  an  order  on  the  bill  to  another  to  pay  it,  this  is 
an  acce|)|(ince.     Harper  >;.  West,  1  ('ranch,  ('.  ('.  l'J2. 

See  further  upon  tin's  .sid)jcct,  Phillips  v.  Frost,  2'J  Maine,  77  ;  Brannin  v.  Hen- 
derson, 12  B.  Mon.  61,  in  wiiich  the  drawee  had  written  upon  the  back  of  the 
bill,  "  I  will  see  the  within  paid  eventually  ;  "  Edson  v.  Fuller,  2  Foster,  183,  in 
which  a  parol  promise  "  to  settle,"  was  proved  ;  Barnet  v.  Smith,  10  Foster,  256, 
in  which  a  check  was  pronounced  ''good  "  by  the  cashier  of  the  bank  upon  which 
it  was  drawn.  In  all  these  cases  the  words  in  (juotation  marks  were  held  to  con- 
stitute acceptance.     Scd  qucere.     See  Powell  i'.  Jones,  1  Esp.  17. 

It  has  even  been  held  that  tlie  words  "  I  will  not  accept  this  bill,"  written 
on  the  draft,  constitute  a  valid  acceptance.  Lumley  v.  Palmer,  Cas.  Temp. 
Hardw.,  London  ed.  74.  But  so  paradoxical  a  ruling  may  well  be  questioned. 
See  Bailey  on  Bills,  1G4,  note  (2  Am.  ed.),  where  it  is  said:  "But  by  Lord, 
Mansfield,  in  Peach  v.  Kay,  .  .  .  '  it  was  held  by  all  the  judges  that  an  express 
refusal  to  accept,  written  on  the  bill  where  the  drawee  apprised  the  party  who 
took  it  away  what  he  had  written,  was  no  acceptance  ;  but  if  the  drawee  had  in- 
tended it  as  a  surprise  ujjon  the  party,  and  to  make  him  consider  it  as  an  accept- 
ance, they  seemed  to  think  it  iiiight  have  been  otherwise.'"  See  1  Parsons, 
Notes  and  Bills,  283. 


CooLiDGE  et  al.  V.  Payson  et  al. 

(2  Wheaton,  GG.     Supreme  Court  of  the  United  States,  February,  1817.) 

Promise  to  accept.  —  A  letter  written  within  a  reasonable  time,  before  or  after  the  date 
of  a  bill  of  exchange,  describing  it  in  terms  not  to  be  mistaken,  and  i)romising  to 
accept  it,  is,  if  sliown  to  the  person  wlio  afterwards  takes  the  bill  on  the  credit  of 
the  letter,  a  virtual  acceptance,  binding  the  person  who  makes  the  promise ;  and 
this  too  though  it  was  drawn  in  favor  of  a  person  who  took  it  for  a  preexisting 
debt. 

The  case  is  stifTiciently  stated  in  the  opinion  of  tlio  Court. 

Maiish.\ll,  C.  J.  This  suit  was  instituted  by  Payson  Sc  Co.,  as 
indorsers  of  a  bill  of  exchange,  drawn  by  Cornthwaite  and  Cary, 
payable  to  the  order  of  John  Randall,  against  Coolidge  <fc  Co.  as 
the  acceptors. 

At  the  trial  the  holders  of  the  bill  on  which  the  name  of  John 


44  ACCEPTANCE. 

Randall  was  ladorscd,  olTered,  for  tlie  purpose  of  proving  the  in- 
dorsement, an  affidavit  made  by  one  of  the  defendants  in  the  cause, 
in  order  to  obtain  a  continuance,  in  which  he  referred  to  the  bill  in 
terms  which,  tliey  supposed,  implied  a  knowledge  on  his  part  that 
the  plaintiffs  were  the  rightful  owners.  The  defendants  jDbjected 
to  the  bill's  going  to  the  jury  without  further  proof  of  the  indorse- 
ment ;  but  the  Court  determined  that  it  should  go  with  the  affida- 
vit to  the  jury,  who  might  be  at  liberty  to  infer  from  tlience  that 
the  indorsement  was  made  by  Randall.  To  this  opinion  the  coun- 
sel for  the  defendants  in  the  Circuit  Court  excepted,  and  this 
Court  is  divided  on  the  question  wlicther  the  exception  ought  to  be 
sustained. 

On  the  trial  it  appeared  that  Coolidge  &  Co.  held  the  proceeds 
of  part  of  the  cargo  of  the  "  fliram,"  claimed  by  Cornthwaite  and 
Gary,  which  had  been  captured  and  held  as  lawful  prize.  The 
cargo  had  been  acquitted  in  the  District  and  Circuit  Courts,  but, 
from  the  sentence  of  acquittal,  tlie  captors  had  appealed  to  this 
Court.  Pending  the  appeal  Cornthv/aite  &  Co.  transmitted  to 
Coolidge  &  Co.  a  bond  of  indemnity,  executed  at  Baltimore  with 
scrolls  in  the  place  of  seals,  and  drew  on  them  for  two  thousand 
seven  hundred  dollars.  This  i)ill  w^as  also  payable  to  the  order  of 
Randall,  and  indorsed  by  him  to  Payson  &  Co.  It  was  presented 
to  Coolidge  &  Co.  and  protested  for  non-acceptance.  After  its  pro- 
test, Coolidge  &  Co.  wrote  to  Cornthwaite  and  Cary  a  letter,  in 
which,  after  acknowledging  the  receipt  of  a  letter  from  them,  with 
the  bond  of  indemnity,  they  say,  '•  this  bond,  conformably  to  our 
laws,  is  not  executed  as  it  ought  to  be  ;  but  it  may  be  otherwise  in 
your  State.  It  will  therefore  be  necessary  to  satisfy  us  tliat  the 
scroll  is  usual  and  legal  with  you  instead  of  a  seal.  We  notice  no 
seal  to  any  of  the  signatures,"  "  We  shall  write  our  friend  Wil- 
liams by  this  mail,  and  will  state  to  him  our  ideas  respecting  the 
bond,  which  he  will  probably  determine.  If  Mr.  W.  feels  satisfied 
on  this  point,  he  will  inform  you,  and  in  that  case  your  draft  for 
two  thousand  dollars  will  be  honored." 

On  the  same  day  Coolidge  &  Co.  addressed  a  letter  to  Mr.  Wil- 
liams, in  which,  after  referring  to  him  the  question  respecting 
the  legal  oliligation  of  the  scroll,  they  say,  "  you  know  the  object 
of  the  bond,  and,  of  course,  see  the  propriety  of  our  having  one,  not 
only  legal,  but  signed  by  sureties  of  unquestionable  responsibility, 
respecting  which  we  shall  wholly  rely  on  your  judgment.     You 


roOLIDGE  y.    PAYRON.  45 

mention  the  last  surely  as  l)eing  rcspbnsihle  ;  wliat  think  you  of 
the  others  ?  " 

In  his  answer  to  this  K'lter,  Williams  says,  "I  am  assured,  that 
tlic  l)ond  transmitted  in  my  last  is  sufficient  for  the  purpose  for  which 
it  was  ^iven,  provided  the  parties  possess  the  means  ;  and  of  the 
last  signer,  I  have  no  hc^sitation  in  expressinu;  my  firm  heliSf  of 
his  being  able  to  meet  the  whole  amount  hims(df.  Of  Ihc  j)rinci- 
pals  I  cannot  s[)eak  with  so  much  confidence,  not  being  well  ac- 
quainted with  their  resources.  Under  all  circumstances,  I  should 
not  feel  inclined  to  withhold  from  them  any  portion  of  the  funds 
for  which  the  bond  was  given." 

On  the  day  on  which  tiiis  letter  was  written,  Cornthwaite  and 
Gary  called  on  Williams,  to  inquire  wiielher  he  had  satisfied 
Coolidge  &  Co.  respecting  the  bond.  Williams  stated  the  substance 
of  the  letter  he  had  written,  and  read  to  him  a  part  of  it.  One  of 
the  firm  of  Payson  &  Co.  also  called  on  him  to  make  the  same  in- 
quiry, to  whom  he  gave  the  same  information,  and  also  read  fiom 
his  letter  book  the  letter  he  had  written. 

Two  days  after  this,  the  bill  in  the  declaration  mentioned,  was 
drawn  by  Cornthwaite  and  Gary,  and  ])aid  to  Payson  &  Go.  in  part 
of  the  protested  bill  of  two  thousand  seven  hundred  dollars,  by 
whom  it  was  presented  to  Coolidge  &  Co.,  who  refused  to  accept 
it,  on  which  it  was  protested,  and  this  action  brought  by  the 
holders. 

On  this  testimony,  the  counsel  for  the  defendants  insisted  that 
the  plaintiffs  were  not  entitled  to  a  verdict ;  but  the  Court  instructed 
the  jury,  that  if  they  were  satisfied  that  Williams,  on  the  applica- 
tion of  the  plaintiffs,  made  after  seeing  the  letter  from  Coolidge  k 
Go.  to  Cornthwaite  and  Gary,  did  declare  that  he  was  satisfied  with 
the  \nnn\  referred  to  in  that  letter,  as  well  with  respect  to  its  e.xecu- 
tion,  as  to  the  sufficiency  of  tlie  obligors  to  pay  the  same  ;  and  that 
the  plaintiffs,  u[)on  the  faith  and  credit  of  the  said  declaration,  and 
also  of  the  letter  to  Cornthwaite  and  Gary,  and  without  having 
seen  or  known  the  contents  of  the  letter  from  Coolidge  k  Co.  to 
AVilliamSjdid  receive  and  take  the  bill  in  the  declaration  mentioned, 
they  were  entitled  to  recover  in  the  present  action  ;  and  that  it  was 
no  legal  objection  to  such  recovery  that  the  promise  to  accept  the 
present  bill  was  made  to  the  drawers  thereof,  previous  to  the  exist- 
ence of  such  bill,  or  that  the  bill  had  been  taken  in  part-payment 
of  a  pre-existing  debt,  or  that  the  said  Williams,  in  making  the 


46  ACCEPTANCE. 

declarations  aforesaid,  did  ^ceed  the  private  instructions  given  to 
him  by  Coolidge  &  Co.  in  their  letter  to  him. 

To  this  cliarge  the  defendants  excepted  ;  a  verdict  was  given  for 
the  plaintifTs,-  and  judgment  rendered  thereon,  which  judgment  is 
now  before  this  Court  on  a  writ  of  error. 

Tfie  letter  from  Coolidge  &  Co.  to  Cornthwaite  and  Cary  contains 
no  reference  to  their  letter  to  Williams  which  might  suggest  the 
necessity  of  seeing  that  letter,  or  of  obtaining  information  respect- 
ing its  contents.  Tliey  refer  Cornthwaite  and  Cary  to  Williams, 
not  for  the  instructions  they  had  given  him,  but  for  his  judgment 
and  decision  on  the  bond  of  indemnity.  Under  such  circumstances, 
neither  the  drawers  nor  the  holders  of  the  bill  could  be  required 
to  know,  or  could  be  affected  by,  the  private  instructions  given  to 
Williams.  It  was  enough  for  them,  after  seeing  the  letter  from 
Coolidge  &  Co.  to  Cornthwaite  and  Cary,  to  know  that  Williams 
was  satisfied  with  the  execution  of  the  bond  and  the  sufficiency 
of  the  obligors,  and  had  informed  Coolidge  &  Co.  that  he  was  so 
satisfied. 

This  difficulty  being  removed,  the  question  of  law  which  arises 
from  the  charge  given  by  tlie  Court  to  the  jury  is  this  :  does  a 
promise  to  accept  a  bill  amount  to  an  acceptance  to  a  person  who 
has  taken  it  on  the  credit  of  that  promise,  although  the  promise 
was  made  before  the  existence  of  the  bill,  and  although  it  is  drawn 
in  favor  of  a  person  who  takes  it  for  a  pre-existing  debt  ? 

In  the  case  of  Pillans  and  Rose  v.  Van  Mierop  and  Hopkins,  3 
Burr.  1663,  the  credit  on  which  the  bill  was  drawn  was  given  be- 
fore the  promise  to  accept  was  made,  and  the  promise  was  made 
previous  to  the  existence  of  the  bill.  Yet  in  that  case  after  two 
arguments,  and  much  consideration,  the  Court  of  King's  Bench 
(all  the  judges  being  present  and  concurring  in  opinion)  considered 
the  promise  to  accept  as  an  acceptance. 

Between  this  case  and  that  under  consideration  of  the  Court,  no 
essential  distinction  is  perceived.  But  it  is  contended,  that  the 
authority  of  the  case  of  Pillans  and  Rose  v.  Van  Mierop  and  Hop- 
kins is  impaired  by  subsequent  decisions. 

In  tiie  case  of  Pierson  v.  Dunlop  ct  al.,  [2]  Cowp.  571,  the  bill  was- 
drawn  and  presented  before  the  conditional  promise  was  made  on 
which  the  suit  was  instituted.  Although,  in  that  case,  the  holder 
of  the  bill  recovered  as  on  an  acceptance,  it  is  supposed  that  the 
principles  laid  down  by  Lord  3IansJield,  in  delivering  his  opinion, 


COOLIDGE   V.    PAYSON.  47 

contradict  those  laid  down  in  Pillan  and  Rose  v.  Van  Mierop  and 
PIoj)kins.  IIisl()rd.sliij)ol)Scrvcs,  '•  it  lias  Ijoen  truly  said,  as  a  gen- 
eral rule,  that  the  mere  answer  of  a  merchant  to  the  drawer  of  a 
hill,  saying,  '  he  will  duly  honor  it,'  is  no  acceptance, •unless  accom- 
panied with  circumstanees  which  may  induce  a  third  person  to  take 
the  bill  by  indorsement;  hut  if  there  arc  any  such  circumstances, 
it  may  amount  to  an  acceptance,  though  the  answer  be  contained 
in  a  letter  to  the  drawer." 

If  the  case  of  Pillans  and  Rose  v.  Van  Mierop  and  Hopkins,  had 
been  understood  to  lay  down  the  broad  })rinciple  that  a  naked  prom- 
ise to  accept,  amounts  to  an  acceptance,  the  case  of  Piersou  v. 
Dunlop  certainly  narrows  that  principle  so  far  as  to  require  addi- 
tional circumstances  proving  that  the  person  on  whom  the  bill  was 
drawn,  was  bound  by  his  promise,  either  because  he  had  funds  of 
the  drawer  in  his  hands,  or  because  his  letter  had  given  credit  to 
the  bill,  and  induced  a  third  person  to  take  it. 

It  has  been  argued,  that  those  circumstances  to  which  Lord 
3IansJir/d  alludes,  must  be  apparent  on  the  face  of  the  letter.  But 
the  Court  can  perceive  no  reason  for  this  opinion.  It  is  neither 
warranted  by  the  words  of  Lord  Mansfield,  nor  by  the  circum- 
stances of  the  case  in  which  he  used  them.  "  The  mere  answer  of 
a  merchant  to  the  drawer  of  a  bill,  saying  "he  will  duly  honor  it,  is 
no  acceptance  unless  accompanied  with  circumstances,"  &c.  The 
answer  must  be  "  accompanied  with  circumstances  ;  "  but  it  is  not 
said  that  the  answer  must  contain  those  circumstances.  In  the 
case  of  Picrson  v.  Dunlop,  the  answer  did  not  contain  those  cir- 
cumstances. They  were  not  found  in  the  letter,  but  were  entirely 
extrinsic.  Nor  can  the  Court  perceive  any  reason  for  distinguish- 
ing l)etween  circumstances  which  ajjjjcar  in  the  letter  containing 
the  promise,  and  those  which  are  derived  from  otlier  sources.  The 
great  motive  for  construing  a  j)romise  to  accept,  as  an  acce{)tance, 
is,  that  it  gives  credit  to  the  bill,  and  may  induce  a  third  person  to 
take  it.  If  the  letter  be  not  shown,  its  contents,  whatever  they 
may  be,  can  give  no  credit  to  the  bill ;  and  if  it  be  shown,  an  abso- 
lute promise  to  accept  will  give  all  the  credit  to  the  bill  which  a 
full  confidence  that  it  will  be  accepted  can  give  it.  A  conditional 
promise  becomes  absolute  when  the  condition  is  performed. 

In  the  case  of  Mason  v.  Hunt,  Dong.  '2\){j,  Lord  Matis/ic/d  said, 
"  there  is  no  doubt  but  an  agreement  to  accept  may  amount  to  an 
acceptance  ;  and  it  may  be  couched, in  such  words  as  to  put  a  third 


48  ACCEPTANCE. 

person  in  a  better  condition  than  the  drawee.  If  one  man,  to  give 
credit  to  another,  makes  ffn  absolute  promise  to  accept  his  bill,  the 
drawee,  or  any  other  person,  may  show  such  promise  upon  the  ex- 
change to  get  credit ;  and  a  third  person,  who  should  advance  his 
money  upon  it,  would  have  nothing  to  do  with  the  equitable  circum- 
stances wliich  migiit  subsist  between  the  drawer  and  acceptor." 

What  is  it  that  "  the  drawer,  or  any  other  person,  may  show 
upon  tlic  exchange?"  It  is  the  promise  to  accept,  —  the  naked 
promise.  Tlie  motive  of  this  promise  need  not,  and  cannot  be  ex- 
amined. The  promise  itself,  when  shown,  gives  the  credit ;  and 
the  merchant  who  makes  it  is  bound  by  it. 

The  cases  cited  from  Cowper  and  Douglas  are,  it  is  admitted, 
cases  in  which  the  bill  is  not  taken  for  a  pre-existing  debt,  but  is 
purchased  on  the  credit  of  the  promise  to  accept.  But  in  the  case 
of  Pillans  v.  Van  Mierop,  the  credit  was  given  before  the  promise 
was  received  or  the  bill  drawn ;  and  in  all  cases  the  person  who 
receives  such  a  bill  in  payment  of  a  debt,  will  be  prevented  thereby 
from  taking  other  means  to  obtain  the  money  due  to  him.  Any  in- 
gredient of  fraud  would,  unquestionably,  affect  the  whole  transac- 
tion ;  but  the  mere  circumstance,  tliat  the  bill  was  taken  for  a 
pre-existing  debt  has  not  been  thought  sufficient  to  do  away  the 
effect  of  a  promise  to  accept. 

In  the  case  of  Johnson  and  another  v.  Collins,  1  East,  98,  Lord 
Kenyan  shows  much  dissatisfaction  with  the  previous  decisions  ou 
this  subject ;  but  it  is  not  believed  that  the  judgment  given  in 
that  case  would,  even  in  England,  change  the  law  previously  es- 
tablished. In  the  case  of  Johnson  v.  Collins,  the  promise  to  accept 
was  in  a  letter  to  the  drawer,  and  is  not  stated  to  have  been  shown 
to  the  indorser.  Consequently,  the  bill  does  not  appear  to  have 
been  taken  on  the  credit  of  that  promise.  It  was  a  mere  naked 
promise,  unaccompanied  with  circumstances  which  might  give 
credit  to  the  bill.  The  counsel  contended,  that  this  naked  promise 
amounted  to  an  acceptance  ;  but  the  Court  determined  otherwise. 
In  giving  his  opinion,  Le  Blanc,  J.,  lays  down  the  rule  in  the  words 
used  by  Lord  31ansficld,  in  the  case  of  Pierson  v.  Dunlop  ;  and 
Lord  Kenyon  said,  that "  this  was  carrying  the  doctrine  of  implied 
acceptances  to  the  utmost  verge  of  the  law  ;  and  he  doubted  whether 
it  did  not  even  go  beyond  it."  In  Clarke  and  others  v.  Cock,  4 
East,  67,  the  judges  again  express  their  dissatisfaction  with  the 
law  as  established,  and  their  regret  that  any  other  act  than  a  writ- 


COOLIDGE   V.    PAYSON.  49 

ten  acceptance  on  the  bill  had  ever  been  deemed  an  acceptance. 
Yet  they  do  not  undertake  to  overrul(v  the  decisions  which  they 
disapprove.  On  the  contrary,  in  that  case,  they  unanimously  de- 
clared a  letter  to  the  drawer  promising  to  accept  a  bill,  which  was 
siiown  to  the  person  wiio  held  it,  and  took  it  on  the  credit  of  that 
letter,  to  be  a  virtual  acceptance.  It  is  true,  in  the  case  of  Clark 
V.  Cock,  the  bill  was  made  before  the  promise  was  given,  and  the 
judges,  in  their  opinions,  use  some  expressions  which  indicate  a 
distinction  between  bills  drawn  before  and  after  the  date  of  the 
promise ;  but  no  case  has  been  decided  on  this  distinction  ;  and  in 
Pillans  and  Rose  v.  Van  Mierop  and  Hopkins,  the  letter  was  writ- 
ten before  the  bill  was  drawn. 

The  Court  can  perceive  no  substantial  reason  for  this  distinction. 
The  prevailing  inducement  for  considering  a  promise  to  accept,  as 
an  acceptance,  is  that  credit  is  tliereby  given  to  the  bill.  Now, 
this  credit  is  given  as  entirely  by  a  letter  written  before  the  date  of 
the  bill  as  by  one  written  afterwards. 

It  is  of  much  importance  to  merchants  that  this  question  should 
be  at  rest.  Upon  a  review  of  the  cases  which  are  reported,  this 
Court  is  of  opinion,  that  a  letter  written  within  a  reasonable  time 
before  or  after  the  date  of  a  bill  of  exchange,  describing  it  in  terms 
not  to  be  mistaken,  and  promising  to  accept  it,  is,  if  shown  to  the 
person  who  afterwards  takes  the  bill  on  the  credit  of  the  letter,  a 
virtual  acceptance  binding  the  person  who  makes  the  promise. 
This  is  such  a  case.  There  is,  therefore,  no  error  in  the  judgment 
of  the  Circuit  Court,  and  it  is  affirmed  with  costs. 

Judgment  affirmed. 

Tlie  doctrine  of  tlic  above  case  is  re-affirmed  in  Schimmelpennich  v.  Bayard, 
post,  64;  Townsley  r.  Suiiiiall,  2  Peters,  170;  Boyce  v.  Edwards,  post,  52,  and 
Adams  r.  Jones,  12  Peters,  207,  on  the  point  respecting  a  promise  to  accept. 

In  Town^ley  v.  Sumrall,  supra,  the  Court,  Story,  J.,  held  that  if  the  drawee 
Lave  no  funds  in  his  hands,  and  the  fact  is  known  to  the  party  taking  the  bill, 
and  yet  tlie  inducement  to  take  the  bill  is  the  promise  of  the  drawee  to  accept 
it,  it  constiiutes  a  valid  contract  between  the  parties,  if  there  is  a  purchase  of 
the  bill  on  the  credit  of  such  promise. 

In  McEvers  i\  Ma^*on,  10  .Johns.  207,  decided  in  1813,  three  years  prior  to 
the  decijion  in  Coolidge  v.  Payson,  the  Court,  Kent,  C.  J.,  drew  the  same  dis- 
tinction between  the  rights  of  one  who  has  taken  a  bill  on  the  faith  of  a  promise 
tp  accept,  and  one  who  has  not  so  taken  it;  and  it  was  held  that,  as  the  indorsee 
had  taken  the  bill  in  entire  ignorance  of  any  such  promise,  he  could  not  recover 
from  the  defendants  as  implied  acceptors. 

•  4 


50  ACCEPTANCE. 

Although  doubts  were  expressed  in  this  case  whether  an  agreement  to  accept 
a  bill  thereafter  to  be  drawn  would  amount  to  an  acceptance,  or  could  be  en- 
forced by  the  indorsee,  yet  the  law  is  now  considered  well  settled  in  America, 
that  an  agreement  to  accept  is  binding  if  the  bill  is  drawn  within  a  reasonable 
time,  and  such  agreement  was  made  known  to  the  indorsee,  and  the  bill  was  in- 
dorsed or  negotiated  on  the  credit  of  the  acceptor.  Per  Bean/.sley,  Senator,  in 
Greele  v.  Parker,  5  Wend.  414,  citing  Goodrich  v.  De  Forest,  15  Johns.  6.  In 
Greele  v.  Parker,  decided  in  1830,  Walworth,  Chancellor,  says:  "  It  is  a  well 
settled  rule  of  the  commercial  law  of  this  country,  and  of  most  of  the  nations  of 
Europe,  except  England,  where  it  has  recently  been  abolished  by  statute,  that 
an  unconditional  promise  in  writing  to  accept  a  bill  of  exchange,  if  made  within 
a  reasonable  time  before  or  after  the  date  of  the  bill,  and  describing  the  same  in 
terms  not  to  be  mistaken,  is  a  virtual  acceptance  thereof,  in  favor  of  any  person 
to  whom  such  promise  has  been  shown,  and  who  has  received  the  bill  for  a  valua- 
ble consideration,  on  the  faith  of  such  promise."  That  a  promise  to  accept  a 
non-existing  bill  constitutes  an  acceptance,  see  Steman  v.  Harrison,  42  Penn. 
State,  49  ;  Burns  v.  Rowland,  40  Barb.  368 ;  Crowell  v.  Van  Bibber,  18  La.  An. 
6:57  ;  Bayard  v.  Lathy,  2  McLean,  462  ;  Wilson  v.  Clements,  3  Mass.  1 ;  Storer 
V.  Logan,  9  Mass.  o5 ;  Carnegie  v.  Morrison,  2  Met.  381;  Murdock  v.  Mills,  11 
]\Iet.  5;  Russell «.  Wiggin,  2  Story,  213;  Plummer  r.  Lyman,  49  Maine,  229, 
and  other  authorities  cited  in  this  note.  But  it  must  be  observed  that  in  such  a 
case  the  promise  must  have  been  communicated  to  the  indorsee,  and  that  he 
took  the  bill  on  the  credit  thereof.  Chitty,  Bills,  285.  It  has  been  held  that 
a  promise  to  accept  an  existing  bill  may  be  sued  upon  as  an  acceptance,  whether 
the  holder  took  it  on  the  credit  of  the  promise  or  not.  Jones  v.  Bank  of  Iowa, 
34  111.  313  ;  Read  v.  Marsh,  5  B.  Monr.  8.  But  this  may  be  doubted  ;  and  Ex- 
change Bank  of  St.  Louis  v.  Rice,  98  Mass.  288,  is  an  ably  considered  case  to 
the  contrary. 

In  Read  v.  Marsh,  the  Court  say  that  "  it  seems  to  be  now  well  settled  that 
a  letter  promising  to  accept  or  protect  a  bill,  whether  written  before  or  after  it 
is  drawn,  may  operate  as  an  accej^tance,  .  .  .  although  the  holder  has  not  been 
induced  by  such  letter  or  promise  to  take  the  bill,''  citing  Chitty,  177.  But  the 
text  does  not  support  this  position ;  and  this  is  certainly  not  the  law  respecting 
non-existing  bills.  In  this  case,  the  letter  promising  to  accept,  was  written  after 
the  bill  had  been  drawn. 

Frequent  expressions  of  regret  occur  that  the  doctrine  of  virtual  acceptances 
of  non-existing  bills  was  ever  advanced ;  and  in  Wildes  v.  Savage,  2  Story,  22, 
^tory,  J.,  it  is  held  that  the  doctrine  must  be  strictly  confined  to  the  case  of  bills 
to  be  drawn  payable  on  demand  or  after  date,  and  never  extends  to  those  paya- 
ble at  or  after  sight.  It  is  a  little  remarkable  that  he  should  say  (p.  29),  that 
he  has  been  unable  to  find  a  single  case  of  that  kind,  when  he  himself  de- 
livered the  opinion  in  Payson  v.  Coolidge,  2  Gall.  233,  —  the  principal  case  in 
the  Court  below;  from  the  report  of  which,  as  given  in  2  Gallison,  it  appears 
th.it  the  bill  in  suit,  and  of  which  the  defendants  were  there  held  as  acceptors, 
was  payable  at  sight.  No  notice  of  the  distinction  drawn  in  Wildes  v.  Savage, 
was  taken  either  in  the  Court  below,  or  on  the  appeal. 

The  question  whether  a  parol  promise  to  accept  a  non-existing  bill  is  valid  in 
favor  of  an  indorsee  for  value,  who  took  the  bill  on  the  faith  of  such  promise. 


COOLIDGE   V.    PAYSON.  .  51 

has  several  times  come  luffjro  the  courts  of  Englaiul  and  of  this  country.  In 
Miln  V.  Prost,  1  Holt,  IHl  (181G),  it  is  held  that  a  parol  promise  in  such  a  casse 
is  as  valid  as  if  it  were  in  writing;  but  tlie  contrary  doctrine  is  held  in  Bank  of 
Ireland  v.  Archer,  11  Mees.  &  Wels.  383  (1843).  And  rarke,  li.,  in  this  case, 
says  that  the  report  of  ^liln  v.  Prest,  in  Holt,  is  inaccurate,  and  refers  to  4 
Camp.  393,  for  a  correct  version  of  it.  The  language  of  Parke,  B.,  seems  to 
cover  the  case  of  a  uviUcn,  as  well  as  of  a  parol  promise  to  accept  a  non-existing 
bill.  This  is  sustained  hy  the  opinion  of  eminent  I-2nglish  counsel  in  Russell  v. 
Wiggin,  2  Story,  21:5;  and  see  C'hitty,  Bills,  284-286.  Mr.  Chitty  here  re- 
views the  English  cases,  and  considers  it  "at  least  questionable  whether  a  third 
person,  who  has  taken  a  bill  on  the  faith  of  such  [written]  promise,  can  treat 
the  promise  as  equivalent  to  an  acceptance."  But  see  /rare  Agra,  &c.,  Bank,  Law 
Rep.  2  Ch.  Ap.  ot)l  (18G7),  in  which  it  is  held  that  such  third  person  may  in 
equity  compel  the  party  to  a<  cept  who  had  promised  to  do  so. 

In  Bank  of  ^Michigan  v.  Ely,  17  Wend.  oOS,  the  Court,  Xehou,  C.  J.,  say 
that,  previously  to  the  statuie  refjuiring  acceptances  to  be  in  writing,  it  was  set- 
tled in  that  State  that  a  parol  promise  to  accept  a  future  bill  was  not  binding, 
unless  the  bill  was  taken  by  the  holcfer  upon  the  faith  and  credit  of  such  promise ; 
citing  Ontario  Bank  v.  Worthington,  12  Wend.  503.  The  converse  would  seem 
to  follow  from  this,  that  if  the  holder  did  so  take  the  bill,  tlie  parol  promise 
would  be  binding.  To  this  elFect  are  Crowell  v.  Van  Bibber,  18  La.  An.  G37 ; 
Williams  v.  Winans,  2  Green  (N.  J.),  339.  Contra,  Kennedy  v.  Geddes,  8  Port. 
(Ala.)  2(J3 ;  Plummer  v.  Lyman,  49  Maine,  232.  But  the  promise  in  the  last 
case  came  within  the  statute  of  frauds. 

The  doctrine  being  settled  in  this  country,  differently  perhaps  from  that  of 
the  courts  of  England,  that  a  promise  to  accept  a  non-existing  bill  under  the  re- 
strictions above  mentioned,  may  be  sued  upon  as  an  acceptance,  there  seems  to 
be  no  solid  ground  for  the  distinction  between  a  written  and  a  parol  promise, 
when  not  within  the  statute  of  frauds,  except  where  the  statute  requires  accept- 
ance to  be  in  writing,  as  in  England  and  New  York.  The  credit  given  to  the 
indorsee  is  that  which  gives  the  promise  its  binding  force ;  and  the  inducement  to 
take  the  bill  may  be  as  strong  when  the  promise  is  in  parol,  as  when  it  is  writ- 
ten. That  the  ordinary  promise  to  accept  is  not  within  the  statute  of  frauds,  is 
well  settled.  See  Townsley  v.  Sumrall,  2  Peters,  170,  and  other  eases,  si(j>ra. 
There  were  special  circumstances  in  Plummer  v.  Lyman,  supra,  which  brought 
the  promise  within  the  statute. 

If  the  drawee  of  a  bill,  drawn  and  indorsed  for  his  acconmiodation,  procure 
the  same  to  be  discounted  and  promise  to  pay  the  bill  at  maturity,  this  consti- 
tutes him  an  acceptor.     Bank  of  Rutland  v.  Woodruff,  34  Vt.  89. 

So  if  the  drawee's  agent  write  an  order  on  the  bill  to  another  to  pay  it,  this  is 
an  acceptance  of  the  original  bill.     Harper  v.  West,  1  Crauch,  C  C.  192. 


52  *  «  ACCEPTANCE. 


BoYCE  and  Henry,  Plaintiffs  in  Error,  v.  Timothy  Edwards, 
Defendant  in  Error. 

(4  Peters,  111.     Supreme  Court  of  the  United  States,  January,  1830.)' 

Promise  to  cwcept.  Bill  must  be  pointed  out.  —  In  order  to  bind  as  acceptor  one  who  has 
promised  to  accept  a  non-existing  bill,  the  particular  bill  must  be  pointed  out  and 
described  in  terms  not  to  be  mistaken. 

Distinction  between  an  action  upon  a  bill  as  an  accepted  bill,  and  one  founded  on  a 
breach  of  promise  to  accept. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Thompson,  J.  This  was  an  action  of  assumpsit,  brought  in  the 
Circuit  Court  of  the  United  States  for  the  District  of  South  Caro- 
lina, upon  two  bills  of  exchange  drawn  by  Adam  Hutchinson,  in 
favor  of  Timothy  Edwards,  the  plaintiff  in  the  Court  below,  upon 
Boyce  and  Henry,  the  defendants,  both  bearing  date  on  the  8th  of 
February,  1827,  the  one  for  $2100  and  the  other  for  $2331,  payable 
sixty  days  after  sight. 

The  cause  was  tried  before  the  district  judge ;  and  in  the  course 
of  the  trial,  several  exceptions  were  taken  on  the  part  of  the  de- 
fendants below  to  the  admission  of  evidence,  and  the  ruling  of  the 
Court  upon  questions  of  law,  all  which  are  embraced  in  the  charge 
to  the  jury,  to  which  a  general  bill  of  exceptions  was  taken  ;  and 
the  cause  comes  here  upon  a  writ  of  error. 

The  bills  of  exchange  were  duly  presented  for  acceptance,  and 
on  refusal  were  protested  for  non-acceptance  and  non-payment ;  but 
the  plaintiff  sought  to  charge  the  defendants  as  acceptors,  by  virtue 
of  an  alleged  promise  to  accept  before  the  bills  were  drawn.  And 
whether  such  liability  was  established  by  the  evidence,  is  the  main 
question  in  the  cause.  The  evidence  principally  relied  upon  for 
this  purpose  consisted  of  two  letters,  the  first  as  follows  :  "  Charles- 
ton, March  9, 1825.  Mr.  Edwards :  Dear  Sir,  —  Mr.  Adam  Hutch- 
inson, of  Augusta,  is  authorized  to  draw  on  us  for  the  amount  of 
any  lots  of  cotton  which  he  may  buy  and  ship  to  us,  as  soon  after 
as  opportunity  will  offer ;  such  drafts  shall  be  didy  honored  by 
yours,  respectfully,  Boyce,  Johnson,  and  Henry." 

Johnson  soon  after  died ;  and  on  the  28th  of  the  same  month  of 
March,  the  defendants  published  a  notice  in  the  Charleston  news- 
papers, announcing  a  dissolution  of  the  partnership  by  the  death  of 


BOYCE   V.    EDWARDS.  53 

Johnson,  and  that  the  business  would  be  conducted  in  future  under 
the  firm  of  IJoyce  and  Henry.  The  other  letter  is  from  the  defend- 
ants, of  the  date  of  the  4th  of  January,  1827,  addressed  to  Adam 
Hutchinson,  in  which  they  say,  "  you  are  at  liberty  to  draw  on  us 
when  you  send  the  bill  of  lading.  We  do  not  put  you  on  the  foot- 
ing of  otiier  customers,  for  we  do  not  allow  them  to  draw  for  more 
than  three-fourtiis  in  any  instance.  You  may  draw  for  the 
amount,"  &c. 

The  defendants'  counsel  had  objected  to  the  admission  of  the 
first  letter  from  Boyce,  Johnson,  and  Henry,  and  contended  that 
this  did  not  bind  Boyce  and  Henry  to  accept  bills  drawn  on  them 
after  the  dissolution  of  the  partnership  was  known,  and  desired 
the  Court  so  to  instruct  the  jury.  But  the  Court  stated  to  the 
jury,  that  the  said  letter  in  connection  with  the  other  evidence  in 
the  cause  was  sufficient  to  charge  the  defendants  as  acce{)tors. 
The  other  evidence  referred  to  by  the  Court,  as  would  appear  from 
other  parts  of  the  charge,  was  the  letter  of  the  4th  of  January, 
1827,  the  notice  of  the  dissolution  of  the  partnership,  the  accounts 
rendered  by  the  defendants,  and  the  numerous  bills,  drawn  and 
accepted  by  them,  all  wliich  had  been  given  in  evidence  in  tlie  course 
of  the  trial. 

According  to  the  view  which  we  take  of  the  instruction  given  by 
the  Court  below  at  the  trial,  tliat  the  defendants,  upon  the  evidence, 
were  liable  as  acceptors,  it  becomes  very  unimportant  to  decide 
whether  the  letter  of  Boyce,  Johnson,  and  Henry  should  have  been 
admitted  or  not.  For  we  think,  in  point  of  law,  there  was  a  mis- 
direction in  this  respect,  even  if  the  letter  was  properly  admitted. 
We  should  incline,  however,  to  the  opinion  that  this  letter,  at  the 
time  when  it  was  olTered  and  objected  to,  and  standing  alone,  would 
not  be  admissible  evidence  against  the  defendants.  It  was  dated 
nearly  two  years  before  the  bills  in  question  were  drawn,  and  was 
from  a  different  firm.  It  was  evidence  between  other  and  different 
parties.  A. contract  alleged  to  have  been  made  by  Boyce  and  Henry, 
could  not  be  supported  by  evidence  that  the  contract  was  made  by 
Boyce,  Johnson,  and  Henry.  It  might  be  adniissil)le,  connected 
with  otlier  evidence  showing  that  the  authority  had  been  renewed 
and  continued  l)y  the  new  firm,  and  in  support  of  an  action  on  a 
promise  to  acc3pt  bills  drawn  on  the  new  firm.  But  that  was  not 
the  purpose  for  which  it  was  received  in  evidence,  or  the  effect 
given  to  it  by  the  Court  in  the  part  of  the  charge  now  under  con- 


54  ACCEPTANCE. 

sideration.  It  was  declared  to  be  sufficient,  in  connection  with  the 
other  evidence,  to  charge  the  defendants  as  acceptors.  And  in  this 
we  think  the  Court  erred.  Had  the  letter  been  written  by  the  de- 
fendants themselves,  it  would  not  have  been  sufficient  to  charge 
them  as  acceptors. 

The  rule  on  this  subject  is  laid  down  with  great  precision  by  this 
Court,  in  the  case  of  Coolidge  v.  Payson,  2  W.  66  [ante,  p.  43], 
after  much  consideration  and  a  careful  review  of  the  authorities : 
"  That  a  letter  written  within  a  reasonable  time,  before  or  after  the 
date  of  a  bill  of  exchange,  describing  it  in  terms  not  to  be  mis- 
taken, and  promising  to  accept  it,  is,  if  shown  to  the  person  who 
afterwards  takes  the  billon  the  credit  of  the  letter,  a  virtual  accept- 
ance, binding  the  person  who  makes  the  promise."  This  case 
was  decided  in  the  year  1S17.  Tlie  same  question  again  came 
under  consideration  in  the  year  1828,  in  the  case  of  Schimmel- 
pennich  et  al.  v.  Bayard  el  al.,  1  Peters,  264  [pos^,  p.  64],  and  re- 
ceived the  particular  attention  of  the  Court,  and  the  same  rule 
laid  down  and  sanctioned  ;  and  this  rule  we  believe  to  be  in  per- 
fect accordance  with  the  doctrine  that  prevails  both  in  the  English 
and  American  courts  on  this  subject.  At  all  events,  we  consider 
it  no  longer  an  open  question  in  this  Court,  and  whenever  the 
holder  of  a  bill  seeks  to  charge  the  drawee  as  acceptor  upon  some 
collateral  or  implied  undertaking,  he  must  bring  himself  within 
the  spirit  of  the  rule  laid  down  in  Coolidge  v.  Payson,  and  we  think 
the  present  case  is  not  brought  within  that  rule. 

With  respect  to  the  letter  of  the  9th  of  March,  1825,  in  addition 
to  the  objection  already  mentioned,  that  it  is  not  an  authority  to  draw 
emanating  from  the  drawees  of  these  bills,  it  bears  date  nearly  two 
years  before  the  bills  were  drawn,  and,  what  is  conclusive  against 
its  being  considered  an  acceptance,  is,  that  it  has  no  reference  what- 
ever to  these  particular  bills,  but  is  a  general  authority  to  draw  at 
any  time,  and  to  any  amount,  upon  lots  of  cotton  shipped  to  them. 
This  does  not  describe  any  particular  bills  in  terms  not  to  be  mis- 
taken. 

The  rule  laid  down  in  Coolidge  v.  Payson,  requires  the  authority 
to  be  pointed  at  the  specific  bill  or  bills  to  which  it  is  intended  to 
be  applied,  in  order  that  the  party  who  takes  the  bill  upon  the 
credit  of  such  authority  may  not  be  mistaken  in  its  application. 

And  this  leading  objection  lies  also  against  the  letter  of  the  4th 
of  January,  1827.     It  is  a  general  authority  to  Hutchinson  to 


BOYCE   V.    EDWARDS.  55 

draw,  upon  sending  to  the  defendants  tlie  l)ills  of  lading  for  the 
cotton.  This  is  a  limitation  iipon  the  authority  contained  in  the 
former  letter,  even  supposing  it  to  have  been  adopted  by  the  new 
firm,  and  must  be  considered,  pro  tanto,  a  revocation  of  it.  Hutch- 
inson is  only  authorized  to  draw  upon  sending  the  bills  of  lading 
to  tlie  defendants.  And  although  it  may  fairly  Ijc  collected  from  the 
evidence,  that  that  was  done  in  the  present  case,  it  does  not  remove 
the  great  objection  that  it  is  a  general  authority,  and  does  not  j)oint 
to  any  particular  bills  and  descrilje  tliem  in  terms  not  to  l)0  mis- 
taken, as  required  by  the  rule  in  Coolidge  v.  Payson.  The  other 
circumstances  relied  on  by  the  Court  to  charge  the  defendants 
as  acceptors,  are  still  more  vague  and  indefinite,  and  can  have 
no  such  effect. 

The  Court,  therefore,  erred  in  directing  the  jury  that  the  evi- 
dence was  sufficient  to  charge  the  defendants  as  acceptors,  and  the 
judgment  must  be  reversed. 

The  distinction  between  an  action  on  a  bill,  as  an  accepted  bill, 
and  one  founded  on  a  breach  of  promise  to  accept,  seems  not  to 
have  been  adverted  to.  But  the  evidence  necessary  to  sui)port  the 
one  or  the  other  is  materially  different.  To  maintain  the  former, 
as  has  been  already  shown,  the  promise  must  he  applied  to  the 
particular  bill  alleged  in  the  declaration  to  have  been  accepted.  In 
the  latter,  the  evidence  maybe  of  a  more  general  character,  and  the 
authority  to  draw  may  be  collected  from  circumstances  and  ex- 
tended to  all  bills  coming  fairly  within  the  scope  of  the  promise. 

Courts  have  latterly  leaned  very  much  against  extending  the 
doctrine  of  implied  acceptances,  so  as  to  sustain  an  action  upon 
the  bill.  For  all  practical  purposes  in  commercial  transactions  in 
bills  of  exchange,  such  collateral  acceptances  are  extremely  incon- 
venient and  injurious  to  the  credit  of  the  bills  ;  and  tiiis  has  led 
judges  frequently  to  express  their  dissatisfaction  that  the  rule  had 
been  carried  as  far  as  it  has,  and  their  regret  that  any  other  act 
than  a  written  acceptance  on  the  bill,  had  ever  been  deemed  an 
acceptance. 

As  it  respects  the  rights  and  the  remedy  of  the  innnediate  parties 
to  the  promise  to  accept,  and  all  others  who  may  take  bills  upon 
the  credit  of  such  promise,  they  are  equally  secure,  and  eqiuilly  at- 
tainable by  an  action  for  the  breach  of  the  promise  to  accept,  as 
they  could  be  by  an  action  on  the  bill  itself. 

In  the  case  now  before  the  Court,  the  evidence  is  very  strong,  if 


56  ACCEPTANCE. 

not  conclusive,  to  sustain  an  action  upon  a  count  properly  framed 
upon  the  breach  of  the  promise  to  accept.  The  bills  in  question 
appear  to  have  been  drawn  for  the  exact  amount  of  the  cost  of  the 
cotton  shipped  at  the  very  time  they  were  drawn.  And  i£,  the  bills 
of  lading  accompanied  the  advice  of  the  drafts,  the  transaction  came 
within  the  authority  of  the  letter  of  the  4th  of  January,  1827  ;  and 
if  satisfactorily  shown  that  the  bills  were  taken  upon  the  credit  of 
such  promise,  and  corroborated  by  the  other  circumstances  given 
-in  evidence,  it  will  be  difficult  for  the  defendants  to  resist  a  recov- 
ery for  the  amount  of  tlie  bills. 

With  respect  to  the  question  of  interest,  we  think  that,  if  the 
plaintiff  shall  recover  at  all,  he  will  only  be  entitled  to  South  Caro- 
lina intx^rest.  The  contract  of  the  defendants,  if  any  was  made, 
upon  which  they  are  responsible,  was  made  in  South  Carolina. 
Tiie  bills  were  to  be  paid  there  ;  and  although  they  were  drawn  in 
Georgia,  they  were  drawn,  so  far  as  respects  the  defendants,  with 
a  view  to  the  State  of  South  Carolina,  for  the  execution  of  the 
contract. 

The  judgment  of  the  Circuit  Court  must  be  reversed,  and  the 
cause  sent  back  with  directions  to  issue  a  venire  de  novo. 

'  The  following  letter,  in  Ulster  County  Bank  v.  McFarlan,  5  Hill,  432,  was 
held  to  be  a  sufficient  promise  to  accept :  "I  hereby  authorize  you  to  draw  on 
me  at  ninety  days,  from  time  to  time,  for  such  amounts  as  you  may  require,  pro- 
vided that  the  whole  amount  running  and  unpaid  shall  not  exceed  S3000."  And 
the  Court,  Bronson,  J.,  after  citing  Bank  of  Michigan  v.  Ely,  17  Wend.  508, 
and  Parker  w., Greele,  2  Wend.  545;  s.  c,  5  Wend.  414,  say:  "These  cases 
show  also  that  the  written  promise  to  accept  need  not  contain  a  particular  de- 
scription or  identification  of  the  bill  to  be  drawn." 

The  case  was  decided  in  favor  of  the  defendant,  on  the  ground  that  the 
authority  was  not  strictly  pursued.  It  was  afterwards  affirmed  in  the  '•  'ourt  of 
Appeals  on  that  defence.  3  Denio,  553.  But  Hand,  Senator,  takes  occasion  to 
deny  the  soundness  of  the  doctrine  advanced  in  the  Supreme  Court  above  men- 
tioned, and  thinks  that  a  wrong  view  was  taken  of  the  cases  of  Greele  v.  Parker, 
and  Bank  of  Michigan  v.  Ely.  He  says:  "The  first  case  was  on  a  promise  to 
accept  for  $250  at  three  and  four  months,  and  was  clearly  intended  to  be  but 
one  transaction.  The  names  of  the  j^arties  and  amount  were  given,  and  the 
time  the  bill  was  to  run,  which  was  a  far  more  definite  description  than  that 
given  in  this  case.     The  last  case  turned  on  another  point." 

Again  on  p.  558  :   "  But  the  ground  upon  which  I  put  this  part  of  the  case  is,  - 
that  by  the  law  of  this  country,  irrespective  of  the  statute,  the  promise   must 
point  to  the  particular  bills,  and  describe  them  in  tenns  not  to  be  mistaken,  and 
that  the  statute  has  in  no  way  enlarged  that  rule." 

The  statute  referred  to  is  worthy  of  note.     It  reads  as  follows :  "  An  uncondi- 


nORTSMAN    V.    HP:N.SnAW,  57 

tional  promise  in  writing  to  accept  a  bill  before  it  is  drawn,  shall  be  deemed  an 
actual  acceptance  in  favor  of  every  person  who,  upon  the  faith  thereof,  ^hall 
have  received  the  bill  for  a  valuable  considera'tion,"  1  R.  S.  768,  §  8,  published 
in  1829.  It  will  be  seen  that  it  says  nothing  concerning  the  necessity  of  the 
promise  dejpignating  and  describing  the  bill ;  and  it  is  not  difficult  to  see  that 
there  might  be  diirorent  views  on  this  subject  in  construing  the  statute.  But  in 
the  absence  of  statute,  the  rule  in  the  principal  case  will  be  found  a  safe  and 
just  precedent. 

The  following  cases  further  illustrate  the  subject :  lianorgee  v.  Ilovey,  5  Mass. 
11;  Storer  v.  Logan,  9  id.  55  f  Carnegie  v.  Morrison,  2  Met.  381;  Wildes  v. 
Savage,  1  Story,  22;  Baring  v.  Lyman,  ib.  39G ;  Russell  v.  Wiggin,  2  id.. 
213 ;  Adams  v.  Jones,  21  Peters,  207 ;  and  cases  cited  in  note  to  Coolidge 
V.  Payson,  supra.  See  also  Burns  v.  Rowland,  40  Barb.  3G8,  in  which  the 
defendants  authorized  IL  to  draw  on  them  for  the  amount  he  might  owe  tiie 
plaintilfs.  The  Court  held  that  it  was  no  objection  that  the  drafi  was  drawn 
for  a  specific  sum  not  mentioned  in  the  letter,  and  that  the  defendants  were 
liable  as  acceptors. 


John  Hortsman,  Plaintiff  in  Error,  v.  John  Henshaw  et  al.. 
Defendants  in  Error. 

(11  Howard,  177.     Supreme  Court  of  the  United  States,  December,  1850.) 

What  acceptance  admits.  —  The  drawee  of  a  bill  of  exchange  cannot  recover  tlie  amount 
thereof  paid  to  a  honnjide  liolder,  if  tlie  drawer  put  tlie  bill  into  circulation  bearing 
a  fort^ed  indorsement  of  the  payee's  name.  Acceptance  admits  tlie  drawer's  sig- 
nature to  be  genuine,  and  tlie  drawer,  in  sucii  case,  warrants  the  signature  of  tlie 
payee. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Taney,  C.  J.  The  material  facts  in  this  case  may  he  stated  in 
a  few  words. 

Fiske  and  Bradford,  a  mercantile  firm  in  Boston,  drew  their  bill 
of  exchange  upon  Hortsman  of  London,  payable  at  sixty  days'  sight 
to  the  order  of  Fiske  and  Bridge,  for  six  hundred  and  forty-two 
pounds  sterling.  The  drawers,  or  one  of  them,  placed  the  bill  in 
the  hands  of  a  broker,  with  the  names  of  the  payees  indorsed  upon 
it,  to  be  negotiated ;  and  it  was  sold  to  the  defendants  in  error 
bona  fide  and  for  full  value.  They  transmitted  it  to  their  Corre- 
spondent in  London,  and,  upon  presentation,  it  was  accepted  by  the 


58  ACCEPTANCE. 

drawee,  and  duly  paid  at  maturity.     The  payees  and  indorsees  all 
resided  in  Boston,  where  the  bill  was  drawn  and  negotiated. 

It  turned  out  that  tjie  indorsement  of  the  payees  was  forged, — 
by  whom  does  not  appear ;  and  a  few  months  after  the  bill  was 
paid,  the  drawers  failed  and  became  insolvent.  The  drawee,  hav- 
ing discovered  the  forgery,  brought  this  action  against  the  defend- 
ants in  error  to  recover  back  the  money  he  had  paid  them. 

The  precise  question  which  this  case  presents  does  not  appear  to 
have  arisen  in  the  English  courts  ;  nor  in  any  of  the  courts  of  this 
country  with  the  exception  of  a  single  case,  to  which  we  shall  here- 
after more  particularly  refer.  But  the  established  principles  of 
commercial  law  in  relation  to  bills  of  exchange  leave  no  difficulty 
in  deciding  the  question. 

The  general  rule  undoubtedly  is,  that  the  drawee  by  accepting 
the  bill  admits  the  handwriting  of  the  drawer;  but  not  of  the  in- 
dorsers.  And  the  holder  is  bound  to  know  that  the  previous  in- 
dorsements, including  that  of  the  payee,  are  in  the  handwriting  of 
the  parties  whose  names  appear  upon  the  bill,  or  were  duly  author- 
ized by  them.  And  if  it  should  appear  that  one  of  them  is  forged, 
he  cannot  recover  against  the  acceptor,  although  the  forged  name 
was  on  the  bill  at  the  time  of  the  acceptance.  And  if  he  has 
received  the  money  from  the  acceptor,  and  the  forgery  is  after- 
wards discovered,  he  will  be  compelled  to  repay  it. 

The  reason  of  the  rule  is  obvious.  A  forged  indorsement  can- 
not transfer  any  interest  in  the  bill,  and  tlie  holder  therefore  has 
no  right  to  demand  the  money.  If  the  bill  is  dishonored  by  the 
drawee,  the  drawer  is  not  responsible.  'And  if  the  drawee  pays  it 
to  a  person  not  authorized  to  receive  the  money,  he  cannot  claim 
credit  for  it  in  his  account  with  the  drawer. 

But  in  this  case  the  bill  was  put  in  circulation  by  the  drawers, 
with  the  names  of  the  payees  indorsed  upon  it.  And  by  doing  so 
they  must  be  understood  .as  affirming  that  the  indorsement  is  in 
the  handwriting  of  the  payees,  or  written  by  their  authority.  And 
if  the  drawee  had  dishonored  the  bill,  the  indorser  would  undoubt- 
edly have  been  entitled  to  recover  from  the  drawer.  The  drawers 
must  be  equally  liable  to  the  acceptor  who  paid  the  bill.  For  hav- 
ing admitted  the  handwriting  of  the  payees,  and  precluded  them- 
selves from  disputing  it,  the  bill  was  paid  by  the  acceptor  to  the 
persons  authorized  to  receive  the  money,  according  to  the  drawer's 
own  order. 


HORTSMAN    V.    IIENSIIAW.  59 

J^ow  the  acceptor  of  a  bill  is  presinhed  to  accept  upon  funds  of 
the  drawer  in  his  hands,  and  he  is  prcclnded  by  his  acceptance 
from  averring  the  contrary  in  a  suit  brought  against  him  Ijy  the 
holder.  The  rights  of  the  parties  are  therefore  to  be  determined 
as  if  this  bill  was  paid  by  Hortsman  out  of  the  money  of  Fiske 
and  Brad-ford  in  his  hands.  And  as  Fiske  and  Bradford  were  lia- 
ble to  the  defendants  in  error,  they  are  entitled  to  retain  the  money 
they  have  thus  received. 

We  take  the  rule  to  be  this.  Whenever  the  drawer  is  liable  to 
the  holder,  the  acceptor  is  entitled  to  a  credit  if  he  pays  the  money  ; 
and  he  is  bound  to  pay  upon  his  acceptance,  when  the  payment  will 
entitle  him  to  a  credit  in  his  account  with  the  drawer.  xVnd  if  he 
accepts  without  funds,  upon  the  credit  of  the  drawer,  he  must  look 
to  him  for  indemnity,  and  cannot  upon  that  ground  defend  himself 
against  a  bona  fide  indorsee.  The  insolvency  of  the  drawer  can 
make  no  difference  in  the  rights  and  legal  liabilities  of  the  parties. 

The  English  cases  most  analogous  to  this  are  those  in  which  the 
names  of  the  drawers  or  payees  were  fictitious,  and  the  indorse- 
ment written  by  the  maker  of  the  bill.  xVnd  in  such  cases  it  has 
been  held  that  the  acceptor  is  liable,  although,  as  the  payees  were 
fictitious  persons,  their  handwriting  of  course  could  not  be  proved 
by  the  holder.  10  Barn.  &  Ores.  478.  The  American  case  to 
which  we  referred  is  that  of  Meacher  v.  Fort,  3  Hill  (S.  C),  227. 
The  same  question  now  before  the  Court  arose  in  that  case,  and 
was  decided  in  conformity  with  this  opinion. 

Another  question  was  raised  in  the  argument  upon  the  sufficiency 
of  the  notice  ;  and  it  was  insisted  by  the  counsel  for  the  defend- 
ants, that,  if  they  could  have  been  made  liable  to  this  action  by  the 
plaintiff,  they  have  been  discharged  by  his  laches  in  ascertaining 
the  forgery  and  giving  them  notice  of  it. 

But  it  is  not  necessary  to  examine  this  question,  as  the  point 
already  decided  decides  the  case. 

Tlic  judgment  of  the  Circuit  Court  is  affirmed,  with  costs. 

The  case  of  IVIeacher  v.  Fort,  cited  by  Taney ,  J.,  is  so  clearly  stated,  and  so 
important,  that  the  opinion  is  f;iven  in  full. 

Before  Evans,  J.,  at  Charleston,  January  term,  1837. 

His  Honor,  the  presiding  jud^^o,  reported  the  case  as  follojvs :  — 

This  was  an  action  on  a  promissory  note.     Tiie   note  was   payable  to  Jph 
Fort  and  Joseph  Maybank,  and  indorsed  to  the  plaintill",  Meacher      The  defend- 
ant was  the  maker.     There  was  no  doubt  as  to  the  signature  of  the  defendant,  • 


60  ACCEPTANCE. 

as  maker,  or  of.Maybank,  one  oMlie  indorsers.  The  defence  relied  on  was, 
that  the  signature  of  John  Fort,  one  of  the  indorsers,  was  a  forgery ;  and  as 
the  note  was  niadu  payable  to  John  Fort  and  Maybank,  the  plaintiff  could  not 
recover  unless  both  indorsed  it.  There  is  no  doubt  of  the  correctness  of  this 
position,  as  a  general  rale.  It  was  clearly  proved  that  the  signature  was  not 
John  Fort's.  But  the  plaintiff  contended  that  the  defendant  himself  had  either 
forged  the  signature  of  John  Fort,  or  had  procured  it  to  be  done,  and  had  put 
the  note  in  circulation,  and  was  thereby  precluded  from  objecting  to  the  forgery 
of  the  signature  of  the  indorser.  Fort,  who  was  the  defendant's  father.  The  plain- 
tiff, Meacher,  was  a  bona  fide  holder, — having  received  the  note  from  one 
Bruerton,  on  account  of  a  debt  due  to  him  by  Bruerton. 

When  the  note  became  due,  Meacher  sent  an  agent  (Stillraan),  to  demand 
payment  of  the  drawer,  at  his  residence  on  Black  River,  fifteen  miles  above 
Georgetown.  Stillinan  told  him  if  it  was  not  paid  it  would  be  protested,  and 
the  indorsers  called  upon  for  payment.  The  defendant  replied  it  was  impos- 
sible for  him  to  pay  it  before  January  (the  note  was  due  1st  December),  and 
spoke  of  selling  some  property  to  pay  the  debt.  The  demand  of  payment  was 
made  for  Meacher. 

A  bond,  signed  by  John  E.  Fort  and  John  Fort,  was  offered  in  evidence,  to 
enable  the  jury  to  decide  whose  writing  the  signature  of  John  Fort  was. 

On  the  part  of  the  defendant,  John  Fort  was  examined.  He  denied  that  the 
signature  was  his,  or  that  he  had  ever  authorized  any  person  to  sign  his  name 
on  the  note.  In  fact  he  had  never  heard  of  the  existence  of  any  such  paper, 
until  it  was  presented  to  him  by  Meacher,  1st  February,  1833  (which  was  some 
months  alter  its  date:  it  was  due  1st  December,  1883).  As  soon  as  he  knew  of 
the  note,  he  advertised  it  as  a  forgery.  Defendant  is  his  son,  and  lived,  at  the 
date  of  the  note,  at  the  thirty-two-mile  house.  A  Mrs.  Durant  had  rented  the 
house  of  Bruerton,  and  kept  a  tavern.  Defendant  married  her  daughter,  and 
heard  him  say  he  would  buy  the  place  if  he  could.  He  tried  to  do  so,  but  could  not 
make  the  payment.  Bruerton  had  very  little  property,  and  the  defendant  never 
had  any  propc.-rty  from  him  of  the  value  of  this  note  (nine  hundred  dollars). 

In  my  charge  to  the  jury,  I  told  them  that  from  the  evidence  I  thought  Meach- 
er should  be  regarded  as  the  bona  fide  holder  of  this  note,  — he  having  received 
it  from  Bruerton  in  the  course  of  a  regular  business  transaction ;  but  to  enable 
him  to  recover  against  the  maker,  it  was  necessary  to  prove  that  the  payees  of 
the  note  had  parted  from  their  interest  by  indorsement.  This  was  the  general 
rule,  but  there  were  exceptions. 

Among  the  exceptions  which  were  applicable  in  this  case,  were  these  :  — 

1.  If  the  maker  of  a  note  make  it  payable  to  a  fictitious  person,  which  ficti- 
tious name  he  writes  on  the  note,  and  then  puts  it  in  circulation. 

2.  Or  if  he  make  it  payable  to  a  real  person,  and  forge  his  indorsement,  or 
if  he  procure  it  to  be  done,  and  then  put  it  in  circulation. 

In  these  cases  the  drawer  could  not  insist  on  proof  of  the  indorsements,  be- 
cause he  was  estopped  to  say  that  was  not  genuine  which  he  had  represented  to 
be  so,  by  putting  it  jn  circulation. 

It  was  submitted  to  the  jury  .to  decide,  whether  the  eviden  .'c  in  this  ca^e  brought 
it  within  these  exceptions  to  the  general  rule.  They  found  for  the  plaintiff.  The 
•notice  of  appeal  is  annexed. 


HORTSMAN    V.    HENSHAW.  61 

On  the  trial  the  plaintifT  contended  he  could  recover  on  the  promise  made  by 
defendant  to  pay  at  Janiiiny,  when  .Stiiinian  demanded  panncnt.  I  did  not 
think  so;  but  I  find  it  alle;.'((i  in  the  iioliee,  as  a  ground  that  I  did  not  instruct 
the  jury  that  the  plaintlll'  could  not  recover  on  this  proniite,  unless  it  Lad  been 
declared  on.  I  certainly  so  decided  in  the  hearing  of"  the  jury ;  and  I  charged 
them  to  find  for  defendant,  unless  they  believed  the  case  came  within  the  excep- 
tions hereinbefore  stated. 

The  defendant  moves  for  a  nonsuit,  or  a  new  trial,  on  the  grounds  following: 

1.  Because  the  phiintill's  case  was  without  evidence,  in  this  that  tlie  declara- 
tion was  upon  a  note,  and  no  proof  of  the  indorsement  alleged  in  the  declaration, 
which  was  necessary  to  convey  a  right  to  the  plaintiff. 

2.  Because  the  Court  did  not  instruct  the  jury  that  the  plaintiff  must  recover 
on  the  note  only,  and  could  not  recover  upon  the  promise  made  to  the  jjlain- 
tiff,  as  the  same  was  not  declared  on;  and,  if  it  had  been,  was  founded  on  no  « 
consideration. 

3.  Be(  ause  the  verdict  was  against  the  positive  evidence,  as  to  the  indorse- 
ment, and  the  judge  erred  in  charging  the  jury  that,  although  the  indorsement 
■was  not  genuine,  they  were  at  liberty  to  presume  it  was  made  by  the  assent  of 
the  real  payee  of  the  note,  and  that  if  so  made,  the  interest  in  the  note  was 
thereby  passed  to  the  plaintiff. 

4.  Because  tiie  judge  eireil  in  charging  the  jury  that,  if  the  name  of  the  pavee 
of  the  note  was  written  by  the  maker,  the  plaint ilt"  was  entitled  to  recover  undeir 
a  declaration  setting  forth  a  real  indorsement  by  the  payee  himself;  whereas,  it 
is  submitted,  that  if  such  was  the  state  of  facts,  the  action  should  have  been 
founded  on  the  deceit. 

CuiUA,  Evans,  J.  This  Court  is  of  opinion  there  was  no  error  in  the  charge 
of  tlie  presiding  judge.  The  facts  of  the  case  were  for  the  decision  of  the  jury, 
and  there  docs  not  appear  to  be  any  sufficient  ground  to  disturb  the  verdict. 

The  motion  is  dismissed. 

Oanlt,  Richardson,  0''Xeall,  and  Butler,  JJ.,  concurred. 

A  similar  question  arose  in  1847,  in  Coggill  v.  American  E.xchange  Bank,  1 
Comstock,  113.  In  that  case  one  of  the  drawers  of  the  bill  forged  the  payee's 
name,  and  then  procured  it  to  be  discounted  ;  and  at  maturity  the  plaintiff,  the 
drawee,  paid  it.  On  discovering  the  forgery  he  sued  the  delendant,  a  hona  Jide 
holder  to  whom  he  had  paid  the  b!ll,  to  recover  the  sum  paid.  The  Court  held 
that  the  action  could  not  be  maintained;  but  based  their  decision  on  the  fact 
stated,  that  the  payee  had  no  interest  in  the  bill,  comparing  it  to  a  bill  drawn  to 
a  fictitious  person,  such  a  bill  being  in  effect  payable  to  bearer.  Vere  v. 
Lewis,  3  T.  R.  182;  Rlinct  v.  Gibson,  ib.  481;  s.  c,  1  H.  Bl.  5G9;  Collins 
V.  Emmett,  1  II.  Bl.  313:  rhilllps  v.  Thurn,  Law  Rep.  1  C.  P.  4C3 ;  Plets  v. 
Johnson,  3  Hill,  112.  The  j)oint  made  in  the  j)rincipal  case  was  not  noticed, 
that,  in  such  ease,  the  drawer  is  estopped  to  deny  the  genuineness  of  the  in- 
dorsement ;  that  he  is  thus  liable  to  the  bona  Jide  holder,  and  that,  therefore,  the 
drawee  is  entitled,  on  payment,  to  a  credit  against  the  drawer.  Whence  it  would 
follow  that  it  is  immaterial  that  the  payee  had  no  interest  in  the  bill,  when  the 
drawer  himself  puts  it  into  circulation,  bearing  the  payee's  indorsement.  But,  ac- 
cording to  Coggill  V.  American  Exchange  Bank,  explaining,  on  this  point.  Canal 
Bank  v.  Bank  of  Albany,  1  Hill.  287,  if  the  payee  owned  the  forged  bill,  the  ac* 


62  ACCEPTANCE. 

ceptor  would  be  entitled  to  recover  the  sum  paid  to  the  holder.  It  must  be  con- 
fessed there  is  ailhculty  in  harmonizing  the  two  cases,  unless  the  language  of  the 
principal  decision  is  used  with  reference  to  the  case  of  a  payee  without  interest ; 
and  yet,  if  that  be  true,  how  can  it  be  said  that  in  -such  case  the  drawee  has  paid 
to  one  not  entitled  to  receive  the  money  ?  The  case  seems  to  cover  the  whole 
ground  of  a  payee  who  owned  the  bill,  as  well  as  of  one  who  had  no  interest  in 
it.  And  a  further  explanation  than  the  very  satisfactory  one  given  by  Judge 
Taney,  may  perhaps  be  given  to  the  case  ;  that  it  rests  upon  the  familiar  principle 
that  of  two  innocent  parties,  he  should  suffer  who  occasioned  the  difficulty.  The 
drawee,  by  accepting,  induced  the  holder  to  part  with  his  money.  See  opinion 
of  Keating,  J.,  in  Phillips  v.  Thum,  Law  Rep.  1  C.  P.  472.  The  case  of  Canal 
Bank  v.  Bank  of  Albany,  supra,  may  at  first  seem  to  present  a  different  view ; 
but  it  nuist  be  observed  that  it  is  nowhere  stated  in  that  case  that  the  forged  bill  was 
put  into  circulation  by  the  drawer,  — the  distinguishing  fact  in  all  the  other  above 
cases.  See  also  Burchfield  v.  Moore,  3  E.  &  B.  683 ;  Talbot  v.  Bank  of  Roch- 
ester, 1  Hill,  295 ;  Young  v.  Grote,  4  Bing.  253.  These  eases  show  that  the 
drawer  is  not  estopped  to  deny  the  genuineness  of  the  indorsement,  if  the  forg- 
ery occurred  after  the  bill  passed  out  of  the  drawer's  hands  ;  and  this  is  the  line 
of  distinction  drawn  in  the  principal  case.  This  may  have  escaped  the  notice  of 
the  learned  judge  (Bronson),  in  Coggill  v.  American  Exchange  Bank.  And  we 
repeat  that  it  must  be  understood  that  the  principal  case  and  the  above  discus- 
sion are  predicated  of  forgery  committed  before  the  drawer  put  the  bill  into 
circulation. 

Though  it  is  true  in  general  that  the  acceptor  does  not  warrant  the  genuine- 
ness of  the  signature  of  any  indorser,  still,  if  he  accept  and  negotiate  the  bill 
with  knowledge  that  there  is  a  forged  indorsement  upon  it,  he  is  estopped  to 
deny  the  genuineness  of  such  indorsement.  Beeman  v.  Duck,  11  Mees.  &  W. 
251. 

It  has  been  held  that,  though  acceptance  admits  the  genuineness  of  the  draAv- 
er's  signature,  the  rule  does  not  apply  where  the  forgery  is  in  the  body  of  the 
bill,  as  in  the  sum  to  be  paid ;  that  the  reason  and  justice  of  the  rule  extend  no 
farther  than  to  the  signature.  With  the  drawer's  handwriting,  as  indicated  in  his 
signature,  the  drawee  is  bound  to  be  familiar,  but  with  nothing  else.  Bank  of 
Commerce  v.  Union  Bank,  3  Comst.  230  (1850).  In  this  case  the  amount  of  the 
bill  was  altered  from  .$105  to  $1005;  and  the  acceptor  having  paid  the  latter 
sum,  was  held  entitled  to  recover  it  from  him  to  whom  he  had  paid  it.  But  the 
law  upon  this  point  do6s  not  seem  to  be  so  settled.  See  Byles,  Bills,  323 ; 
Ward  V.  Allen,  2  Met.  53,  decided  in  1840,  and  Langton  v.  Lazarus,  5  Mees. 
&  W.  629,  decided  in  1839,  in  which  cases  it  is  held  that  the  fraudulent  altera- 
tion of  the  day  of  payment,  made  before  acceptance,  is  no  defence  to  the  accept- 
or in  an  action  by  a  bona  fide  holder.  And  in  Van  Duzer  v.  Howe,  21  N.  Y. 
531  (1860),  post,  it  is  held  that  where  the  defendant  wrote  his  blank  acceptance 
on  an  agreement  with  the  drawer  that  he  should  not  draw  for  more  than  $1000, 
and  he  inserted  in  the  bill  a  larger  sum,  and  passed  it  for  value  to  the  plaintiff', 
the  defendant  was  nevertheless  liable. 

So  in  Young  v.  Grote,  4  Bing.  253  (1827),  it  is  held  that,  if  the  drawer  facili- 
tated or  gave  occasion  to  the  forgery,  he  must  bear  the  loss  himself.  In  that  case 
•the  bill  had  been  so  drawn  by  leaving  a  space  after  the  mark  "  £,"  that  the  amount 


*  HORTSMAN    V.    HENSHAW.  63 

was  rhanged  from  £iy2.'2,  to  £352.2,  and  the  drawer  was  required  to  bear  the 
lo.'^s,  after  payment  by  the  drawee.     See  IJylcs,  liills,  3215. 

The  acceptance  of  a  bill  drawn  by  procuration  admits  the  hand\vriting  of  the 
drawer,  and  also  the  procuration ;  but  it  does  not  admit  the  agent's  power  to  in- 
dorse, though  the  handwriting  is  the  same  as  that  of  the  drawer,  and  though  the 
indorsement  preceded  the  acceptance.  Robinson  v.  Yarrow,  7  Taunt,  -loo  (1817)  ; 
Smith  V.  Chester,  1  T.  K.  (t.')4. 

If,  however,  the  drawer  is  a  fictitious  person,  and  the  bill  is  drawn  payable  to 
the  drawer's  order,  the  arceptor's  undertaking  is  that  he  will  pay  to  the  signature 
of  the  same  person  that  signed  for  the  drawer ;  and  in  such  case  the  indorsee 
may  show,  as  against  the  acceptor,  that  the  signatures  of  the  fictitious  drawer 
and  of  the  first  indorser,  are  in  the  same  handwriting.  Cooper  v.  Meyer,  10 
Barn.  &  C.  468. 

A  party  who  admits  that  an  acceptance  is  in  his  own  handwriting,  and  thereby 
induces  another  to  take  the  bill,  is  precluded  thereafter  from  denying  the  gen- 
uineness of  the  acceptance.     Leach  v.  Buchanan,  4  Esp.  22G. 

So  if  the  acceptor  puts  the  bill  into -circulation,  he  cannot  be  allowed  to  allege 
that  he  paid  it  before  maturity.     Ilinton  r.  Bank  of  Columbus,  9  Port.  Ala.  4C3. 

Acceptance  for  the  honor  of  an  indorser  does  not  admit  the  genuineness  of  the 
indorser's  signature.  Wilkinson  v.  Johnson,  3  Barn.  &  C.  428.  And  the  rea- 
soning of  Abbutt,  C.  J.,  in  this  case  is  perhaps  broad  enough  to  warrant  the  rule 
as  laid  down  in  1  Parsons,  Notes  and  Bills,  323,  that  acceptance  for  honor 
does  not  admit  the  genuineness  of  the  signature  of  any  party  for  whose  honor  the 
acceptance  is  given,  not  even  of  the  drawer's  signature. 

The  acceptor  for  honor  then  occupies  a  more  favorable  situation  than  an 
acceptor  in  at  least  two  respects  :  first,  that  he  is  entitled  to  notice,  like  an  in- 
dorser, on  presentment  to  and  non-payment  by  the  drawee ;  secondly,  that  he 
can  recover  money  paid  to  a  holder  who  claims  under  a  forgery  of  the  drawer's 
name,  according  to  the  rule  in  Parsons  and  the  reasoning  in  Wilkinson  t'.  John- 
son, supra. 

But  one  who  accepts  for  the  honor  of  tlie  drawer  is,  like  the  drawer  himself, 
estopped  from  denying  that  the  bill  is  a  valid  bill ;  and  consequently  it  is  not 
competent  to  him  to  set  up  as  a  defence  to  an  action  against  him  by  an  indorsee, 
that  the  payee  is  a  fictitious  person,  and  that  he  was  ignorant  of  that  fact  at  the 
time  he  accepted  the  bill.  Phillips  v.  Thurn,  18  Com.  B.  (x.  s.)  G94  (1865)  ; 
s.  c,  again  in  Law  Rep.  1  C.  P.  463.     See  next  case  and  note. 

In  this  case,  the  bill  was  payable  to  a  fictitious  payee,  and  therefore  held 
equivalent  to  a  bill  payable  to  bearer,  Erie,  C.  J,  said:  "  I  take  it  to  be  cleai" 
that  if  the  defendant  had  not  intervened,  and  the  action  had  been  brought  by 
the  holder  of  the  bill  against  the  drawer,  the  drawer  would  have  been  by  law 
compelled  to  admit  that  the  bill  was  a  valid  bill,  payable  to  bearer.  ...  It  seems 
to  me  there  is  good  reason  lor  saying  that  that  which  the  drawer  would  be 
estopped  from  denying,  the  acceptor  for  honor  should  also  be  estopped  from 
denying.  I  think  that  he  is  ecpially  bound  to  admit  that  the  bill  is  a  valid  bill." 
18  Com.  B.  701. 


64  ACCEPTANCE. 


Gerrit  Schimmelpennich  and  Jan  Adrian  Toe  Lear, 
Aliens,  v.  William  Bayard,  William  Bayard,  Jr.,  Rob- 
ert Bayard,  and  Jacob  Le  Roy. 

(1  Peters,  264.     Supreme  Court  of  the  United  States,  January,  1828.) 

Acceptance  supra  protest.  — If  tlie  drawees  of  a  bill  of  exchange,  refusing  to  honor  the 
bill,  were  bound  to  accept  the  same,  they  will  not  be  permitted  to  change  the  rela- 
tion in  which  they  stand  to  the  parties  on  the  bill  by  a  wrongful  act.  They  can 
acquire  no  rights  as  the  holders  of  bills  paid  supra  protest,  if  they  were  bound  to 
honor  them  in  their  character  of  drawees. 

When  bound  to  accept.  —  A  drawee,  who  has  been  in  the  habit  of  receiving  consign- 
ments from  the  drawer  with  whom  he  has  an  open  account  therefor,  is  not  bound 
to  accept  bills  drawn  on  him  against  a  particular  shipment,  which  bills  the  drawer 
in  his  letter  of  advice  says  may  be  charged  in  account,  if  the  account  actually  show 
that  the  drawer  had  no  funds  in  the  hands  of  the  drawee. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Marshall,  C.  J.  This  action  was  brought  on  nine  hills  of 
exchange,  drawn  by  John  C.  Delprat,  on  the  plaintiffs,  and  indorsed 
by  the  defendants,  a  list  of  which  follows  :  — 

Baltimore,  May  23,  1822, 


£500 

favor  of  J.  P.  Kraft. 

200 

favor 

of  defendants. 

300 

)) 

500 

» 

1000 

5) 

300 

)j 

1000 

» 

r.  10,000 

» 

5000 

5> 

,,         June  12      „ 

5)  55         -'-"  55 

.   „         July  31      „ 

55  55  55  55 

55  55  55  55 

These  bills  were  regularly  protested  for  non-acceptance  and  non- 
payment ;  but  were  accepted  and  paid  svpra  protest.,  by  the  draw- 
ees, for  the  honor  of  the  defendants  the  indorsers.  The  jury  found 
a  verdict  for  the  plaintiffs,  subject  to  the  opinion  of  the  Court,  on  a 
case  stated.  The  judges  were  divided  in  opinion  on  the  following 
points,  which  have  been  certified  to  this  Court. 

1.  Whether  the  authority  to  John  C.  Delprat  to  draw  on  the 
plaintiffs,  did  or  did  not  amount  to  an  acceptance  of  the  bills. 

2.  Whether  the  bills  paid  by  the  plaintiffs,  supra  protest,  for  the 


SCIIIMMKLI'ENNICII    V.    BAYARD.  65 

lioiior  of  tlie  dcfendiiiits,  were  drawn  and  negotiated  in  confornnty 
to  the  authority  and  instructions  of  the  phiintiffs  to  J.  C.  Delprat. 

3.  Whether  the  plaintiffs  were  bound  to  accept  and  pay  the  hills 
in  question,  and  whether  the  same  having  l)ecn  jjaid  hy  the  plain- 
tiffs, supra  protest,  for  the  honor  of  the  defendants,  the  plaintiffs 
are  entitled  to  recover  the  amount  of  the  defendants. 

4.  Whether  J!  C.  Delprat  was  a  competent  witness. 

5.  Whether  the  letter  oifered  by  the  plaintiffs  in  evidence,  and 
rejected,  ought  to  have  been  admitted. 

6.  Whether  the  plaintiffs  are  entitled  to  a  judgment  on  the  ver- 
dict of  the  jury. 

These  questions  require  an  examination  of  the  relations  which 
existed  between  the  drawer  of  these  bills  and  the  drawees. 

On  the  lltli  of  January,  1H18,  the  plaintiffs  entered  into  a  con- 
tract with  John  C.  Delprat,  of  wliich  the  following  is  a  copy. 

The  undersigned,  N.  and  J.  and  R.  Van  Staphorst,  merchants  in 
this  city,  and  John  C.  Delprat,  of  Philadelphia,  present  the  last 
choosing  for  the  present  act  his  domicilium  citandi  et  exequendi,  at 
the  office  of  the  youngest  notary  here,  have  entered  with  one 
another  into  the  following  arrangement  and  stipulations :  — 

Art.  I.  The  second  undersigned  (namely,  J.  C.  Delprat)  shall 
to  the  benefit  of  the  first  undersigned  (N.  and  J.  and  R.  V.  S.) 
manage  in  the  United  States  of  America,  the  mercantile  interest  of 
said  first  undersigned,  consisting  chiefly  in  the  forming  of  new 
solid  connections,  and  procuring  of  consignments  ;  and  shall  further 
perform  every  thing  the  first  undersigned  will  appoint  him  to  do  as 
their  agent. 

Art.  II.  The  second  undersigned  binds  himself  to  procurfi  to  no 
person  or  i)ersons  in  this  kingdom  any  consignments  or  commis- 
sions from  himself  or  any  other,  except  to  the  first  undersigned  ; 
but,  on  the  contrary,  to  use  his  utmost  exertions  towards  the  ben- 
efit of  the  mercantile  house  of  the  first  undersigned,  they  being 
willing  on  their  side  to  facilitate  all  such  commercial  operations  as 
might,  benefit  tiic  second  undersigned  without  their  prejudice. 

Art.  III.  The  first  undersigned  allows  to  the  second  undersigned 
the  faculty  to  value  on  them  direct,  or  payable  in  London,  at  no 
shorter  date  than  sixty  days'  sight,  for  such  moneys  as  the  second 
undersigned  shall  emjjloy  to  make  advances,  on  whole  or  jiart  of 
cargoes  of  current  articles,  namely,  to  the  aniount  of  two-thirds  of 

5 


66  ACCEPTANCE. 

the  invoice  price  of  articles  laden  in  chartered  vessels,  and  of  three- 
fourths  in  vessels  owning  to  the  shii)pers,  and  likewise  consigned 
to  the  first  undersigned  ;  it  beiug  left  to  the  knowledge  and  prudence 
of  the  second  undersigned  to  judge  of  the  invoice  price  of  the  afore- 
mentioned goods  ;  and  it  being  understood  that  the  second  under- 
signed, at  the  same  time  that  he  gives  advice  of  his  drafts  furnished 
in  the  above  maimer,  shall  enclose  and  forward,  or  cause  to  be 
enclosed  and  forwarded,  to  the  first  undersigned,  the  bill  of  lading 
and  invoice  of  the  goods  on  which  the  above-mentioned  advances 
might  have  been  made  ;  and  shall  cause  the  above  goods  to  be  duly 
insured  in  America  to  that  effect,  that  the  policy  of  said  insurance 
be  delivered  up,  duly  indorsed,  to  the  second  undersigned,  and  rests 
with  him  until  the  end  of  the  expedition.  It  being  further  a  fixed 
rule  that  tlie  first  undersigned  must  never  come  in  the  predicament 
of  having  made  any  advances  on  cargoes  or  part  of  cargoes  which 
are  not  duly  insured  in  America. 

The  first  undersigned  further  oblige  themselves  to  open  a  credit 
of  $40,000,  say  forty  thousand  dollars,  with  Messrs.  Le  Roy,  Bayard, 
&  Co.,  New  York,  to  be  made,  use  of  by  the  second  undersigned, 
in  case  any  advances  are  required  on  consignments  to  be  made  to 
the  said  first  undersigned,  that  credit  to  be  renewed  every  time  by 
the  said  first  undersigned,  after  the  arrivement  of  the  consigned 
goods  shall  have  been  duly  advised  by  them. 

If,  however,  against  all  probability,  it  happened  that  the  multi- 
plicity of  consignments  rendered  it  desirable  to  the  first  undersigned 
to  stop  for  a  wliile  further  consignments,  then  the  said  first  under- 
signed retain  the  faculty  to  prescribe  to  the  second  undersigned 
such  limits  and  orders  as  they  shall  find  proper,  according  to  cir- 
cumstances, which  orders  and  limits  the  second  undersigned  shall 
be  obliged  to  follow. 

Art.  IV.  As  sometimes  an  opportunity  might  offer  to  procure  a 
good  consignment  to  the  first  undersigned,  on  condition  of  their 
taking  an  interest  in  that  expedition,  they  authorize  the  second 
undersigned  to  make  use  likewise  of  the  above-mentioned  credit  of 
$40,000  to  interest  the  first  undersigned  ;  in  such  expeditions  for  a 
proportion  not  larger  than  one-fourth,  with  this  restriction,  that 
said  proportion  must  never  exceed  the  amount  of  $10,000,  say  ten 
thousand  dollars.  The  choice  of  the  articles  to  be  shipped  to  the 
first  undersigned  on  their  own  account,  being  left  to  the  commercial 
knowledge  of  the  second  undersigned.  This  authorization  will  be 
considered  as  renewed  after  the  termination  of  each  expedition ; 


SCHIMMELPENNICH    V.    BAYARD.  67 

namely,  after  that  termination  sliall  have  l)een  duly  advised  to  the 
second  undersigned  hy  the  first  undersigned. 

Art.  V.  That  the  first  undersigned,  in  consideration  of  the  ser- 
vices to  he  rendered  hy  the  second  undersigned,  shall  grant  to  the 
second  undersigned  one-third  of  the  amount  of  the  two  per  cent 
commission,  to  he  earned  by  the  first  undersigned  on  the  consign- 
ments to  he  procured,  and  further,  one  per  cent  from  the  purchase 
of  such  goods  which  might  Ijc  shipped  for  the  account  of  the  first 
undersigned,  as  is  m')re  amply  specified  in  article  4  ;  it  is  to  be 
understood  that  then  no  benefit  arises  from  the  third  of  the  two  per 
cent  commission  of  those  good  ;  and  finally,  that  the  second  under- 
signed is  promised  an  allowance  for  travelling  and  other  expenses 
the  sura  of  82000,  say  two  thousand  dollars,  per  annum,  to  com- 
mence with  the  first  of  February,  1818. 

Art.  Yl.  These  arrangements  shall  last  for  the  term  of  two  con- 
secutive years,  and  thus  end  with  the  last  day  of  January,  1820.  It 
being  understood  that  (in  case  of  no  denunciation  to  the  contrary, 
made  by  any  of  the  parties  aforesaid)  this  contract  will  be  continued 
from  year  to  year,  but  that,  in  case  one  of  the  parties  should  desire 
the  annullation  of  the  present  contract,  said  party  shall  be  obliged 
to  signify  his  intention  to  the  other  party  four  months  before  the 
expiration  thereof. 

Art.  Vn.  Ultimately,  it  has  been  stipulated  that  in  the  Unhoped- 
for and  wholly  unexpected  case  of  any  differences  taking  place 
between  the  undersigned,  respecting  tlie  fulfilment  of  any  of  the 
articles  al)ove  mentioned,  those  disputes  or  differences  shall  be 
entirely  adjusted  and  decided  by  the  decision  of  two  arbiters,  to  be 
chosen  in  the  city  of  Amsterdam,  one  by  each  party  ;  who,  in  case 
of  difference  of  opinion  between  them,  shall  have  the  faculty  of 
appointing  a  third  or  super  arbiter,  which  arbiters  then  must  decide 
and  finally  terminate  all  such  differences  ;  both  parties  renunciating 
to  all  law  measure  and  impediments,  and  especially  to  the  faculty 
of  laying  any  arrests  or  hindrance  on  moneys,  goods,  or  possessions, 
belonging  to  any  one  of  the  parties  undersigned  ;  all  such  aforesaid 
measures  to  be  considered  now  and  then  as  null,  void,  and  of  no 
effect  whatsoever ;  the  consequences  thereof  to  be  suffered  by  the 
party  which  might  have  made  use  of  the  aforesaid  measures. 

Of  the  present  act  have  been  made  two  copies,  itc. 

(Signed)  N.  and  J.  and  R.  Van  Staphorst. 

John  C.  Delprat. 

AMSTEiauM,  11th  January,  1818. 


68  ACCEPTANCE. 

A  copy  of  tins  contract  was  transmitted  by  the  plaintiffs  to  the 
defendants,  in  a  letter  dated  the  21st  of  the  same  month,  a  copy  of 
which  follows. 

Amsterdam,  21st  January,  1818. 
M,essrs.  Le  Roy,  Bayakd,  &  Co.,  New  York  (confidential). 

Gentlemen,  —  Thinking  it  useful  for  the  extension  of  our  commer- 
cial relations  in  the  line  of  consignments  (one  of  the  branches  of 
our  establishment),  to  appoint  an  agent  to  that  purpose  in  the 
United  States  of  America,  we  have  been  decided  by  the  confidence 
we  place  in  the  character  and  commercial  notions  of  Mr.  John  C. 
Delprat,  to  appoint  that  gentleman  to  the  aforementioned  trusts  ; 
in  which  choice  we  have  chiefly  been  directed  by  the  reliance  we 
have  on  the  principles  of  loyalty  and  prudence,  which  must  actuate 
a  person  employed  during  such  along  period  by  your  worthy  house. 
We  judged  it  necessary,  for  the  obtaining  of  said  purpose,  to  leave 
at  the  disposal  of  Mr.  Delprat  sufficient  means  to  facilitate  his 
exertions  ;  namely,  by  opening  with  you,  in  his  favor,  a  credit  to  be 
made  use  of  by  him  in  the  manner  pointed  out  in  the  enclosed 
abstract  of  our  contract  with  said  gentleman.  We  therefore  request 
and  authorize  you  to  furnish  Mr.  Delprat  to  the  extent  of  $40,000, 
say  forty  thousand  dollars  (to  be  made  advances  with  by  him  on 
such  cargoes,  or  part  thereof,  as  he  might  procure  the  consignment 
of  to  our  house,  and  to  be  made  use  of  to  interest  our  house  in 
part  of  cargoes  to  the  forementioned  purpose).  The  credit  to  run 
for  the  space  of  two  years,  unless  countermanded  by  us  in  such  a 
manner  that,  when  Mr.  Delprat  has  availed  himself  of  the  whole  or 
part  of  said  credit  of  $40,000,  that  credit,  or  part  of  the  same,  must 
be  considered  renewed  when  you  receive  our  approbation  of  the 
said  disposition  of  Mr.  Delprat. 

You  will  observe,  the  sole  object  of  the  mission  of  Mr.  Delprat  is 
to  obtain  solid  consignments  from  good  houses,  throughout  the 
United  States,  and  the  disposal  of  the  credit  opened  in  his  behalf 
with  your  house  is  exclusively  intended  to  facilitate  said  business. 
In  this  important  matter,  it  will  be  a  point  of  great  security,  and, 
as  such,  eminently  satisfactory  to  us,  that  our  said  agent  may  be 
able  to  have  recourse,  in  every  circumstance,  to  wise  and  friendly 
counsel ;  and  we  therefore  request  you  to  assist  Mr.  Delprat,  as  far 
as  opportunity  may  offer,  with  the  lessons  of  your  long  experience, 
particularly  with  respect  to  those  transactions  for  which,  by  virtue 


SCHI.MMELPENNICU    V.    BAYARD.  69 

of  tlic  credit  aforementioned,  we  may  have  recourse  to  your  cash, 
it  heiuf^,  as  you  will  observe,  a  material  point  that  we  are  secured  ; 
that  the  moneys  he  may  dispose  of  will  have  no  other  than  the  des- 
tination just  mentioned.  To  this  ellect,  we  authorize  you,  gentle- 
men, in  case  of  moral  certainty  that  the  moneys  Mr.  Delprat  should 
demand  from  you  by  virtue  of  the  above-mentioned  credit,  would  not 
be  employed  in  the  aforementioned  manner,  and  earnestly  request 
you  not  to  pay,  and  to  refuse  him,  any  moneys  whatsoever,  on 
account  of  the  above  credit. 

In  general,  as  a  trust  of  this  nature,  which  is  to  have*  its  effect  at 
such  a  distance,  is  always  a  delicate  matter,  we  must  claim  and 
dare  expect  from  your  known  sentiments  towards  us,  that  you  will 
give  the  strictest  attention  to  tlie  line  of  conduct  followed  by  Mr. 
Delprat;  and  if,  unexpectedly,  that  conduct  could  appear  in  the 
least  exceptionable,  we  mean  either  imprudent  or  equivocal,  then, 
gentlemen,  do  give  us,  with  all  the  frankness  of  long-experienced 
friendship,  your  ideas  respecting  that  suljjcct,  and  be  j)erfectly  secure 
that  every  information,  of  what  nature  soever,  will  not  only  be 
thankfully  acknowledged  by  us,  but  received  with  the  most  religious 
secrecy.  We  have  now,  gentlemen,  only  to  request  your  kind  oliices 
in  favor  of  Mr.  Delprat,  and  to  solicit  your  friendly  co-operation 
towards  tlie  attaining  the  object  of  his  mission,  which,  we  are  fully 
persuaded,  can  be  much  facilitated  by  your  kind  recommendation 
to  the  numerous  friends  you  have  in  different  parts  of  your  country. 
Be  assured,  gentlemen,  of  the  high  sense  we  have  of  the  obligation 
we  will  liave  to  you  for  your  friendly  services  through  the  whole  of 
the  business  we  just  now  took  tlic  liberty  to  explain  to  you,  and  of 
the  earnest  desire  we  have  to  be  often  in  the  opportunity  of  render- 
ing you  the  like,  or  any  services  in  our  power.  Referring  for  com- 
mercial information  to  our  general  letter  of  this  date,  we  are,  with 
sincere  regard, 

Gentlemen,  your  most  obedient  servants, 

N.  and  J.  and  R.  Van  Staphorst. 

(Indorsed),  Confidential,  Amsterdam,  21st  of  January,  1818. 
N.  and  J.  and  R.  Van  Staphorst.  Received  March  29th.  Answered 
24th  do. 

This  letter  was  answered  l)y  Le  Roy,  Bayard,  &  Co.  in  the  fol- 
lowing terms  :  — 


70  ACCEPTANCE. 

PRIVATE. 

New  York,  24th  March,  1818. 
Messrs.  N.  and  J.  and  R.  Van  Staphorst,  Amsterdam. 

Gentlemen,  —  We  have  the  honor  of  replying  to  your  esteemed 
favor  of  21st  of  January,  acquainting  us  with  the  arrangement  you 
have  made  with  our  mutual  friend,  Mr.  Delprat,  who  has  undertaken 
the  agency  of  procuring  you  consignments  from  this  country.  In 
the  furtherance  of  the  object,  we  shall  be  very  happy  to  render  our 
services  useful,  and  beg  to  offer  our  best  wishes  for  the  success  of 
Mr.  Delprat's  operations  in  your  behalf.  Due  note  is  taken  of  the 
credit  you  are  pleased  to  open  to  that  gentleman  with  us,  to  the 
amount  of  140,000,  subject  to  renewal,  as  fully  expressed  in  your 
letter.  We  doubt  not,  from  the  knowledge  we  possess  of  Mr.  Del- 
prat's character,  that  he  will  fully  justify  the  confidence  you  repose 
in  him  ;  and  though  he  may,  under  existing  circumstances,  find  it 
difficult  to  enlarge  to  the  extent  that  could  be  mutually  wished,  we 
are  persuaded  that  no  exertion  will  be  wanted  on  Mr.  Delprat's  part, 
to  reap  the  utmost  benefit  from  the  mission  intrusted  to  him. 

Believe  us,  with  honor  and  esteem,  gentlemen, 

Your  obedient  servants, 

Le  Roy,  Bayard,  &  Co. 

It  is  proper  to  observe  that  several  merchants  of  Holland,  whose 
agents  the  plaintiffs  were,  had  become  large  holders  of  government 
stock,  and  of  shares  ih  the  Bank  of  the  United  States.  Le  Roy, 
Bayard,  &  Co.  had  been  employed  to  draw  the  interest  and  divi- 
dends, and  to  remit  them  to  Europe.  The  credit  of  $40,000,  there- 
fore, which  was  raised  for  Delprat,  with  Le  Roy,  Bayard,  &  Co., 
was  merely  the  application  of  so  much  of  their  funds,  in  the  United 
States,  to  the  business  of  his  agency,  in  aid  of  the  bills  he  was 
authorized  to  draw  on  them.  The  continuance  or  discontinuance 
of  this  credit  might  depend  on  the  eligibility  of  continuing  this  mode 
of  remittance,  as  well  as  on  the  withdrawal  of  their- confidence  in 
their  agent.  Several  letters  passed  between  the  plaintiffs  and 
defendants,  respecting  their  transactions  in  consequence  of  this 
credit,  which  manifest,  unequivocally,  the  desire  of  the  plaintiffs 
that  its  amount  should  not  be  exceeded,  but  which  betray  no  want 
of  confidence  in  Delprat.  In  a  letter  of  the  24th  of  June,  1819,  they 
renew  the  credit  of  $40,000,  and  add,  "  at  the  same  time,  we  con- 


SCHIMMELPENNICH    V.    BAYAIID.  71 

firm  our  former  orders  not  to  exceed  said  amount  for  our  account. 
In  case  you  have  funds  in  hand,  for  any  of  our  institutions,  and 
you  think  proper  to' remit  us  for  the  sarae3Ir.  Delprat's  bills  oir  us, 
the  nature  of  which  you  are  well  ac(iuainted  with  :  you  allow  him. 
then,  the  same  credit  which  you  do  to  all  persons  from  whom  you 
take  bills,  in  the  persuasion  of  their  solidity  and  of  the  reality  of 
the  transaction  on  which  the  bills  are  issued." 

In  answer  to  this  letter,  the  defendants  say,  on  the  24th  of  Sep- 
tember, 181*J :  '' You  also  accord  us  the  permission  to  remit  this 
gentleman's  (Delprat's)  drafts  for  any  moneys  we  may  have  on 
hand  bclonginj^  to  your  various  institutions.  The  confidence 
which  we  mutually  have  in  this  gentleman's  cliaracter,  must,  .with 
us,  act  in  lieu  of  vouchers,  to  exhibit  the  reality  of  transactions 
which  may  give  origin  to  such  drafts,  the  whole  of  this  gentle- 
man's operations  having  Ijcon  hitherto  beyond  our  immediate 
knowledge." 

This  correspondence  continued  until  the  12th  of  May,  1820, 
when  X.  and  J.  and  R.  Van  Staphorst  addressed  a  letter  to  Messrs. 
Le  Roy,  Bayard,  &  Co.,  of  which  the  following  is  an  extract:  — 

'"  There  being  frequent  opportunities  of  drawing  here  now,  on 
New  York,  we  will  probably  have,  for  some  timo  to  come,  occasion 
to  dispose  of  tlie  dividends  which  '  you  will  receive  for  our  ac- 
count, in  October  next,'  and  so  on  ;  and  we  have  therefore  directed 
Mr.  Delprat  not  to  make  use  of  his  credit  of  840,000,  lately  opened 
in  his  favor.  We  thus  also  request  you,  by  the  present,  to  con- 
sider the  same  as  annulled  until  we  may  again  renew  the  same." 

The  agency  of  Delprat  continued  after  this  revocation  of  his 
credit  with  Le  Roy,  Bayard,  <fe  Co.  He  continued  to  solicit  con- 
signments for  their  house  in  Amsterdam,  and  to  draw  bills  on  them 
for  advances,  without  any  other  alteration  in  his  powers  than  is 
contained  in  a  letter  of  the  (Uh  of  February,  1821,  which  contains  the 
following  clause :  "  The  advances,  therefore,  to  be  made  by  you  on 
our  behalf,  on  shipments  to  our  consignments,  either  from  funds 
belonging  to  jus  in  your  hands,  or  by  drawing  and  indorsing  tlie 
shipper's  draft,  must  not  exceed,  henceforth,  one-half  of  tiie  '  true 
invoice.' "  As  a  compensation  for  this  reduction  of  the  advance 
to  be  made  in  the  United  States,  J.  and  X.  apd  R.  Van  Staphorst 
engaged,  on  the  arrival  of  the  shipments,  to  remit  to  the  consign- 
ors the  estimated  value  of  the  cargoes  in  bills  on  their  house  in  the 
United  States. 


72  ACCEPTANCE. 

Delprat  acknowledged  the  receipt  of  this  letter  on  the  17th  of 
April,  1821,  and  promised  to  conform  to  its  directions. 

Tlie  correspondence  between  the  plaintiffs  and  defendants,  re- 
specting Mr.  Delprat's  agency,  appears  to  have  ceased  on  the  12th 
of  May,  1820,  when  his  credit  with  the  house  of  the  latter  was 
annulled.  At  least,  no  subsequent  letter  appears  in  the  record 
until  the  9th  of  July,  1822,  when  the  plaintiflfs  announced  to  the 
defendants  the  sudden  termination  of  their  connection  with  Mr. 
Delprat ;  whose  conduct,  they  said,  had  been  so  imprudent  as  to 
oblige  them,  at  the  same  time,  to  protest  several  of  his  drafts. 
Tlieir  knowledge,  they  say,  of  the  former  intercourse  between  Le 
Roy,  Bayard,  &  Co.  and  Mr.  Delprat,  and  of  the  great  regard 
felt  for  hiin  by  those  gentlemen,  induce  them  to  state  the  chief 
reasons  which  compelled  them  to  this  measure.  These  are,  his 
irregularities  in  keeping  his  accounts,  and  omission  to  furnish  an 
account  since  the  31st  of  December,  1820,  although  the  balance 
then  due  from  him  was  fully  17837.54,  being  "  for  the  proceeds 
of  gin  consigned  l)y  us  to  him ;  for  proceeds  of  drafts,  issued  by 
him  on  us,  for  our  account,  in  order  to  employ  the  proceeds  to 
make  prudent  advances  with,"  &c. 

They  then  proceed  to  state  that  Mr.  Delprat  owed,  at  tliat  date, 
upwards  of  82,000  florins,  against  which  he  might  be  entitled  to  a 
credit  of  $6000.  The  account,  they  say,  has  accrued  to  this  height, 
in  a  great  measure,  "  inconsequence  of  shipments  made  to  him  for 
his  account,  in  full  confidence  of  his  making  us,  for  the  amount, 
remittances  ;  which  we  till  now  have  not  received,  though  the  goods 
were  witli  him  for  many  months."  The  letter  complains  of  the 
large  advances  made  by  Mr.  Delprat,  on  consignments,  notwith- 
standing their  repeated  remonstrances  ;  and  dwells  on  the  high 
opinion  they  had  entertained  of  him ;  "  his  integrity,"  they  say, 
tiiey  "even  now  will  not  question."  Thus,  the  letter  proceeds, 
"  were  matters  situated,  when  last  Friday,  contrary  to  any  thing 
we  could  expect  or  anticipate,  we  found  ourselves  drawn  upon  by 
Mr.  Delprat,  for  £200,  <£300,  and  <£500,  issued,  as  he  informs  us, 
for  the  amount  of  purchases  which  he  is  making  of  articles  not  yet 
shipped;"  and,  on  the  other  hand,  2d,  .£500,  florins  1250  and 
1750,  issued  on  us,-  as  advances  made  to  Mr.  Krafft,  already  so 
much  our  debtor,  on  shipments  which  he  made  some  long  time  ago, 
and  which  Mr.  Delprat  could  clearly  perceive  that,  taken  at  an 
average,  did  nothing  diminish  the  balance  due  by  him." 


SCIIIMMELPENXICH    V.    BAYARD.  73 

The  letter  proceeds  to  state,  in  substance,  that  they  could  choose 
only  between  the  alternatives  of  allowing  the  debt  due  from  Mr. 
Dclprat  to  be  swelled  to  a  still  larger  amount,  and  protesting  his 
bills.  They  had  chosen  the  latter,  however  it  might  pain  their 
feelings.  They  express  tlieir  regret  to  find  that,  among  the  drafts 
to  be  protested  for  non-acceptance,  and  perhaps  afterwards  for  non- 
payment, are  several  indorsed  l)y  the  defendants^  for  whose  honor, 
however,  they  had  intervened. 

This  letter  was  received  by  the  defendants  on  the  first  day  of  Sep- 
tember, 1822.  They  immediately  obtained  from  Mr.  Delprat  an 
order  on  tiie  plaintiffs  to  hold  at  their  disposal  all  the  proceeds  of 
the  goods  shipped  in  his  name,  by  the  "  Virgin"  and  other  vessels, 
and  all  balances  due  to  him.  This  order  was  enclosed  to  the  plain- 
tififs,  in  a  letter  of  the  7th  of  September,  1822,  in  which  they  say : 
"  We  can  of  course  only  consider  this  order  as  applying  to  the  bal- 
ance that  may  possilily  accrue  to  him  upon  the  settlement  of  your 
account ;  and  if  any  should  accrue,  we  will  thank  you  to  take  such 
legal  steps  which  you  may  deem  necessary,  as  will  place  it  with  us, 
without  fear  of  contention.  His  drafts,  which  you  may  have  paid 
for  our  account,  will  probably  furnish  sufficient  authority  to  enable 
you  to  do  so." 

At  the  trial,  John  C.  Delprat  was  examined  as  a  witness.  He 
deposes  that  the  several  bills  of  exchange  on  which  this  suit  jvas 
instituted,  were  drawn  in  his  capacity  as  agent,  on  account  of  and 
for  the  purpose  of  making  advances  on  shipments  consigned  to  the 
plaintiffs  ;  and,  except  that  in  favor  of  J.  P.  Krafft,  for  ,£500,  were 
accompanied  by  letters  of  advice.  That  during  the  whole  period 
of  his  agency,  he  was  in  the  habit  of  making  shipments  on  his  own 
account,  and  of  drawing  for  advances  on  the  said  shij)ments  pre- 
cisely in  the  same  manner  as  when  they  were  made  by  others  ;  that 
this  was  done  with  the  full  knowledge  and  approbation  of  the  said 
N.  and  J.  and  R.  Van  Staphorst,  who  never  found  fault  with  him 
for  doing  so  ;  but  to  encourage  him  to  make  such  shipments,  gave 
him  credit  for  one-half  the  commission  upon  the  sales  of  the  shijiments 
so  made  upon  his  own  account.  On  his  cross-examination,  the 
witness  stated  that  the  bill  for  £500  in  favor  of  Krafft  was  drawn 
for  shipments,  by  the  "  Edward,"  "Jason,"  and  "  May  Flower."  He 
cannot  say  when  the  "  Edward  "  sailed.  The  "  Jason  "  had  arrived, 
and  the  "  May  Flower  "  had  sailed  before  the  bill  was  drawn.  Kraffl 
was  at  that  time  indebted  to  the  plaintiffs.     The  bill  was  issued  to 


74  ACCEPTANCE. 

Krafft,  but  was  returned  to  witness,  who  sent  it  to  the  defendants. 
The  bills  of  lading  and  the  invoices  were  not  sent  with  it.  The 
three  bills  of  the  27th  of  May,  for  XIOOO,  were  drawn  on  account 
of  shipments,  in  his  own  name,  by  the  "  Virgin."  She  sailed  about 
the  oOth  of  July.  They  were  not  accompanied  by  invoices  or  bills  of 
lading.  The  two  bills  of  the  12th  and  18th  of  June,  for  £1000  and 
for  <£300,  were  drawn  on  tobacco  shipped  by  the  "  Henry,"  belong- 
ing to  the  witness  and  to  Mr.  Krafft.  The  bill  of  lading  and  invoice 
did  not  accompany  them.  The  three  bills  of  the  31st  of  July  were 
drawn  on  the  shipments  by  the  "  Virgin  "  generally.  They  were  not 
accompanied  by  bills  of  lading  or  invoices.  The  defendants  re- 
ceived a  commission  for  indorsing  his  bills  on  the  plaintiffs. 

In  making  the  advances  on  shipments  on  his  own  account,  he 
drew  on  the  plaintiffs,  sent  his  bills  to  the  defendants,  to  whom  they 
were  charged,  and  then  drew  on  the  defendants,  as  the  mo'ney  was 
required,  either  on  his  own  shipments  or  the  shipments  of  others  ; 
■which  bills  were  credited  to  the  defendants.  He  understands  that 
all  his  transactions  with  the  defendants  were  carried  by  them  into 
their  general  account  with  him.  These  transactions  were  not  con- 
fined to  his  agency  for  the  plaintiffs.  He  remains  considerably 
indebted  to  them. 

He  was  concerned  in  shipments  with  Mr.  Krafft,  and  did  a  great 
deal  of  business  with  him ;  but  did  not  consider  himself  as  a  gen- 
eral partner. 

The  connection  between  the  plaintiffs  and  J.  C.  Delprat,  was 
formed  by  the  agreement  of  the  11th  of  January,  1818.  He  was  con- 
stituted their  agent  for  purposes  therein  described,  and  received 
such  powers  as  were  deemed  suflficieint  to  enable  him  to  perform  the 
duties  which  devolved  on  him.  That  duty  was  to  manage  their 
mercantile  interest  in  the  United  States,  "  consisting  chiefly  in  the 
forming  of  new  solid  connections,  and  procuring  of  consignments." 
To  enable  him  to  perform  this  duty,  he  was  allowed  the  faculty  to 
value  on  them  direct  or  payable  in  London,  at  no  shorter  date  than 
sixty  days'  sight,  for  such  moneys  as  he  should  "  employ  to  make 
advances  on  the  whole  or  part  of  cargoes  of  current  articles ; " 
namely,  to  the  amount  of  two-thirds  of  the  invoice  price,  &c.  It 
being  understood  that  his  letters  of  advice  should  be  accompanied 
by  the  bills  of  ladings  and  invoices  of  the  goods  on  which  the  ad- 
vances piay  have  been  made. 

John  C.  Delprat,  then,  had  no  general  authority  to  personate  the 


SCIIIMMELPENNICH    V.    BAYARD.  75 

plaintiffs  in  all  respects  whatever ;  but  was  an  agent  appointed  for 
particular  purposes,  with  limited  powers,  calculated  to  subserve 
those  purposes.  To  procure  consignments,  it  was  indispensable 
that  he  should  advance  money  to  the  consignors,  and  this  money 
was  to  be  raised  by  bills  on  the  plaintiffs.  But  he  was  authorized 
to  draw  only  for  a  sjiecial  j)urpose,  and  to  a  limited  extent.  Out  of 
the  limits  assigned  to  him,  he  had  no  power.  The  plaintiffs  not 
being,  as  a  matter  of  course,  the  acceptors  of  every  bill  he  might 
draw,  must  have  performed  some  act  in  relation  to  the  particular 
bills,  which  imposes  on  them  in  law  the  character  of  acceptors. 

This  point  was  considered  by  this  Court,  in  the  case  of  Coolidge 
and  otliers  v.  Payson  and  others,  2  W.  66  \^ante,  p.  43]. 

Coolidge  &  Co.  held  the  proceeds  of  a  cargo,  claimed  by 
Cornthwaite  and  Gary,  whose  claim  depended  on  the  decision  of 
this  Court,  of  a  case  depending  therein.  Cornthwaite  and  Cary 
were  desirous  of  drawing  these  funds  out  of  the  hands  of  Coolidge 
<fe  Co.,  and  offered  a  bond,  with  sureties,  as  an  indemnity,  in  the 
event  of  an  unfavorable  decision.  Coolidge  &  Co.,  in  a  letter  to 
Cornthwaite  and  Cary,  state  some  formal  objections  to  the  bond, 
and  add,  "  we  shall  write  to  our  friend  Williams,  by  this  mail,  and 
will  state  to  him  our  ideas  respecting  the  bond,  which  he  will 
probably  determine.  If  Mr.  Williams  feels  satisfied  on  this  point, 
he  will  inform  you ;  and  in  that  case  your  draft  for  82000  will  be 
honored." 

In  answer  to  the  letter  addressed  by  Coolidge  &  Co.  to  Wil- 
liams, on  this  subject,  he  declared  his  satisfaction  with  the  bond, 
as  to  form  ;  declared  his  confidence  that  the  last  signer  was  able 
to  meet  the  whole  amount  himself  ;  but  that  he  could  not  speak 
certainly  of  tiie  })rincipals,  not  being  well  acquainted  with  their 
resources.  He  added,  "  under  all  circumstances,  I  should  not 
feel  inclined  to  withhold  from  them  any  portion  of  the  funds  for 
which  the  bond  was  given." 

On  the  same  day,  Cornthwaite  and  Cary  called  on  Williams, 
who  stated  the  substance  of  the  letter  he  had  written,  and  read  a 
part  of  it.  One  of  the  firm  of  Payson  <fe  Co.  also  called  on  him, 
and  received  the  same  information.  Two  days  afterwards  Corn- 
thwaite and  Cary  drew  on  Coolidge  &  Co.  for  82000,  and  paid  the 
bill  to  Payson  &  Co.,  who  presented  it  to  Coolidge  &  Co.,  by 
whom  it  was  protested.     Payson  &  Co.  sued  them  as  acceptors. 

The  Court  instructed  the  jury  that  if  they  were  satisfied  that 


76  ACCEPTANCE. 

Williams,  on  the  application  of  the  plaintiffs,  made  after  seeing  the  ^ 
letter  from  Coolidt^e  &  Co.  to  Cornthwaite  and  Gary,  did  declare 
that  he  was  satisfied  with  the  bond  referred  to  in  that  letter ;  and 
that  the  plaintiffs  on  the  faith  and  credit  of  tlie  said  declaration, 
and  also,  of  the  letter  to  Corntiiwaite  and  Gary,  did  receive  and 
take  the  bill  in  the  declaration,  they  were  entitled  to  recover  in 
the  action. 

The  jury  found  a  verdict  for  the  plaintiffs ;  the  judgment  on 
which  was  alTirmed  in  tliis  Court. 

In  this  case,  the  drawee  had  written  a  letter  to  the  drawer, 
promising  to  honor  his  bill  for  $2000,  if  Mr.  Williams  should  be 
satisfied  with  a  bond  of  indemnity,  which  had  been  placed  in  their 
possession.  Mr.  Williams  declared  his  satisfaction  with  it,  both 
to  the  drawer  and  holder  of  the  bill,  within  two  days  after  this 
declaration.  In  this  case  the  promise  to  accept  was  express,  and 
applied  to  a  particular  bill,  the  precise  amount  of  which  was  speci- 
fied in  the  promise. 

The  Court  in  its  opinion  reviews  several  decisions  in  England  on 
this  point ;  in  all  of  which  the  promise  to  accept  was  express ;  and 
in  some  of  which  the  Court  declared  the  opinion  that  the  promise 
ought  to  be  accompanied  by  circumstances  which  may  induce  a 
tliird  person  to  take  the  bill.  After  reviewing  these  cases,  this 
Court  laid  down  the  rule,  "  that  a  letter  written  within  a  reason- 
able time  before  or  after  the  date  of  the  bill  of  exchange,  describ- 
ing it  in  terms  not  to  be  mistaken,  and  promising  to  accept  it,  is, 
if  shown  to  the  person  who  afterwards  takes  the  bill  on  the  credit 
of  the  letter,  a  virtual  acceptance,  binding  the  person  who  makes 
the  promise." 

It  cannot  be  alleged  that  these  bills  are  brought  within  this 
rule.  The  plaintiffs,  therefore,  cannot  be  considered  as  acceptors 
of  them. 

But,  although  the  plaintiffs  cannot  be  viewed  as  the  acceptors  of 
these  bills,  it  does  not  follow,  necessarily,  that  they  can  maintain 
the  present  action.  To  entitle  them  to  maintain  it,  the  Court  must 
be  satisfied  that  the  payment  is,  in  fact,  what  it  professes  to  be,  — 
a  payment  really  for  the  honor  of  the  indorsees.  If  the'  drawees, 
thus  refusing  to  honor  the  bill,  and  thus  denying  the  authority  of 
the  drawer  to  draw  ui)on  them,  were  bound  in  good  faith,  to  accept 
or  pay  as  drawees,  they  will  not  be  permitted  to  change  the  rela- 
tion in  which  they  stand  to  the  parties  on  the  bills  by  a  wrongful 


SCHIMMELPENNICH    V.    B  A  YARD.  77 

^act.  They  can  acquire  no  rights,  as  the  holders  of  bills  paid  supra 
protesl,  if  they  were  hound  to  honor  them  in  their  ciiaracter  of 
drawees.  The  sinj^le  and  unmixed  inquiry,  therefore,  on  the 
second  and  third  (luestions  is,  whether  the  drawees  were  l)ouMd  to 
accept  or  to  pay  tiicse  hills.  And,  first,  were  they  so  bound  be- 
cause the  bills  were  drawn  in  pursuance  of  the  authority  they  had 
given  to  the  drawer  ?  Tliis  demands  a  more  critical  examination 
of  the  evidence  than  was  required  when  considering  the  first 
question. 

It  is  apparent,  from  the  contract  of  the  11th  of  January,  1818, 
that  Mr.  Delprat  came  to  the  United  States  as  the  agent  of  N. 
and  J.  and  R.  Van  Staphorst,  to  manage  their  mercantile  interest ; 
"  consisting  chiefly  in  forming  new  solid  connections  and  procur- 
ing of  consignments  ; "  and  also  with  commercial  views  of  his 
own.  The  jirincipal  object  of  the  contract  is  to  define  his  author- 
ity, and  to  regulate  his  conduct  as  agent.  He  is  allowed  to  draw 
on  the  jdaintiffs  for  such  moneys  as  he  should  employ,  in  making 
advances  on  current  articles  consigned  to  his  principnls,  to  the 
amount  of  two-thirds  of  the  invoice  price  of  articles  laden  in 
chartered  vessels.  He  was  still  further  restricted  in  his  advances, 
by  orders  received  long  before  the  bills  in  question  were  drawn,  to 
one-half  of  the  true  invoice.  Mr.  Delprat's  authority,  then,  to 
make  advances  was  limited,  at  the  date  of  this  transaction,  to  one- 
half  the  invoice  price.  One,  and  perhaps  the  most  usual  mode  of 
conducting  business  of  this  description  is,  to  draw  in  favor  of  the 
consignor,  or  to  indorse  his  l)ill.  The  agent  might,  however,  if 
not  otherwise  instructed,  draw  immediately  on  his  principal,  and 
advance  tiie  money  to  tlie  consignor  which  was  raised  by  the  bill. 
In  either  case,  however,  drafts  beyond  one-half  the  invoice  price 
of  the  consignments  actually  made  would  exceed  the  authority 
given.  Circumstances  may  exist,  which  w^ould  impose  on  the 
principal  the  obligation  to  pay  such  drafts ;  but  the  question  we 
are  Jiow  considering  relates  only  to  the  authority  under  which  the 
bills  were  drawn.  That  authority  restricted  the  agent  in  the 
amount  of  his  drafts  to  one-half  the  invoice  price  of  the  articles 
actually  consigned ;  and  also  required  him  to  accompany  his  let- 
ters of  advice  with  bills  of  lading  and  invoices. 

Were  the  bills  in  question  drawn  in  conformity  with  powers  and 
instructions  thus  limited  ? 

The  first  bill  on  the  list  is  for  =£500,  drawn  in  favor  of  J.  P. 


78  ACCEPTANCE. 

Krafft,  on  the  23d  of  May,  1822,  and  indorsed  by  liim  to  the  de-^ 
fendants.     Tlic  letter  of  advice  states  this  bill  to  be  drawn  on  ac- 
count   of   shipments    by    the    "-Ecrward,"    "Jason,"    and    "May 
Flower,"  as  by  letter  of  21st,  which  is  to  be  charged  to  account  of 
P.  Krafft.     Tiio  letter  of  the  21st  is  not  in  the  record. 

The  shipment  by  the  "  Jason  "  had  arrived,  and  the  "  May 
Flower  "  had  sailed  before  the  bill  was  drawn.  Mr.  Krafft  was  at 
the  time  iiulcl>ted  to  N.  and  J.  and  R.  Van  Stapliorst.  The  bill 
was  returned  by  Krafft  to  Delprat,  and  then  indorsed  by  the  de- 
fendants. 

It  does  not  appear  certainly  who  remitted  this  bill ;  although  the 
probability  is  that,  as  it  was  indorsed  by  the  defendants,  not  as 
purchasers,  but  for  a  commission,  it  was  remitted  by  Delprat,  to 
whom  it  was  returned  by  Krafft,  as  is  stated  in  Delprat's  testi- 
mony, or  by  some  person  to  whom  Delprat  sold  it.  It  is  true  that 
he  further  states  that,  after  the  bill  was  so  returned,  he  sent  it  to 
the  defendants ;  but  this  was,  no  doubt,  done  for  the  purpose  of 
having  it  indorsed  by  the  defendants,  in  order  to  give  it  credit. 
Neither  does  it  appear,  from  the  evidence  in  the  cause,  that  Krafft 
accompanied  the  sliipments  on  account  of  which  this  bill  was 
drawn,  by  any  letter  of  advice,  or  otherwise  directing  the  proceeds 
thereof  to  be  applied  to  the  discharge  of  this  bill ;  but,  on  the 
contrary,  the  letter  of  advice  addressed  to  the  plaintiffs  by  Delprat 
directed  the  bill  to  be  charged  to  the  account  of  Krafft,  generally. 
Under  these  circumstances,  taken  in  connection  with  the  addi- 
tional one  that  Delprat  was  concerned,  generally,  with  Krafft,  in 
the  shipments  made  to  the  plaintiffs,  the  Court  is  of  opinion  that 
there  is  no  material  difference  between  this  bill  and  those  drawn 
on  account  of  shipments  made  by  and  in  the  name  of  Delprat, 
which  are  now  to  be  considered. 

It  has  already  been  stated  that  Mr.  Delprat  was  a  merchant, 
trading  on  his  own  account,  at  the  same  time  that  he  was  the  agent 
of  N.  and  J.  and  R.  Van  Staphorst.  His  transactions,  in  his  two 
characters,  were  as  distinct  from  each  other  as  if  they  had  been 
the  transactions  of  distinct  persons.  As  an  agent,  he  was  bound 
to  act  "  in  conformity  to  the  authority  and  instructions  "  of  his 
principals  ;  as  a  merchant,  he  was  himself  the  principal,  and 
acted  in  conformity  with  his  own  judgment.  It  would  seem,  then, 
that  the  cpntract  must  contain  some  very  peculiar  and  unusual 
provisions,  to.  place  Mr.  Delprat  under  the  authority  of  the  house 


SCHIMMKLPENNICH    V.    BAYARD.  79 

in  Amsterdam,  wliilst  carryinp;  on  trade  iii  tlic  riiited  States  on 
his  own  account.  Uj)on  reference  to  the  contract,  we  find  a  stip- 
ulation between  the  parties  in  the  following  words :  "  The  second 
undersigned  (Delprat)  binds  himsell  to  procure  to  no  person  or 
persons  in  this  kingdom  any  consignments  or  commissions,  from 
himself  or  any  other,  except  to  the  first  undersigned  ;  but,  on  the 
contrary,  to  use  liis  utmost  exertions  toward  the  benefit  of  the  mer- 
cantile house  of  the  first  undersigned  ;  they  being  willing,  on 
their  side,  to  facilitate  all  such  commercial  operations  as  might 
benefit  the  second  undersigned,  without  their  prejudice." 

This  article  contains  the  only  limitation  on  the  entire  independ- 
ence of  Mr.  Delprat  as  a  merchant.  It  is,  perhaps,  a  necessary 
limitation,  which  was,  in  part,  the  price  of  his  agency,  and  for 
which  he  finds  a  comj)ensation  in  the  profits  of  the  business  con- 
fided to  him.  This  restriction  does  not  change  the  character  of 
his  transactions  as  a  merchant.  His  waiving  the  right  to  consign 
to  any  other  liouse,  does  not  impress  on  his  consignments  to  the 
Van  Staphorsts,  or  on  his  bills  drawn  on  those  consignments,  a 
character  dilferent  from  that  which  would  have  belonged  to  them 
had  his  shipments  been  made  from  choice.  He  does  not  bind  him- 
self to  make  consignments  to  them  ;  but  not  to  make  consignments 
to  any  other  house  in  the  Netherlands. 

If  any  doubt  could  arise  from  this  article,  it  would  be  produced 
by  the  peculiar  manner  in  which  it  is  expressed.  Mr.  Delprat 
binds  himself  to  {)rocure  to  no  person  in  the  kingdom  of  the 
Netherlands  any  consignments  or  commissions,  from  himself  or 
any  other,  except  to  the  Van  Staphorsts.  The  singular  applica- 
tion of  the  word  "  procure,"  to  consignments  made  by  Mr.  Delprat 
himself,  may  be  connected  with  the  succeeding  article,  which  au- 
thorizeshim  to  draw  bills,  and  may  have  some  influence  on  its 
construction.  In  that  article,  the  Van  Staphorsts  allow  Mr.  Del- 
prat "  the  faculty  to  value  on  them  direct,  or  payable  in  London," 
for  such  moneys  as  he  shall  employ  to  make  advances  on  the 
whole  or  part  of  cargoes  of  current  articles  consigned  to  them,  to 
the  amount  of  two-thirds  of  the  invoice  price. 

It  may  be  said  that,  as  in  the  preceding  article,  consignments 
made  by  Delprat  on  his  own  account  were  considered  as  procured 
by  him,  and  were  placed  on  the  same  footing  with  consignments 
made  by  others ;  so  in  this  the  express  authority  to  draw  bills 
might  embrace  transactions  of  both  descriptions.     But  we  do  not 


80  ACCEPTANCE. 

think  that  the  inaccurate  use  of  words  in  one  article  will  justify 
a  departure  from  the  correct  construction  of  a  succeeding  article ; 
unless  the  same  words  are  used,  or  the  bearing  of  the  one  on  the 
other  is  such  as  to  require  tliat  departure. 

The  same  motives  existed  for  restraining  the  agent  from  making 
as  from  procuring  consignments  to  any  other  house  in  the  Nether- 
lands. His  utmost  exertions  were  required  for  the  benefit  of  his 
principals.  The  restriction,  therefore,  might  be  expressed  in  the 
same  sentence ;  and  a  sliglit  inaccuracy  of  language  was  the  less 
to  be  regarded,  because  it  could  produce  no  possible  misunder- 
standing with  respect  to  the  extent  of  the  prohibition. 

The  third  article  might  not  be  intended  to  prescribe  the  same 
rules  for  the  conduct  of  Mr.  Delprat,  as  a  merchant  and  as  the 
agent  of  the  Van  Staphorsts.  As  a  merchant,  he  had  a  right  to 
draw  on  effects  placed  in  their  hands,  independent  of  contract. 
Tiie  usage  of  trade  allows  such  drafts  to  be  made  on  a  shipment ; 
and  the  consignee  must  pay  the  bills,  if  the  shipment  places  funds 
in  his  hands  to  pay  them.  But,  as  agent,  his  line  of  conduct  was 
to  be  prescribed  by  contract.  We  must  therefore,  consult  the 
language  of  the  agreemeat,  in  order  to  determine  whether  it  pro- 
vides for  the  future  connection  between  the  parties,  further  than  as 
regards  their  characters  as  principal  and  agent. 

The  faculty  given  to  Mr.  Delprat  by  the  third  article,  to  value 
on  the  Van  Staphorsts,  is  "  for  such  moneys  as  he  should  employ 
to  make  advances  "  on  articles  consigned  to  them.  Money  laid 
out  in  the  purchase  of  articles  on  his  own  account  cannot,  with 
any  propriety  of  language,  be  denominated  money  employed  in 
making  advances  on  articles  consigned  to  him.  The  distinction 
between  money  advanced  on  articles  consigned  and  money  em- 
ployed in  purchases,  although  the  articles  may  be  purchased  for 
the  purpose  of  being  consigned  is  obvious.  Money  advanced  is 
always  to  another,  never  to  the  individual  making  the  advance. 
This  language  shows,  we  think,  incontestably,  that  the  article  was 
drawn  with  a  sole  view  to  bills  drawn  by  Mr.  Delprat  as  agent,  not 
on  his  own  account  as  a  merchant. 

A  subsequent  part  of  the  article  gives  additional  support  to  this 
construction.  Mr.  Delprat  is  to  draw  for  two-thirds  of  the  in- 
voice price  of  the  article,  and  is  himself  the  judge  of  the  price 
which  may  be  inserted  in  the  invoice.  This  power  might  be  safely 
confided  to  him  in  making  advances  to  others,  but  might  not  be 


SCniMMELPENNICH    V.    BAYARD.  81 

trusted  to  him  in  his  own  case.  The  case  shows  the  Van  Stap- 
horsts  to  have  been  men  of  extreme  caution.  Their  letter  to  Le 
Roy,  Bayard,  &  Co.,  enclosing  their  contract  witii  Delprat,  shows 
an  unwillingness  to  commit  themselves  to  him  further  than  was 
necessary.  It  is  not  i»rol)able  that  they  would  have  given  him  an 
elipress  authority  to  draw  on  his  own  account  on  invoices  to  be 
priced  by  himself. 

But  the  language  of  the  article  applies,  wc  think,  entirely  to  his 
bills  drawn  as  agent,  not  to  those  drawn  as  a  merchant  transact- 
ing business  for  himself. 

When  examined  as  a  witness,  Mr.  Delprat  says  that,  during  the 
whole  period  of  his  agency,  he  was  in  the  habit  of  making  ship- 
ments on  his  own  account,  to  the  said  house  in  Amsterdam,  and  of 
drawing  for  advances  on  account  of  the  said  shipments  so  made, 
precisely  in  the  same  manner  as  when  the  shipments  were  made  by  ' 
others  ;  and  this  was  done  with  the  full  knowledge  of  X.  and  J. 
and  R.  Van  Staphorst,  who  never  found  fault  with  him  for  doing 
so ;  but,  in  order  to  encourage  him  to  make  such  shipments,  gave 
him  credit  for  one-half  the  commission  upon  the  sales  of  the  ship- 
ments, so  made  on  his  own  account. 

The  Van  Staphorsts  were  commission  merchants,  desirous  of 
extending  their  business.  No  doubt  can  be  entertained  of  their 
willingness  to  receive  consignments  from  Mr.  Delprat,  as  well  as 
from  others.  But  this  does  not  prove  that  the  power  given  him  as 
their  agent,  to  make  advances  to  others,  was  intended  to  regulate 
the  intercourse  between  them  as  merchants.  That  intercourse 
was  regulated  by  the  general  principles  of  mercantile  law  ;  and  the 
contract  between  the  parties  does  not  show  that  cither  was  dissat- 
isfied with  those  principles,  or  wished  to  vary  them. 

This  question  refers,  we  presume,  to  the  authority  given  by  the 
contract  of  the  11th  January,  1818.  The  first  article  describes 
the  objects  which  were  committed  to  Mr.  Delprat,  by  the  Van 
Staphorsts.  These  were  :  the  management  "■  of  their  mercantile 
interest  in  the  United  States,  consisting  chiefly  in  the  forming  new 
solid  connections,  and  procuring  of  consignments." 

The  second  article  restrains  the  right  Mr.  Delprat  might  other- 
wise have  exercised,  of  consigning  to  other  houses  in  the  Nether- 
lands. 

The  third  authorizes  him  to  draw  bills  on  his  principals,  for  the 

6 


82  ACCEPTANCE. 

purposes  of  his  agency,  under  such  limitations  as  they  deemed  it 
prudent  to  prescribe. 

Tills  contract,  we  think,  does  not  contemplate  bills  drawn  by  Mr. 
Delprat  on  his  own  account,  as  a  merchant.  The  bills  mentioned 
in  the  declaration,  which  were  drawn  in  favor  of  the  defendants, 
and  indorsed  by  them,  do  not  come  within  the  authority  given  b^ 
the  contract.  No  instructions  from  the  plaintiffs,  extending  this 
authority,  appear  in  the  record. 

Tlie  third  question  comprehends  the  whole  matter  in  contro- 
versy, and  has  been  partly  answered  in  answering  the  preceding 
questions.  It  asks  whether  the  plaintiffs  were  bound  to  accept 
and  pay  the  bills  in  question  ;  and  whether  the  same  having  been 
paid  by  the  plaintiffs,  svpra  protest,  for  the  honor  of  the  defend- 
ants, the  plaintiffs  are  entitled  to  recover  the  amount  of  the  de- 

•fendants  ? 

Tlie  opinion    has   been  already  expressed  that  the  bill,  drawn 

on  the  23d  May,  1822,  for  X500  sterling,  in  favor  of  J.  P.  Krafft, 
is  not  distinguislial)le  from  those  which  were  drawn  by  Mr.  Del- 
prat, to  enable  him  to  purchase  articles  on  his  own  account,  which 
were  shipped  to  the  plaintiffs.  In  making  these  shipments,  and  in 
drawing  these  bills,  Mr.  Delprat  acted  for  himself,  as  an  inde- 
pendent merchant.  The  relation  between  him  and  the  plaintiffs 
was  that  of  consignor  and  consignee.  The  obligation  of  the  plain- 
tiffs to  accept  and  pay  his  bills,  depended  essentially  on  the  state 
of  their  accounts.  So  far  as  the  information  furnished  by  the 
case  goes,  Delprat  appears  to  have  been  indebted  to  the  plaintiffs. 
In  tlieir  letters  of  19th  July  and  10th  September,  1822,  which  were 
given  in  evidence  by  the  defendants,  they  state  him  to  be  then 
their  debtor  ;  and  it  is  not  shown  that  this  debt  has  been  dis- 
charged. The  plaintiffs,  therefore,  were  not  bound  to  accept  and 
pay  these  drafts,  unless  they  have  acted  in  such  a  manner  as  to 
give  the  holders  of  the  bills  a  right  to  count  on  their  being  paid. 

It  is  believed  to  be  a  general  rule,  that  an  agent  with  limited 
powers  cannot  bind  his  principal  when  he  transcends  his  power. 
It  would  seem  to  follow  that  a  person  transacting  business  with 
him  on  the  credit  of  his  principal,  is  bound  to  know  the  extent  of 
his  authority.  Yet,  if  the  principal  has,  by  his  declaration  or  con- 
duct, authorized  the  opinion  that  he  had  given  more  extensive 
powers  to  his  agent  than  were  in  fact  given,  he  could  not  be  per- 
mitted to  avail  himself  of  the  imposition,  and  to  protest  bills,  the 


SCHIMMELPENNICII    V.    BAYARD.  83 

drawing  of  which  his  conduct  had  sanctioned.  But  the  defend- 
ants, in  this  cause,  cannot  allege  that  they  have  been  deceived. 
They  were  the  intimate  correspondents  of  the  plaintiffs,  from  whom 
they  received  a  co})y  of  the  contract.  The  letter  which  transmitted 
i^  requests  their  friendly  supervision  of  the  conduct  of  Mr.  Del- 
prat,  and  desires  them  not  to  pay  the  money  for  which  the  plain- 
tiffs had  given  him  a  credit  with  them,  in  case  of  "a  moral 
certainty  "  that  it  would  not  be  employed  for  the  purposes  of  hi& 
agency.  In  the  course  of  the  correspondence  between  the  plain-  ^ 
tiffs  and  defendants,  we  find  several  letters,  written  during  the 
continuance  of  Mr.  Delprat's  credit  with  the  latter,  which  show 
the  determination  of  the  former  not  to  approve  of  advances  be- 
yond that  credit.  In  their  letter  of  the  24th  June,  1819,  the 
plaintiffs  expressly  caution  the  defendants,  should  they  think  ^ 
proper  to  remit  in  Mr.  Delprat's  bills,  the  nature  of  which  they 
are  well  acquainted  with,  that  they  (the  defendants)  allow  hira 
the  same  credit  that  they  do  other  persons,  from  whom  they  take 
bills,  in  the  persuasion  of  their  solidity,  and  of  the  reality  of  the 
transaction  on  which  the  bills  are  issued.  They  add :  "  Tiiis  is 
not  the  effect  of  any  want  of  confidence  in  our  agent,  but  merely 
profluing  from  our  invariable  rule  to  limit  and  circumscribe  the 
credits  we  allow."  The  letters  from  the  defendants  show  a  perfect 
understanding  on  their  part,  of  the  terms  on  which  Mr.  Delprat's 
bills  were  to  be  taken.  On  the  11th  May,  1819,  announcing  that 
he  had  filled  his  credit,  they  say  :  "  In  addition  to  it,  he  has  ex- 
pressed an  anxiety  that  we  should  negotiate  his  drafts  on  you, 
payable  in  London,  for  about  £3000  sterling,  or  that  we  should 
take  his  drafts  on  Amsterdam,  for  a  similar  value.  The  personal 
regard  which  we  bear  for  Mr.  Delprat,  would  have  induced  us 
promptly  to  accede  to  his  request,  had  not  the  restriction  laid  upon 
us,  of  not  permitting  him  to  exceed,  but  for  a  few  hundred  dollars, 
the  credit  you  give  him,  and  the  total  absence  of  any  indication 
from  you  of  a  wish  for  us  to  interfere  in  his  pecuniary  arranti-e- 
ments,  in  any  other  than  the  mode  marked  by  the  credit,  led  us  to 
believe  that  our  negotiations  or  purchase  of  his  drafts,  was  neither 
wished  nor  contemplated  by  you."  And,  in  their  letter  of  the 
7th  September,  1822,  enclosing  the  order  of  Mr.  Delprat  on  the 
plaintiffs,  for  any  balances  belonging  to  him  in  their  hands,  so  far 
from  complaining  of  the  protest  of  the  bills,  they  say :  "  We  can, 
of   course,  only  consider  this  order  as  applying  to  the  balance 


84  ACCEPTANCE. 

that  may  possibly  accrue  to  him,  upon  the  settlement  of  your 
account." 

Messrs.  Le  Roy,  Bayard,  &  Co.,  then,  were  not  deceived  by  the 
plaintiffs.  Unfortunately  for  themselves,  they  placed  too  much 
confidence  in  Mr.  Delprat.  They  took  his  bills,  as  they  were  cau- 
tioned to  do,  in  the  letter  of  the  24th  June,  1819,  "  in  the  persua- 
sion of  their  solidity,  and  of  the  reality  of  the  transaction  on 
which  they  were  issued."     If  in  this  they  were  mistaken,  the  re- 

**  sponsibility  and  the  loss  arc  their  own.  The  fourth  and  fifth  ques- 
tions have  been  waived  by  the  parties,  and  do  not  properly  arise  in 
the  case.  They  are  on  exceptions  taken  in  the  trial  of  the  cause, 
which  could  not  be  brought  before  the  Court  after  verdict,  but  on  a 
motion  for  a  new  trial,  which  was  not  made. 

^  The  sixth  question,  whether  a  judgment  can  be  rendered  on  the 
verdict  of  the  jury,  has  been  answered,  so  far  as  this  Court  can 
answer  it.  We  do  not  understand  it  as  referring  to  the  amount  of 
the  verdict,  for,  on  that  the  Circuit  Court  alone  can  decide.  If  it 
is  intended  to  repeat,  in  another  form,  the  question  whether  the 
plaintiffs  can  maintain  their  action,  as  the  holders  of  bills,  accepted 
and  paid,  supra  2Jrotest,  for  the  honor  of  the  drawers,  it  is  already 
answered. 

The  decision  of  a  majority  of  this  Court,  on  the  points  on  which 
the  judges  of  the  Circuit  Court  were  divided,  will  be  certified  in 
conformity  with  the  foregoing  opinion. 

This  cause  came  on  to  be  heard,  on  a  certificate  of  division  of 
opinion  of  tiie  judges  of  the  Circuit  Court  of  the  United  States, 
for  the  Southern  District  of  New  York,  and  on  the  points  on  which 
the  said  judges  were  divided  in  opinion,  and  was  argued  by  coun- 
sel, on  consideration  wiiereof,  this  Court  is  of  opinion, — 

1.  That  the  authority  to  John  C.  Delprat  to  draw  on  the  plain- 
tiffs did  not  amount  to  an  acceptance  of  the  bills. 

2  and  3.  Tliat  the  bills  mentioned  in  the  declaration,  were 
drawn  by  the  said  Delprat,  not  under  the  authority  of  the  plaintiffs, 
but  on  his  own  account ;  and  the  plaintiffs  were  not  bound  to 
accept  and  pay  them,  unless  funds  of  the  drawer  came  to  their 
hands. 

4  and  5.  These  questions  are  understood  to  be  waived,  and  do 
not  appear  to  arise  in  the  case. 

6.  The  sixth  question  is  decided  by  the  answer  to  the  second  and 


KONIG    V.    BAYARD.  86 

third,  80  far  as  respects  the  right  of  the  plaintiffs  to  maintain  their 
action.    On  the  (juantum  of  damages,  this  Court  can  give  no  opinion. 
All  which  is  ordered  to  be  certified  to  the  Court  of  the  United 
States  for  the  Second  Circuit  and  District  of  New  York. 

See  next  case. 


William  Konig,  an  Alien,  Plaintiff  below,  v.  William  Bay- 
ard, William  Bayard,  Jr.,  Robert  Bayard,  and  Jacob 
Le  Roy. 

« 

(1  Peters,  250.     Supreme  Court  of  the  United  States,  January,  1828.) 

Acceptance  supra  protest  hi/  stranger.  —  It  is  no  objection  tliat  a  stranger  lias  intervened 
as  acceptor  for  the  honor  of  an  indorser  ;  or  that  his  acceptance  has  been  made  at 
the  request  and  under  tlie  jjuaranty  of  the  drawee.  But  in  such  case  the  indorser 
may  avail  himself  of  all  defences  which  he  could  have  made  had  the  drawee 
accepted  for  his  honor  and  then  sued  upon  such  acceptance. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Marshall,  C.  J.  This  suit  was  brought  in  the  Court  of  the 
United  States  for  the  Second  Circuit  and  District  of  New  York, 
on  a  l)ill  of  exchange,  drawn  by  John  C.  Delprat,  of  Baltimore, 
on  Messrs.  N.  and  J.  and  R.  Van  Staphorst,  of  Amsterdam,  in 
favor  of  Le  Roy,  Bayard,  <fe  Co.,  of  New  York,  and  indorsed  by 
them.  The  bill  was  regularly  presented,  and  protested,  after 
which  it  was  accepted  and  paid  by  the  plaintiff,  for  the  honor  of 
the  defendants.  The  jury  found  a  verdict  for  the  plaintitT,  sub- 
ject to  the  opinion  of  the  Court,  on  a  case  stated  by  the  parties. 
The  judges  of  the  Circuit  Court  were  divided  in  opinion  on  the 
following  points  :  — 

1.  Whether  the  letters  offered  in  evidence  by  the  defendants, 
and  objected  to,  ouglit  to  have  been  admitted. 

•J.  Whether  the  plaintiff  had  a  right,  under  the  circumstances, 
to  accept  and  pay  the  bill  in  question,  under  protest,  for  the  honor 
of  the  defendants,  and  is  entitled  to  recover  the  amount  with 
charges  and  interest. 

The  first  question  is  understood  to  be  waived.     It  is  a  questiou 


86  ACCEPTANCE. 

which  was  decided  by  the  Court  at  the  trial,  and  could  not  arise 
after  verdict,  unless  a  motion  had  been  made  for  a  new  trial. 

The  second  requires  an  examination  of  the  case  stated  by  coun- 
sel. The  bill  was  transmitted  by  Le  Roy,  Bayard,  &  Co.,  to 
Messrs.  Rougemont  and  Behrends,  of  London,  to  have  it  presented 
for  acceptance,  who  enclosed  it  to  the  plaintiff  in  a  letter,  from 
which  the  following  is  an  extract :  "  We  beg  you  to  have  the  en- 
closed accepted:  1st  of  fl.  21,500,  60  days,  on  N.  and  J.  and  R. 
Van  Staphorst,  and  hold  the  same  to  the  disposal  of  2d,  3d,  and 
4th.  You  will  oblige  me  by  mentioning  the  day  of  acceptance, 
and  in  case  of  refusal,  you  will  have  the  bill  protested." 
*  The  plaintiff  gave  immediate  notice  of  the  dishonor  of  the  bill, 
and  of  their  intervention  for  the  honor  of  the  defendants. 

Messrs.  N.  and  J.  and  R.  Van  Staphorst  addressed  a  letter  to 
the  defendants,  dated  the  26th  November,  1822,  giving  notice  that 
the  bill  was  dishonored,  the  drawer  having  no  right  to  draw, 
and  that  they  were  advised  by  counsel  not  to  interpose  in  their 
own  names  for  the  honor  of  the  defendants.  Tlie  letter  adds : 
"  In  this  predicament,  we  applied  to  our  friends,  William  Konig  & 
Co.,  who  had  the  said  bill  in  hand,  informed  them  of  the  whole 
case,  and  requested  these  gentlemen,  under  our  guarantee,  to  in- 
tervene on  behalf  of  your  signature,  with  acceptance  and  payment 
of  the  above  bill ;  which  favor  these  gentlemen  have  not  refused  to 
us ;  so  that,  without  our  prejudice,  and  completely  without  yours, 
we  have  duly  protected  your  interest." 

The  defendants  also  gave  in  evidence  a  letter  from  the  plaintiff, 
stating  that  he  had  intervened,  at  the  request  of  N.  and  J.  and  R. 
Van  Staphorst,  and  under  their  gua^-antee  ;  but  that  they  required 
him  to  proceed  against  the  defendants,  as  preliminary  to  the  per- 
formance of  that  guarantee. 

It  was  admitted  that  the  bill  was  drawn  by  J.  C.  Delprat,  on  his 
own  account,  and  not  on  any  shipment  for  a  debt  due  from  him  to  the 
defendants,  for  advances  previously  made  to  him ;  and  that  he  had 
given  to  the  defendants  an  order  on  N.  and  J.  and  R.  Van  Stap- 
horst, for  all  balances  due  from  them  to  him. 

It  is  not  alleged  that  the  drawees  had  any  funds  of  the  drawer 
in  their  hands. 

The  plaintiff  in  this  case  must  be  considered  as  the  agent  of  N. 
and  J.  and  R.  Van  Stapliorst,  and  as  having  paid  the  bill  at  their 
instance.     All  parties  concur  in  stating  this  fact.     The  Van  Stap- 


KONIG    V.    BAYARD.  87 

horsts  adopted  this  circuitous  course,  instead  of  interposing 
directly  in  their  own  names,  under  the  advice  of  counsel.  They, 
however,  immediately  stated  the  transaction  in  its  genuine  colors, 
to  the  defendants.  It  is  impossible  to  doubt  that  a  person  may 
thus  intervene,  throui^h  an  agent,  if  it  be  his  will  to  do  so.  The 
suspicion  which  might  be  excited  by  proceeding,  unnecessarily,  in 
this  circuitous  manner,  cannot  affect  a  transaction,  which  was 
immediately  communicated,  with  all  its  circumstances,  to  the  per- 
sons in  wKose  behalf  the  intervention  had  been  made  ;  unless 
those  persons  were  exposed  to  some  inconvenience,  to  which  they 
would  not  have  been  exposed  had  the  interposition  been  direct. 
This  is  not  the  case  in  the  present  instance,  since  it  cannot  be 
doubted  that  the  defendants  might  have  availed  themselves  of 
every  defence  in  this  action  -of  which  they  could  have  availed, 
themselves  had  N.  and  J.  and  R.  Van  Staphorst  been  plaintiffs. 
The  case  shows  plainly  that  the  bill  was  not  drawn  on  funds,  and 
that  the  drawees  were  not  bound  to  accept  or  pay  it.  No  reason, 
therefore,  can  be  assigned  why  the  person  who  has  made  himself 
the  holder  of  the  bill,  by  accepting  and  paying  it  under  protest, 
should  not  recover  its  amount  from  the  drawer  and  indorsers. 

This  cause  came  on  to  be  heard  on  a  certificate  of  division  of 
opinion  of  the  judges  of  the  Circuit  Court  of  the  United  States 
for  the  Southern  District  of  New  York,  and  on  the  points  on  whicli 
the  said  judges  were  divided  in  opinion,  and  was  argued  by  coun- 
sel ;  on  consideration  w^hereof  this  Court  is  of  opinion  that  the 
plaintiff  had  a  right,  under  the  circumstances,  to  accept  and  pay 
the  bill  in  question,  under  protest,  for  the  honor  of  the  defendants, 
and  is  entitled  to  recover  the  amount  with  charges  and  interest ; 
which  is  ordered  to  be  certified  to  the  said  Circuit  Court. 

In  regard  to  the  defences  wliieh  a  drawer  or  indorser  may  raise  against  a 
stranger  who  accepts  for  his  honor,  it  seems  to  be  immaterial  whether  such 
acceptor  acted  at  the  instance  of  the  drawer  or  as  the  agent  of  the  drawee,  as 
in  the  above  case ;  at  least  no  distinction  is  drawn  in  the  cases  upon  this  point. 
See  Gazzam  v.  Armstrong,  3  Dana,  554 ;  Wood  v.  Piigh,  7  Ohio,  15G  (Curwen's 
ed.  501). 

An  accepted  bill  whicli  has  been  dishonored  may  be  accepted  again  for  honor 
upon  the  insolvency  of  the  drawee.  See  Ex  parte  Wackerbath,  5  Ves.  574;  Ex 
parte  Lambert,  13  Ves.  179.  In  the  latter  ca'se  Lord  Erskine  disapproves  the 
position  taken  in  the  former,  that  in  such  case  the  acceptance  is  given  to  an 
accepted  bill,  and  holds  that  the  acceptor  for  honor  stands  precisely  in  the  place 


88  ACCEPTANCE. 

of  the  drawer  in  an  action  against  the  drawee,  and  can  acquire  no  stronger  title 
against  the  latter  than  the  drawer  had. 

The  acceptor  supra  protest  is  considered  in  the  light  of  an  indorscr  ;  and  there- 
fore at  maturity  the  bill  must  be  again  presented  to  the  drawee,  and  if  still  dis- 
honored bv  him,  it  should  be  protested,  and  notice  given  to  the  acceptor  for 
honor,  or  he  will  i)e  discharged,  lloare  v.  Cazenove,  16  East,  3D1 ;  Williams  v. 
Germaine,  7  B.  &  C.  468;  Schoficld  v.  Bayard,  3  Wend.  488;  Lenox  v.  Lever- 
ett,  10  Mass.  1. 

A  stranger  to  the  bill  may,  by  paying  it  for  the  honor  of  the  jmrties,  acquire 
a  right  of  action  against  all  of  them,  and  will  be  considered  as  standing  in  the 
place  of  a  bona  fide  holder.  But  to  entitle  him  to  this  attitude,  he  must  pay  the 
bill,  not  for  the  honor  o{  any  one,  but  of  all  the  parties,  and  not  before  but  after 
protest ;  and  the  payment  should  be  accompanied  by  a  declaration,  evidenced  by 
a  notarial  act,  showing  why,  and  for  whom,  the  payment  was  made ;  and  of  all 
this  the  parties  to  be  charged  should  have  notice.  Per  Marshall,  J.,  in  Gaz- 
zam  V.  Armstrong,  3  Dana,  554.  See  Geralopulo  v.  Wieler,  10  C.  B.  690,  709 ; 
Phoenix  Bank  v.  Hussey,  12  P'ick.  483.  And  if  the  party  who  has  paid  a  bill 
supra  prote4  do  not  give  reasonable  notice  to  the  party  for  whose  credit  he  has 
made  the  payment,  the  latter  will  not  be  required  to  refund.  Wood  v.  Pugh, 
7  Ohio,  156  (Curwen's  ed.  501). 

In  a  suit  by  a  holder  who  discounted  a  bill  on  the  faith  of  an  acceptance  for 
honor,  the  bill  being  forged,  the  acceptor  supra  protest  cannot  deny  its  genuine- 
ness. Phillips  V.  Thurn,  Law  R.  1  C.  P.  463.  See  note  to  Hortsman  v.  Hen- 
shaw,  ante,  63,  suhfin. 


The  United  States,  PlaintifFs  in  Error,  v.  The  Bank  of 
THE  Metropolis,  Defendant  in  Error. 

(15  Peters,  377.     Supreme  Court  of  the  United  States,  January,  1841.) 

Acceptance  hy  the  United  States.  —  Tlie  liability  of  the  United  States,  on  an  acceptance 
by  an  authorized  officer  given  to  a  bona  Jide  holder  is  the  same  as  that  of  a  private 
individual. 

Conditional  acceptance. — A  bill  drawn  by  a  government  contractor  was  "accepted  on 
condition  that  tlie  drawer's  contracts  be  complied  with,"  and  discounted  by  the 
defendants  in  due  course  of  trade.  Held,  that  forfeitures  previously  incurred,  and 
advarfces  previously  made,  were  not  covered  by  the  condition. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Wayne,  J.  This  is  an  action  of  assumpsit  brought  by  the  United 
States  to  recover  the  sura  of  ^27,881.57.  The  defendants  pleaded 
the  general  issue.  On  the  trial  of  the  cause,  the  defendants  claimed 
credits,  amounting  to  $23,000,  exclusive  of  interests  and  costs. 


UNITED    STATES    V.    BANK    OF    THE    METROPOLIS.  89 

The  items  liad  been  ])i'escnted  to  the  proper  accounting  ofTicer,  and 
were  not  allowed.  They  were  acceptances  of  the  post-office  depart- 
ment, of  the  drafts  of  mail  contractors,  and  an  item  of  8tjll.o2, 
called  in  the  record  "  E.  F.  Brown's  overdraft." 

Tlie  jury  foinid  for  tlie  defendants,  and  certified  there  was  due  to 
them  by  the  United  States  -'353371.94,  with  interest  from  the  (jth 
March,  1838. 

The  errors  assigned  arc,  that  the  Court  refused  to  give  to  the 
jury  the  following  instructions,  which  were  asked  after  the  evidence 
had  been  closed  on  both  sides. 

1.  That  upon  tlie  evidence  aforesaid,  the  defendants  are  not 
entitled  in  this  action  to  set  off"  against  the  plaintiffs'  demand,  the 
amount  of  die  acceptances  given  in  evidence  by  the  defendants,  nor 
the  amount  of  the  overdraft  of  E.  F.  Brown. 

2.  If  the  jury  believe,  from  the  evidence,  that  when  the  accept- 
ance of  the  draft  of  E.  Porter  was  given  by  the  then  treasurer  of  the 
department,  there  was  nothing  due  to  Porter  standing  on  the  books 
of  the  ])Ost-office  department,  and  that  on  the  books  of  the  depart- 
ment, when  the  acceptance  fell  due,  there  was  nothing  due  to  him ; 
then  the  defendants  cannot  set  off"  the  amount  of  said  acceptance 
against  the  plaintiffs'  claim  in  this  action. 

3.  That  if  the  accounts  of  E.  Porter  and  Reeside,  as  contractors 
with  the  post-office  department,  were  not  finally  settled  on  the  books 
of  the  post-office  department  when  the  present  postmaster-general 
came  into  office,  it  was  his  duty  to  have  said  accounts  settled  ;  and 
if  in  such  settlement  there  were  credits  claimed  by  them  as  allowed 
by  order  of  Mr.  Barry,  when  postmaster-general,  and  entered  on 
the  journal,  but  not  carried  into  these  accounts  in  the  ledger,  and 
finally  entered  as  credits  in  these  accounts,  which  credits  were  for 
extra  allowances  which  the  said  postmaster-general  was  not  legally 
authorized  to  allow  them,  then  it  was  in  the  power,  and  was  the 
duty  of  the  present  postmaster-general,  to  disallow  such  items  of 
credit. 

We  will  consider  the  instructions  asked  in  connection,  and  upon 
the  merits  of  the  case  ;  but,  before  we  conclude,  will  express  an 
opinion  upon  the  form  of  the  first. 

It  appears  that  the  five  drafts  claimed  as  credits  were  drawn  on 
the  post-office  department  by  contractors  for  carrying  the  mails. 
That  they  were  accepted,  and  were  discounted  at  the  Metropolis 
Bank  in  the  way  of  business. 


90  ACCEPTANCE. 

Porter's  draft  was  at  ninety  days  after  date  for  |10,000,  payable 
at  the  Metropolis  Bank  to  his  own  order,  to  be  charged  to  account, 
and  was  unconditionally  accepted  by  R.  C.  ^ason,  signing  himself 
treasurer  of  the  post-office  department.  It  is  admitted  that  he 
was  so. 

Reeside  drew  four  drafts.  One  on  the  17th  October,  1835,  for 
$4500  ;  another  on  the  20th  October,  1835,  for  $1000  ;  a  third  on 
the  23d  October,  1835,  for  $4500  ;  and  the  fourth  on  the  28th 
October,  1835,  for  $3000.  They  were  payable  to  his  own  order 
ninety  days  after  date,  for  value  received  ;  to  be  charged  to  his 
account  for  transporting  the  mail,  and  addressed  to  the  postmaster- 
general.  Tlie  following  was  the  form  of  all  of  them,  and  of  the 
acceptances  of  the  postmaster-general. 

$4500.  Washington  City,  October  17,  1835. 

Sir,  —  Ninety  days  after  date,  please  pay  to  my  own  order,  four 
thousand  five  hundred  dollars,  for  value  received,  and  charge  to  my 
account,  for  transporting  the  mail. 

Respectfully  yours,  James  Reeside. 

Hon.  Amos  Kendall,  Postmaster-General. 

"  Accepted,  on  condition  that  his  contracts  be  complied  with." 

Amos  Kendall. 

Porter's  draft  was  unconditionally  accepted.  It  was  discounted 
by  the  defendants,  upon  his  indorsement.  Tlie  bank  became  the 
holder  of  it,  for  valuable  consideration,  and  its  right  to  charge  the 
United  States  with  the  amount  cannot  be  defeated  by  any  equities 
between  tlie  drawer  and  the  post-office  department,  of  which  the 
bank  had  not  notice. 

When  the  United  States,  by  its  authorized  officer,  become  a 
party  to  negotiable  paper,  they  have  all  the  rights,  and  incur  all  tUe 
responsibility,  of  individuals  who  are  parties  to  such  instruments. 
We  know  of  no  difference,  except  that  the  United  States  cannot 
be  sued.  But  if  the  United  States  sue,  and  a  defendant  holds  its 
negotiable  paper,  the  amount  of  it  may  be  claimed  as  a  credit,  if, 
after  being  presented,  it  has  been  disallowed  by  the  accounting 
officers  of  the  treasury ;  and  if  the  liability  of  the  United  States 
upon  it  be  not  discharged  by  some  of  those  causes  which  discharge 
a  party  to  commercial  paper,  it  should  be  allowed  by  a  jury  as  a 
credit  against  the  debt  claimed  by  the  United  States.     This  is  the 


UNITED    STATES   V.    BANK    OP   THE    METROPOLIS.  91 

privilege  of  a  defendant,  for  all  equitable  credits  given  by  tbe  Act 
of  March  3,  1797  ;  ^  1  Story,  4t!4.  This,  and  the  liability  of  the 
United  States,  in  the  yianncr  it  has  l)een  stated,  has  been  repeat- 
edly declared,  in  effect,  by  this  Court.  It  said,  in  llie  case  of  the 
United  States  r.  Dunn,  0  Pet.  51,  "the  liability  of  parties  to  a 
bill  of  exchange,  or  promissory  note,  has  been  fixed  on  certain 
principles,  which  are  essential  to  the  credit  and  circulation  of  such 
paper.  These  princij)lcs  originated  in  the  convenience  of  com- 
mercial transactions,  and  cannot  now  be  departed  from."  From 
the  daily  and  unavoidable  use  of  commercial  paper  by  the  United 
States,  they  are  as  much  interested  as  the  community  at  large  can 
be,  in  rriaintaining  these  principles. 

It  was  held  in  the  case  of  the  United  States  v.  Barker,  4  Wash. 
C.  C.  464,  that  the  omission  of  the  secretary  of  the  treasury,  for 
one  day,  to  give  notice  of  the  dishonor  of  bills,  which  were  pur- 
chased by  the  United  States,  discharged  the  drawer.  And  this 
Court  said,  when  that  case  was  brought  before  it,  there  was  no 
right  to  recover,  on  account  of  the  neglect  in  giving  notice  after 
the  return  of  the  bills.  12  AVheat.  501.  That,  and  other  cases 
like  it,  show  how  rigidly  those  principles  have  been  applied  in 
suits  on  bills  and  promissory  notes,  in  which  the  United  States 
was  a  party.  The  acceptance  of  Porter's  draft  was  unconditional, 
and  there  is  nothing  in  the  evidence  to  discharge  the  acceptor. 
There  is  neither  waiver,  express  or  implied,  of  his  liability.  There 
was  no  understanding  nor  communication  concerning  it  between 
the  bank  and  any  officer  of  the  post-office  department,  before  it 
was  discounted.  The  bank  advanced  the  money,  which  it  was 
the  object  of  the  bill  to  obtain.  It  cannot  be  doubted,  the  accept- 
ance was  given  for  that  purpose.  The  want  of  consideration,  then, 
between  the  drawer  and  the  acceptor,  can  be  no  defence  against 
the  riglit  of  the  indorsee,  who  gave  a  valuable  consideration  for 
the  bill. 

It  does  not  matter  how  the  drawer's  account  stood.  Whether 
he  was  a  debtor  or  a  creditor  of  the  department ;  whether  the 
bank  knew  one  or  the  other.  An  unconditional  acceptance  was 
tendered  to  it  for  discount.  It  was  not  its  duty  to  inquire  how 
the  account  stood,  or  for  what  purpose  the  acceptance  was  made. 
All  it  had  to  look  to  was  the  genuineness  of  the  acceptance,  and 
the  authority  of  the  officer  to  give  it.     The  rule  is,  that  a  want  of 

1  1  Stats,  at  Large,  512. 


92  ACCEPTANCE. 

consideration  between  the  drawer  and  acceptor  is  no  defence 
against  the  right  of  a  third  party,  wlio  has  given  a  consideration 
for  the  bill,  and  this  even  though  the  acceptor  has  been  defrauded 
by  the  drawer ;  if  that  be  not  known  by  such  third  party,  before 
he  gives  value  for  it. 

The  evidence  then,  concerning  Porter's  account,  was  immaterial 
and  irrelevant  to  the  issue.  It  cannot  affect  the  rights  of  the 
bank,  and  did  not  lessen  the  obligation  of  the  department  to  pay 
the  acceptance  when  it  became  due. 

But  the  evidence  does  not  show  that  any  thing  was  due  by 
Porter  when  the  draft  was  accepted,  or  wlien  it  came  to  maturity. 
Mason,  the  witness,  says,  "  that  in  the  interim  a  sufficient  sum 
had  been  raised  and  carried  to  the  credit  of  Porter,  to  pay  the 
draft ;  but  that  he  had  also,  within  the  dates,  been  charged  with 
the  amount  of  a  draft,  drawn  upon  him  by  the  postmaster  at  Mo- 
bile, accepted  by  him,  which  draft  was  payable  in  1833,  and  that 
he  was  charged  with  failures  and  forfeitures  incurred  as  con- 
tractor, in  1833  ;  which  charges  were  made  by  order  of  Mr.  Barry, 
then  postmaster-general.  It  was  certainly  right  to  debit  Porter 
with  these  charges,  if  they  were  due  by  him ;  but  that  did  not 
change  the  relative  rights  and  obligations  of  the  bank  and  the 
dei)artment  upon  his  bill.  If  either  are  to  lose  by  Porter,  shall  it 
be  that  party,  who  was  bound  to  know  the  state  of  the  account, 
before  it  gave  an  unconditional  acceptance,  for  the  purpose  of 
accommodating  its  own  agent ;  or  the  other,  who  placed  faith  in 
the  acceptance,  advanced  the  money  upon  it,  which  it  was  intended 
to  raise  ;  and  who  could  not  have  learned  what  was  the  state  of 
Porter's  account,  as  it  is  proved  that  the  charges  which  it  is  now 
said  should  have  priority  of  payment  over  the  bill,  were  not  made 
against  Porter  until  after  his  bill  had  been  accepted  ?  Certainly, 
the  loss  should  fall  upon  the  first.  It  cannot  be  otherwise,  unless 
it  be  affirmed  that  an  acceptor  may  claim  to  be  discharged  on 
account  of  his  own  negligence,  and  that,  having  induced  a  third 
party  to  advance  money  upon  his  acceptance,  he  shall  be  permitted 
to  intervene  between  himself  and  the  indorsee  of  the  paper,  a 
debt  due  to  him  by  the  drawer.  The  evidence  offered  to  invalidate 
this  credit  was  done  from  ignorance  of  the  legal  consequences  in- 
curred by  such  an  acceptance.  In  such  a  case,  the  bank  right- 
fully looked  to  the  United  States  for  payment  of  this  bill ;  and  if 
Porter  owes  any  thing  for  forfeitures  incurred  as  contractor,  or  on 
account  of  tHe  Mobile  draft,  the  United  States  must  look  to  him. 


UNITED    STATES   V.    BANK    OP   THE   METROPOLIS.  93 

There  is  no  proof  on  the  record,  however,  of  any  things  being  due 
by  I'ortcr  on  those  accounts  ;  and  we  do  not  intend  to  express  any 
opinion  upon  his  lial»ilty,  or  the  rights  of  the  United  States,  in 
respect  to  them  one  way  or  the  other. 

What  are  the  merits  of  the  case  upon  Reeside's  drafts? 

They  were  drawn  on  the  postmaster-general,  at  ninety  days,  pay- 
able to  the  order  of  the  drawer,  and  were  to  l)e  charged  to  his 
account  for  transporting  the  mail.  They  were  "  accepted  on  con- 
dition that  liis  contracts  l)e  complied  with."  Tiiis  is  of  course  as 
binding  as  an  absolute  acceptance,  if  the  condition,  has  been  per- 
formed. 

What  is  the  proof  of  performance,  and  how  shall  this  condi- 
tional acceptance  be  construed?  Mason,  the  witness,  says: 
"  Reeside,  in  fact,  performed  the  services  for  which  he  was  con- 
tractor, in  the  year  ISof)  ;  and  the  money  which  he  earned  upon  his 
contracts  was  a|>^jlied,  to  an  extent  exceeding  the  amount  due  upon 
his  drafts,  to  the  extinguishment  of  balances  created  against  him 
i)y  recharging  him  with  sums  of  money  which  had  been  allowed 
to  him  by  Mr.  Barry,  the  former  postmaster-general,  as  contractor 
for  carrying  the  mail,  by  giving  him  credit  therefor  in  a  general 
account  current  on  the  journal,  but  not  entered  in  the  ledger, 
where  his  account  remained  unsettled  when  the  present  post- 
master-general came  into  office."  It  is  said,  this  does  not  cover 
the  condition  of  the  acceptance,  because  Reeside  stipulated,  by  his 
bond,  to  pay  forfeitures,  and  repay  advances ;  and  that  he  owed 
the  department  on  both  accounts,  wiien  these  acceptances  were 
given  ;  and  that  in  this  sense  his  conti'acts  were  not  complied 
with.  If  this  be  so,  in  one  sense  the  contracts  would  not  be  com- 
plied with  ;  but  is  that  the  construction  which  should  be  i)ut  upon 
such  a  condition,  when  the  snlyect-matter  to  which  it  relates  is 
considered  ? 

If  one  purpose  making  a  conditional  acceptance  only,  and  com- 
mit that  acceptance  to  writing,  he  should  be  careful  to  express  the 
condition  therein.  He  .cannot  use  general  terms,  and  then  exempt 
himself  from  liability,  by  relying  upon  particular  facts  whicii  have 
already  happened,  though  they  are  connected  with  the  condition 
expressed.  Why?  Because  the  particular  fact  is  of  itself  sus- 
ceptible of  being  made  a  distinct  condition.  This  case  furnishes 
as  good  an  illustration  of  the  rule  as  any  other  can  do.  Instead 
of  the  words  being  used,  "  accepted  on  condition  that  his  con- 


94  ACCEPTANCE. 

tracts  be  complied  with,"  could  it  not  have  been  as  easily  said, 
accepted  on  condition  that  forfeitures  already  incurred  shall  be  _ 
paid,  and  that  advances  made  shall  be  refunded  ?  Tliis  would  have 
conveyed  a  very  different  meaning;  and  v?^ould  haveput  the  bank, 
when  the  drafts  were  offered  to  it  for  discount,  on  inquiry.  If 
they  had  been  discounted  without  inquiry,  it  would  have  been 
done  at  the  risk  that  the  earnings  upon  the  contracts,  and  such  as 
might  be  earned  between  the  date  of  the  acceptances  and  the  times 
of  payment,  would  be  enough  to  pay  forfeitures,  repay  advances, 
and  to  take  up  the  bills.  It  matters  not  what  the  acceptor  meant 
by  a  cautious  and  precise  phraseology,  if  it  be  not  expressed  as  a 
condition.  And  when  we  are  told,  as  we  are  in  this  case,  by  the 
person  making  these  acceptances,  that  the  form  of  words  was 
devised  expressly  for  that  purpose,  meaning  for  the  purposes  of 
having  forfeitures  paid  and  advances  refunded,  and  to  avoid  prom- 
ising to  pay  any  thing  to  the  order  of  contractors  so  long  as  any 
thing  should  be  due  from  them  to  the  department,  we  think  it  will 
be  admitted  that  the  purpose  explained  is  larger  than  the  con- 
dition expressed.  And  from  the  passage  in  the  evidence  just 
cited,  how  just  does  the  rule  appear  which  has  been  laid  down  by 
the  Court,  that,  in  the  case  of  acceptances  of  commercial  paper, 
that  which  can  be  made  a  distinct  condition  must  be  so  expressed  ; 
nor  can  any  thing  out  of  the  condition  be  inferred,  unless  it  be  in 
a  case  where  the  words  used  are  so  ambiguous  as  to  make  it 
necessary  that  parol  evidence  should  be  resorted  to  to  explain 
them.  Then  the  onus  of  proof  would  be  on  the  acceptor,  and  the 
proof  would  be  of  no  avail  if  the  holder  or  any  person  under 
whom  he  claims,  took  the  bill  without  notice  of  such  conditions 
and  gave  a  valuable  consideration  for  it.  The  error  in  this  case 
arose  from  the  acceptor  supposing  that  the  defendants  did  know, 
and  if  they  did  not,  they  were  bound  upon  such  an  acceptance  to 
inquire  into  the  stipulations  and  conditions  of  Reeside's  cojitracts 
before  they  discounted  the  bills ;  and  it  is  said  they  did  not  use 
"  due  diligence  to  acquire  information."  The  objection  then  im- 
plies that  inlbrmation  of  these  forfeitures  and  advances  could  have 
been  given,  and  that  it  was  not  given  when  these  acceptances  were 
made.  This  makes  it,  then,  a  question  of  due  diligence  between 
the  acceptor  and  the  defendants,  as  to  his  obligation  to  communi- 
cate what  he  knew  ;  and  their  want  of  caution  in  not  making  the 
inquiry. 


UNITED    STATES    V.    BANK    OF    THE    METROPOLIS.  95 

Wc  tliink  it  will  be  conceded  to  be  a  general  principle,  that  one 
having  knowledge  of  particular  facts  upon  which  he  intends  to 
rely  to  exempt  him  from  a  pecuniary  obligation,  about  to  be  con- 
tracted with  another,  of  which  facts  that  other  is  ignorant,  and  can 
only  learn  them  from  ihc  first  or  from  documents  in  his  keeping, 
that  the  fact  of  knowledge  raises  the  obligation  upon  him  to  tell 
it.  This  would  be  the  law  in  such  a  case,  and  it  is  in  this  case. 
Inquiry  by  the  defendants  would,  at  most,  have  resulted  in  obtain- 
ing what  was  already  known  to  the  acceptor.  He  held  the  con- 
tracts ;  he  knew,  or  should  have  known,  officially,  the  state  of  the 
accounts  ))ctween  the  contractor  and  the  department;  and  wheu 
he  conditionally  accepted  his  drafts,  which  were  to  be  charged  to 
his  account  for  transporting  the  mail,  as  his  liability  to  pay  them 
would  occur  in  ninety  days,  it  was  but  reasonable  that  he  should 
have  said,  in  plain  terms,  when  giving  his  acceptances :  "  If  the 
earnings  of  the  contractor  from  this  time  to  the  maturity  of  tlie 
draft,  shall  be  sufficient  to  pay  what  he  owes,  and  the  debt  he  may 
incur  until  then,  then  these  drafts  will  be  paid."  This  would 
have  been  a  condition  about  which  there  would  have  been  no  mis- 
take. 

But,  further,  if  two  persons  deal  in  relation  to  the  executory 
contracts  of  a  third,  as  these  contracts  were,  and  one  of  them 
being  the  obligee  induces  the  other  to  advance  money  to  the  obligor, 
upon  "  condition  that  his  contracts  be  complied  with  ; "  and  he 
knows  that  forfeitures  have  been  already  incurred  by  the  obligor, 
for  breaches  of  his  contract,  and  does  not  say  so  ;  shall  he  be  per- 
mitted afterwards  to  get  rid  of  his  liability,  by  saying  to  the  per- 
son making  the  advance:  "  I  cannot  pay  you,  for  when  I  accepted 
there  was  already  due  to  me  from  the  drawer  of  the  bill  more 
than  I  accej)ted  for.  I  had  knowledge  of  it  then,  and  so  might 
you  have  had  if  you  had  made  the  inquiry,  but  you  did  not  choose 
to  inquire  ;  so  I  will  pay  myself  first,  because  my  acceptance  was 
on  condition  that  his  contracts  be  complied  with." 

Such  is  the  case  before  us  as  it  was  presented  by  the  argument ; 
and  we  cannot  doubt  it  will  be  thought  decisive  that  it  was  the 
duty  of  the  acceptor,  in  this  instance,  to  communicate  what  he 
knew  of  Reeside's  account,  if  he  had  any  conversation  with  the 
defendants  before  the  drafts  were  discounted,  and  that  it  was  not 
the  duty  of  the  defendants  to  inquire.  It  cannot  be  answered  by 
saying  the  words  of  the  acceptance  were  intended  to  provide  for 


96  ACCEPTANCE. 

what  might  .exist,  but  what  was  not  then  known,  or  for  breaches 
of  the  contracts  which  had  already  occurred,  but  which  had  not 
been  charged  with  a  penalty  ;  for  either  would  be  an  admission 
that  inquiry  by  the  defendants  when  the  acceptances  were  made, 
could  not  have  resulted  in  getting  tlie  information  at  the  depart- 
ment. 

But,  again,  will  the  terms  of  the  acceptance  admit  in  any  way  of 
retroactive  construction  ?  The  words  must  be  taken  according  to 
the  ordinary  import  of  them.  They  are  "  accepted  on  condition 
that  liis  contracts  be  complied  with."  Can  there  be  compliance 
with  an  executory  contract,  l)ut  in  future,  if  breaches  have  already 
happened  ?  Supposing  no  breaches  to  have  occurred,  necessarily 
implies  such  as  may  occur  in  future,  and  subsequent  compliance. 
If  both  past  and  future  breaches,  then,  are,  as  contended  for,  to  be 
comprehended  witliin  the  condition  of  this  acceptance,  why  may 
not  the  condition  be  extended  to  such  as  may  happen  after  the  ma- 
turity of  the  drafts,  as  well  as  to  such  as  had  occurred  before  they 
were  accepted  ?  A  literal  interpretation  must  lead  to  both,  and 
that  will  not  be  contended  for.  But  the  argument  is,  that  the  de- 
fendants should  have  inquired  into  the  "  stipulations  of  the  con- 
tracts and  tlie  extent  of  the  condition  ; "  and  it  is  said  :  "  The 
bank  would  have  been  informed  that  the  department  expected  Mr. 
Reeside  to  renew  his  drafts  until  the  accumulation  of  his  current 
pay  would  be  sufficient  to  meet  them ;  and  had  his  pledge  to  take 
them  up  himself,  if  earlier  payment  should  be  required."  Be  it 
so.  Can  there  be  a  plainer  admission  than  there  is  in  the  preced- 
ing sentence,  written  by  the  acceptor,  that  it  is  necessary  to  go  out 
of  the  condition  of  the  acceptance  to  ascertain  his  meaning,  and 
that  his  construction  rests  upon  facts,  known  by  himself  and  Mr. 
Reeside,  which  the  defendants  could  not  have  known  but  from 
one  or  the  other  of  them  ?  —  facts  out  of  the  condition,  and  which 
could  alone  become  a  condition  by  being  so  expressed.  Again,  it 
is  taken  for  granted  in  the  argument,  if  the  defendants  had  in- 
quired into  the  stipulations  of  the  contract  and  the  bond,  that  they 
would  have  been  informed  of  the  forfeitures  which  had  been  in- 
curred. But  that  would  not  follow.  Before  such  knowledge  could 
have  been  obtained,  it  would  have  been  necessary  to  take  one  step 
fiirtlier  beyond  the  condition,  an  inquiry  into  the  accounts.  Where 
shall  such  construction  stop,  if  it  be  allowed  at  all  ?  The  law 
does  not  permit  a  conditional  acceptance  to  be  construed  by  any 


UNITED    STATES   V.    BANK    OP   THE   METROPOLIS.  97 

thing  extraneous  to  it,  unless  where  tlie  terms  used  are  so  ambigu- 
ous that  it  cannot  be  otherwise  ascertained. 

We  will  suppose,  however,  that  the  stipulations  of  Reeside's 
contract,  and  his  bond,  had  bee'n  known  to  the  defendants.  Might 
they  not  very  justifuibly  have  concluded  tliat  his  drafts  were  ac- 
cepted to  aid  liim  with  an  advance  to  fulfil  his  engagements  ?  The 
bond  in  evidence  shows  that  a  necessity  for  advances  was  contem- 
plated. It  had  been  the  habit  of  the  department  to  make  them  to 
contractors.  Its  exigencies,  it  is  said,  required  advances  to  be 
made.  Tiie  witness.  Mason,  says :  "  From  the  year  1830  the  pecun- 
iary aflfliirs  of  the  department  were  much  deranged,  and  it  was 
frequently  unable  to  pay  debts  due  by  it  to  contractors.  Under 
such  circumstances,  the  department  was  in  the  practice  of  giving 
to  contractors  acceptances  for  sums  less  than  was  actually  stand- 
ing to  their  credit,  unconditionally  ;  and  such  acceptances  were 
always  taken  up  at  maturity,  ])rior  to  May,  1835.  That  occasion- 
ally, and  with  the  special  approbation  of  the  postmaster-general, 
acceptances  were  given  upon  the  faith  of  existing  contracts,  con- 
ditional upon  the  performance  of  the  contracts,  which  were  under- 
stood to  become  absolute,  if  the  contractor  performed  the  services 
stated  in  the  contract."  The  defendants,  in  the  year  1835,  lield 
acceptances  of  the  same  character  for  more  than  f  70,000,  all  of 
which  were  under  protest  for  non-payment,  but  subsequently  paid 
prior  to  the  institution  of  this  suit*,  except  those  in  dispute  in  this 
case.  The  witness  further  says,  the  Bank  of  the  Metropolis  and 
other  banks  in  the  city  of  Washington  and  elsewhere,  have  been, 
for  many  years,  in  the  practice  of  discounting  such  acceptances. 
That  it  was  often  done  for  the  accommodation  of  the  department, 
often  for  the  accommodation  of  the  drawer,  and  frequently  of  both. 
This  testimony  brings  the  department  and  the  bank  in  connection 
upon  accc{)tanccs  of  the  former  for  contractofs  ;  shows  the  course 
of  business  upon  them  ;  and  aids  to  give  a  proper  construction 
to  the  acceptances  under  consideration.  When  it  is  remembered, 
also,  that  these  acceptances  were  given  to  renew  others  of  tlie  de- 
partment which  were  overdue,  we  think  it  cannot  be  doubted  that 
the  terms  "  accepted  on  condition  that  his  contracts  be  complied 
with,"  cannot  retroact  to  embrace  forfeitures  which  had  been  in- 
curred, and  to  refund  advances  said  to  have  been  made  before  the 
date  of  these  acceptances.  The  argument  upon  this  point  was 
made  upon  the  false  assumption  that  there  had  been  a  communica- 

7' 


98  ACCEPTANCE. 

tion  between  the  postmaster-general  and  the  defendants  concerning 
these  acceptances,  before  they  were  discounted  ;  or  that  there  was 
an  obligation  upon  the  part  of  the  defendants  to  make  an  inquiry 
into  the  state  of  Reeside's  contracts,  and  his  fulfilment  of  them, 
because  the  acceptances  were  conditional.  It  did  not  exist  here, 
nor  does  it  in  any  case  of  a  conditional  acceptance.  The  acceptor 
is  bound  by  his  contract  as  it  is  expressed,  and  so  it  may  be  nego- 
tiated without  any  further  inquiry. 

Having  fully  canvassed  the  argument  upon  the  point  of  the  obli- 
gation of  the  defendants  to  inquire  into  the  condition  of  the  accept- 
ance, we  turn,  for  a  moment,  to  the  case  as  it  is  shown  to  be  by 
the  evidence. 

Reeside's  earnings  between  the  date  of  the  acceptances  and  the 
time  for  the  payment  of  them,  were  not  applied  to  pay  forfeitures, 
or  refund  advances.  They  were  exhausted  by  recharging  him  with 
sums  of  money  which  Mr.  Barry  had  allowed  to  him  as  contractor 
for  carrying  the  mail,  which  were  credited  in  the  journal,  but  not 
entered  into  the  ledger.  That  they  were  not  posted,  cannot  affect 
Reeside's  right  to  such  allowances ;  and  something  more  must 
appear  than  the  testimony  in  this  case  discloses,  before  it  can  be 
admitted  that  credits,  given  by  Mr.  Barry,  were  legally  withdrawn 
by  his  successor.  There  is  no  evidence  in  this  cause  to  impeach 
the  fairness  and  legality  of  the  allowances  credited  by  Mr.  Barry  ; 
no  proof  that  Reeside  had  incurred  forfeitures,  or  that  advances 
had  been  made  to  liim.  Proofs  should  have  been  given,  if  it  was 
intended  to  justify  the  recharges  for  the  causes  stated.  No  at- 
tempt was  made  to  do  so.  The  allowances,  then,  are  credits  in 
Reeside's  account,  which  the  defendants  may  use  to  prove  his  per- 
formance of  the  conditions  of  the  acceptance ;  and  they  do  show 
performance,  as  the  amount  earned  would  have  paid  his  drafts  if 
it  had  not  been  divei^ted. 

The  third  instruction  asked  the  Court  to  say,  among  other  things, 
if  the  credits  given  by  Mr.  Barry  were  for  extra  allowances,  which 
the  said  postmaster-general  was  not  legally  authorized  to  allow, 
then  it  was  the  duty  of  the  present  postmaster-general  to  disallow 
such  items  of  credit.  The  successor  of  Mr.  Barry  had  the  same 
power,  and  no  more,  than  his  predecessor,  and  tlic  power  of  the 
former  did  not  extend  to  the  recall  of  credits  or  allowances  made 
by  Mr.  Barry,  if  he  acted  within  the  scope  of  official  authority 
given  by  law  to  the  head  of  the  department.     Tliis  right  in  an  in- 


UNITED   STATES   V.    BANK    OF   THE   METROPOLIS.  99 

cumbent  of  reviewing  a  predecessor's  decisions,  extends  to  mis- 
takes in  matters  of  fact  arising  from  errors  in  calculation,  and  to 
cases  of  rejected  claims,  in  which  material  testimony  is  afterwards 
discovered  and  produced.  But  if  a  credit  has  been  given,  or  an 
allowance  made,  as  these  were,  by  the  head  of  a  department,  and 
it  is  alleged  to  be  an  illegal  allowance,  the  judicial  tribunals  of  the 
country  must  be  resorted  to,  to  construe  the  law  under  wliich  the 
allowance  was  made,  and  to  settle  tiie  rights  between  the  United 
States  and  the  party  to  whom  the  credit  was  given.  It  is  no  longer 
a  case  between  the  correctness  of  one  officer's  judgment  and  that 
of  his  successor.  A  third  party  is  interested,  and  he  cannot  be 
deprived  of  a  payment  on  a  credit  so  given,  but  by  the  intervention 
of  a  court  to  pass  upon  his  right.  No  statute  is  necessary  to  au- 
thorize the  United  States  to  sue  in  such  a  case.  The  right  to  sue 
is  independent  of  statute,  and  it  may  be  done  by  the  direction  of 
the  incumbent  of  the  department.  Tiie  Act  of  July  2,  183G,^  en- 
titled "  An  Act  to  change  organization  of  the  post-office  depart- 
ment," is  only  affirmative  of  the  antecedent  right  of  the  government 
to  sue,  and  directory  to  the  postmaster-general  to  cause  suits  to  be 
brought  in  the  cases  mentioned  in  the  17th  section  of  that  Act. 
It  also  excludes  him  from  determining  finally  any  case  which  he 
may  suppose  to  arise  under  that  section.  His  duty  is  to  cause  a 
suit  to  be  brought.  Additional  allowances  the  postmaster-general 
could  make  under  the  43d  section  of  the  Act  of  March  3,  1825,^ 
3  Story,  1985  ;  and  we  presume  it  was  because  allowances  were 
supposed  to  have  been  made  contrary  to  that  law,  that  the  17th 
section  of  the  Act  of  July  2,  1836,  was  passed.  In  this  last, 
the  extent  of  the  postmaster-general's  power  in  respect  to  allow- 
ances, is  too  plain  to  be  mistaken. 

We  cannot  say  that  either  of  the  sections  of  the  Acts  of  1825 
and  1836,  just  alluded  to,  covers  the  allowances  made  by  Mr.  Barry 
to  Reeside.  But  if  the  postmaster-general  thought  tiiey  did,  and 
that  such  a  defence  could  have  availed  against  the  rights  of  the 
bank  to  claim  these  acceptances  as  credits  in  this  suit,  the  same 
proof  which  would  have  justified  a  recovery  in  an  action  by  the 
United  States,  would  have  justified  the  rejection  of  them  as  cred- 
its, when  they  are  claimed  as  a  set-off. 

We  pass  to  the  credit  claimed,  and  called  E.  F.  Brown's  over- 

i  5  St.  at  Large,  80.  2  4  id.  114. 


100  ACCEPTANCE. 

draft.  But  why  it  is  so  called  avc  do  not  know  ;  for  certainly  no 
overdraft  occurred  when  he  checked  alone  upon  the  contingent  fund 
of  the  department  deposited  to  his  credit  in  the  bank.  $7070.24, 
on  the  30th  April,  1835,  were  deposited  to  his  credit.  By  7th 
June,  he  had  drawn  of  that  sum  13076.97.  Then  the  postmaster- 
general  directed  the  bank  not  to  pay  Brown's  checks,  unless  they 
were  approved  by  Robert  Johnson,  the  accountant  of  the  depart- 
ment. It  is  in  proof  that  no  check  of  Brown's  was  afterwards  paid 
without  Johnson's  approval.  On  the  2d  December  following,  the 
original  deposit  to  Brown's  credit  was  drawn  out  in  his  checks, 
approved  by  Johnson,  and  it  was  found  there  had  been  an  over- 
draft of  something  over  $600.  We  do  not  say  that  an  overdraft 
out  of  the  bank,  by  authorized  officers  of  the  United  States,  is  in 
any  case  chargeable  to  the  United  States,  unless  it  can  be  shown 
that  the  money  overdrawn  has  been  applied  to  the  use  of  the  Uni- 
ted States  ;  but,  in  the  present  instance,  we  think  no  proof  of  such 
application  was  necessary,  and  we  cannot  resist  the  conclusion  that 
the  defendants  are  in  equity  entitled  to  this  credit ;  for  the  proof 
is,  that  on  the  day  that  the  overdraft  was  known,  the  postmaster- 
general  wrote  a  letter  to  the  cashier  of  the  bank,  stating  that  "  the 
contingent  fund  of  the  department  was  exhausted,  but  the  public 
service  requires  that  a  number  of  bills  chargeable  to  that  appro- 
priation, shall  be  paid  sooner  than  the  usual  sums  can  be  obtained 
from  Congress  ;  I  therefore  request  the  favor  of  your  bank  to  pay 
such  bills  against  the  department  of  that  character  as  may  be  pre- 
sented, with  the  certificate  that  the  amount  is  allowed,  signed  by 
Robert  Johnson,  accountant  of  this  department."  The  request 
was  complied  with,  and  the  bank  advanced,  until  the  14th  May, 
1836,  more  than  86000  to  pay  claims  on  the  contingent  fund.  In 
this  case,  as  in  those  of  more  humble  dealings,  the  course  of  busi- 
ness between  parties  must  be  used  when  it  can  apply  to  explain 
their  understanding  of  past  transactions.  Nor  can  the  inference 
be  resisted  that,  when  the  postmaster-general  discovered  the  con- 
tingent fund  had  been  overdrawn,  and  requested  that  other  over- 
drafts might  be  made  on  the  same  account,  that  it  was  an  admission 
of  the  correctness  of  the  first.  We  think,  then,  that  the  United 
States  was  a  debtor  to  the  defendants  for  Porter's  draft,  and  Ree- 
side's  drafts,  and  for  the  overdraft  on  the  contingent  fund,  princi- 
pal, interest,  and  costs. 

But  it  is  said,  though  the  credits  claimed  by  the  defendants 


UNITED    STATES   V.    BANK    OF    THE   METROPOLIS.  101 

shall  be  found  to  be  due  by  the  United  States,  they  cannot  be  set 
off  in  this  suit.  This  was  the  first  instruction  asked,  and  refused 
by  tlie  Court. 

It  is  urged  that,  to  allow  them  as  credits  in  this  suit  is,  in  effect, 
to  permit  money  to  be  taken  from  the  treasury,  otherwise  than  it 
is  directed  to  be  disbursed  by  law.  That  the  money  previously 
held  by  the  defendants,  had  been  passed  to  the  account  of  the 
treasurer  of  the  United  States  by  direction  of  the  postmaster- 
general,  in  conformity  with  the  Act  of  July  2,  1836.  4  Story, 
2464.  That  when  the  defendants  complied  with  the  letter 
of  instruction,  written  to  them  by  the  postmaster-general,  on  the 
16tli  July,  1836,  and  transferred  the  money  then  on  deposit  to 
the  credit  of  the  department,  to  the  treasurer  of  the  United  States, 
for  the  service  of  the  post-office  department,  and  when  they  con- 
sented to  receive  future  deposits  according  to  a  form  sent,  and  to 
transact  the  business  according  to  the  regulations  contained  in  the 
letter  of  the  16th  July,  1836,  that  the  defendants  cannot  legally 
charge  their  claims  against  that  account,  by  way  of  set-off  in  this 
suit. 

To  the  foregoing  objections,  a  brief  but  conclusive  answer  may 
be  given.  That  is  certainly  the  treasury  of  the  United  States, 
where  its  money  is  directed  by  law  to  be  kept ;  but  if  those  whose 
duty  it  is  to  disburse  appropriations  made  by  law,  employ,  or  are 
permitted  by  law  to  employ,  either  for  safe-keeping  or  more  con- 
venient disbursement,  other  agencies,  and  it  shall  become  neces- 
sary for  the  United  States  to  sue  for  the  recovery  of  the  fund,  that 
the  defendant  in  the  action  may  claim,  against  the  demand  for 
which  the  action  has  been  brought,  any  credits  to  which  he  shall 
prove  himself  entitled  to,  if  they  have  been  previously  presented 
to  the  proper  accounting  officers  of  the  treasury,  and  been  rejected. 
Such  is  the  law  as  it  now  stands.  This  right  was  early  given,  by 
an  Act  of  Congress,  to  all  defendants  in  suits  brought  by  the 
United  States.  1  Story.  It  has  been  repeatedly  before  this  Court. 
The  decisions  upon  it  need  not  be  cited.  They  apply  to  this  case. 
The  transfer  of  the  deposit  to  the  treasurer  of  the  United  States ; 
the  letter  of  tiie  postmaster-general,  directing  it  to  be  done ;  his 
regulations  for  keeping  the  account,  and  for  disbursing  it,  were 
directory  to  the  defendants  ;  and  their  compliance  with  such  direc- 
tions was  an  acknowledgment  that  the  postmaster-general  had  the 
right  to  give  them,  as  the  conditions  upon  which  they  were  to  cou- 


102  ACCEPTANCE. 

tinue  the  depository  of  the  fund.  But  it  cannot  be  inferred,  either 
from  the  Act  of  July  2,  1836,  requiring  that  when  the  revenues 
of  the  post-office  department  have  been  collected,  that  they  shall 
be  paid,  under  the  direction  of  the  postmaster-general,  into  the 
treasury  of  the  United  States  ;  or  because  appropriations  for  the  ser- 
vice of  the  department  shall  be  disbursed  by  the  checks  of  the 
treasurer,  indorsed  upon  warrants  of  the  postmaster-general,  and 
countersigned  by  the  auditor  for  the  post-office  department,  under 
the  words  "  registered  and  charged ; "  or  from  the  declaration  in 
the  postmaster-general's  letter  to  the  defendants,  that  no  other 
credit,  set-off,  or  deduction  will  be  admitted  in  this  account.  It 
cannot  be  inferred  that  the  defendants  accepted  the  postmaster- 
general's  letter  as  a  contract  to  surrender  the  right  secured  to 
them  by  the  statute,  to  claim  credits  in  a  suit  brought  against 
them  by  the  United  States ;  or  that  it  imposed  upon  them  any 
legal  obligation  not  to  do  so. 

From  the  previous  and  contemporaneous  correspondence  be- 
tween the  bank  and  the  postmaster-general,  concerning  these 
drafts,  it  is  clear  such  was  not  the  apprehension  of  the  defendant 
when  the  account  was  open  with  the  treasurer  of  the  United 
States,  in  compliance  with  the  postmaster-general's  letter.  That 
was  done  in  compliance  with  the  law,  changing  entirely  the  fiscal 
arrangements  of  the  department ;  and  for  that  purpose  the  post- 
master-general was  the  proper  organ  to  direct  it  to  be  done  ;  but 
any  condition  in  that  letter  not  required  by  the  Act  of  Congress, 
under  which  he  was  acting,  though  officially  made,  is  rather  an 
evidence  of  what  he  wished  to  do,  than  a  conclusion  that  he  had 
the  power  to  impose  it,  or  that  the  defendants  had  consented  to 
look  to  Congress  for  the  reimbursement  of  the  debt  due  tliem,  and 
not  to  the  courts  of  justice.  When  the  account  was  changed  to 
the  treasurer  of  the  United  States,  there  was  a  large  balance  on 
deposit  to  the  credit  of  the  post-office  department.  The  fund, 
however,  was  not  the  less  that  of  the  United  States,  in  the  one 
case  or  the  other.  The  change,  then,  made  no  difference  as  to  the 
ownership  of  the  fund,  in  their  right  to  retain,  if  the  defendants 
had  any  right  at  all  to  retain  it  for  th6ir  debt.  They  had  been 
dealing  with  the  executive  branch  of  the  government  in  a  matter 
of  money,  and  could  not  be  turned  to  the  legislature  without  their 
consent  to  ask  it  to  do  as  a  favor,  what  the  judiciary  could  settle 
as  a  right.     If  the  defendants  had  supposed  such  was  to  be  the 


UNITED    STATES    V.    BANK    OF   THE    METROPOLIS.  103 

consequence  of  carrying  the  fund  to  the  treasurer's  account,  it  is 
manifest,  from  the  evidence  in  tiie  case,  that  it  would  not  have 
been  done.  That  they  did  not  do  so,  it  is  to  be  inferred  also,  from 
the  evidence,  arose  from  an  indisposition  to  enforce  a  right  until 
every  effort  had  been  made  to  obtain  it  by  amicable  adjustment; 
and  from  an  indisposition  to  embarrass  a  department  which  had 
been  severely  pressed,  and  was  then  just  beginning  to  be  relieved. 
The  postmaster-general  says,  in  his  letter  of  March  19,  1838,  that, 
"  excepting  the  refusal,  in  common  with  other  banks,  to  ])ay  the 
warrants  of  this  department  in  gold  and  silver,  or  an  equivalent, 
commencing  in  May  last,  and  the  seizure  of  both  a  general  and 
special  deposit  of  moneys  in  the  treasury  to  meet  alleged  claims, 
under  the  circumstances  exliibited  in  the  annexed  papers,  the 
Bank  of  Metropolis  has  faithfully  discharged  its  duties  as  a  deposit 
bank  for  this  department."  The  circumstances  alluded  to  are 
those  which  have  been  the  subject  of  comment  in  this  case;  and 
it  is  our  opinion  that  they  confirm  the  right  of  the  defendants  to 
tlie  credits  claimed.  There  was  no  error,  then,  in  the  Court  not 
giving  the  instructions  asked  for,  and  the  judgment  is  affirmed. 

It  is  proper  for  us  to  say,  however,  if  the  law  and  the  merits  of 
the  case  were  not  with  the  defendants,  that  the  Court  might  well 
have  refused  to  give  the  first  instruction,  from  the  manner  in 
which  it  is  asked.  After  the  evidence  had  been  closed  on  both 
sides,  the  Court  was  asked  to  say,  "  that,  upon  the  evidence  afore- 
said, the  defendants  are  not  entitled,  in  this  action,  to  set  off 
against  the  plaintiffs'  demand,  the  amount  of  acceptances  afore- 
said, so  given  in  evidence  by  the  defendants,  nor  the  amount  of 
the  overdraft  of  E.  F.  Brown."  It  raises  all  the  issues,  both  of 
law  and  fact,  in  the  case,  and  requires  the  Court  to  adjudge  the 
case  for  the  ])laintiffs.  Tbis  the  Court  could  not  do,  as  there  were 
contested  facts  in  the  case,  which  it  was  the  province  of  the  jury 
to  decide.  The  Court  could  only  have,  said,  alternatively,  what 
was  the  law  of  the  case,  accordingly  as  the  jury  did  or  did  not 
believe  the  fiicts  ;  and  this,  it  will  be  admitted,  would  have  been 
equivalent  to  a  refusal  of  the  instruction.  Wlien  instructions  are 
asked,  they  should  be  precise  and  certain,  to  a  particular  intent ; 
that  the  point  intended  to  be  raised  may  be  distinctly  seen  by  the 
Court,  and  that  error,  if  one  be  made,  may  be  distinctly  assigned. 


104  ACCEPTANCE. 

MoRETON  Newhall  et  al.  v.  Joseph  W.  Clark. 

(3  Gushing,  376.     Supreme  Court  of  Massachusetts,  March,  1849.) 

Conditional  acceptance.  — An  acceptance  of  tlie  following  order  is  conditional  :  "  Please 
pay,  &c.,  out  of  the  amount  to  be  advanced  to  me,  when  the  houses  I  am  now 
erecting  on  your  land  .  .  .  are  so  far  completed  as  to  have  the  plastering  done, 
according  to  our  contract,"  &c.  And  if  the  work  was  never  done  by  the  con- 
tractor (the  drawer),  under  the  contract  referred  to,  the  event  never  occurred  upon 
which  the  defendant  by  his  acceptance  bound  himself  to  pay.  And  it  is  imma- 
terial that  this  contract  was  subsequently  cancelled  by  the  drawer  and  acceptor,  if 
there  was  no  fraudulent  interference  by  the  acceptor  to  prevent  the  completion  of 
the  work  contracted  for. 

The  plaintiffs,  as  the  payees,  brought  this  action  against  the 
defendant,  as  the  acceptor  of  two  orders  drawn  on  him  by  Henry 
M.  Reed,  for  different  sums,  and  of  different  dates,  but  in  other 
respects  of  the  same  tenor.  The  declaration  also  contained  the 
general  counts  for  work  and  labor,  money  paid,  &c.,  in  common 
form.     The  following  is  a  copy  of  one  of  these  orders  :  — 

"  Boston,  June  -22,  1844.  J.  W.  Clark :  —  Please  pay  to  Newhall  &  Maguire, 
or  their  order,  one  hundred  and  eighty-four  dollars  and  sixty-six  cents,  out 
of  the  amount  to  be  advanced  to  me  when  the  houses  I  am  now  erecting  on  your 
land  in  Erie  Street  are  so  far  completed  as  to  have  the  plastering  done,  accord- 
ing to  our  contract,  dated  April  12,  1844,  now  on  record,  and  charge  it  to  my 
account.     Yours,  &c.,  respectfully,  Henry  M.  Reed." 

"Indorsed:        Jos.  W.  Clark." 

The  plaintiff  contended,  in  the  Court  below,  that  the  orders  and 
acceptance  were  absolute  ;  and  the  defendant,  that  they  were  con- 
ditional. The  presiding  judge  ruled  this  point  in  favor  of  the 
plaintiffs  ;  but  considering  the  question  doubtful,  allowed  tliem  to 
proceed  and  introduce  evidence  to  show,  and  the  fact  was  admitted, 
that,  on  the  14th  February,  1845,  Reed,  the  contractor  and  drawer 
of  the  order,  made  an  assignment  to  Rice  and  Jenkins  of  all  his 
right  in  the  contract,  and  that  on  the  same  day  the  contract  was 
cancelled  by  Rice  and  Jenkins  and  the  defendant. 

The  plaintiffs  contended,  upon  this  evidence,  that  if  the  orders 
were  conditional,  the  defendant  and  the  drawer  having  cancelled 
the  contract,  the  defendant  had  thereby  rendered  himself  liable 
absolutely,  from  the  time  of  the  cancellation ;  and  the  presiding 


NEWHALL   V.    CLARK.  105 

I 

judge  so  ruled.  The  defendant  thereupon  offered  to  show  the 
following  facts,  by  way  of  explaining  and  avoiding  the  effect  of 
the  cancellation  :  — 

That  the  contract  had  expired  by  its  own  limitation,  at  the  time 
of  the  cancellation  ;  that  Reed  had  wholly  failed  to  comply  with 
the  terms  of  the  contract,  and  had  released  the  premises  to  Clark  ; 
that  the  work  done  by  Reed  was  not  done  pursuant  to  the  con- 
tract ;  that  he  was  utterly  unable  to  complete  the  work,  and  that 
in  February,  1845,  the  work  was  wholly  suspended;  that  this  was 
well  known  to  the  plaintiffs  ;  and  that  the  assignment  was  made 
in  consequence  of  the  utter  inability  of  Reed  to  go  on  with  and 
complete  the  contract. 

This  evidence,  being  objected  to  by  the  plaintiffs,  was  considered 
inadmissible  by  the  Court,  and  rejected. 

It  was  agreed  that  the  plaintiffs  worked  upon  the  houses  men- 
tioned in  the  contract  to  the  full  value  of  the  sums  for  which  the 
orders  were  drawn,  and  on  the  faith  of  these  orders. 

Upon  the  facts  in  evidence,  the  presiding  judge  ruled  that  the 
plaintiffs  could  recover,  and  a  verdict  being  returned  accordingly 
in  their  favor,  the  defendant  alleged  exceptions. 

Shaw,  C.  J.  The  Court  are  of  opinion,  that  this  verdict,  under 
the  instructions  given,  and  the  evidence  offered,  as  appears  by  the 
bill  of  exceptions,  cannot  be  sustained. 

The  plaintiffs  declare  in  a  general  count  for  work  and  labor, 
money  paid,  etc.,  in  common  form,  and  also  upon  two  orders, 
copies  of  which  accompany  the  bill  of  exceptions.  These  orders 
are  alike,  and  the  same  remarks  will  apply  to  both  :  "  Please  pay, 
(fee,  out  of  the  amount  to  be  advanced  to  me,  when  the  houses  I 
am  now  erecting  on  your  land,  in  Erie  Street,  are  so  far  completed 
as  to  have  the  plastering  done,  according  to  our  contract,  dated," 
&c.  The  orders  refer  to  the  contract  subsisting  between  the  par- 
ties, and  necessarily  call  for  evidence,  beyond  that  of  the  orders 
themselves,  to  ascertain  their  meaning  and  legal  effect,  and  to 
determine  when  and  from  what  fund  the  sums  mentioned  in  them 
are  to  be  paid.  They  look  to  the  future,  to  a  certain  quantity  of  work 
to  he  done,  and  materials  supplied,  by  the  drawer,  for  the  use  and 
benefit  of  the  acceptor,  according  to  contract.  All  future  events 
are  contingent  ;  all  unaccomplished  enterprises,  intended  labors 
and  performances,  fall  within  this  category.     The  acceptance  was 


106  ACCEPTANCE. 

an  agreement  to  the  request  expressed  in  the  order,  and  as  that  was 
contingent,  the  acceptance  was  an  undertaking  dependent  on  the 
same  contingency.  That  contingency  was,  luheji,  or  if,  the  work  I 
have  undertaken  to  do,  shall  have  been  completed  to  a  certain 
stage,  agreeably  to  our  contract.  If,  then,  the  work  was  never 
done  by  the  contractor,  the  drawer  of  the  order,  under  and  in  pur- 
suance of  this  contract,  the  event  never  occurred,  upon  which  the 
defendant  by  his  acceptance  bound  himself  to  pay.  It  follows,  as  a 
necessary  consequence,  that  by  force  of  the  defendant's  express 
promise,  he  was  not  bound  to  pay  any  thing.  Payment  was  only  to 
be  made,  at  a  time  which  never  arrived  ;  and  out  of  a  fund  of  the 
drawer,  to  accrue  by  the  performance  of  the  contract,  on  the  part  of 
the  drawer,  which  never  being  performed,  the  fund  of  course  never 
existed. 

The  Court  are  therefore  of  opinion,  that  the  direction  of  the 
Court  was  incorrect,  in  ruling  that  this  acceptance  was  an  absolute 
and  unconditional  promise  for  the  payment  of  money. 

But,  for  the  purpose  of  presenting  another  question,  the  plaintiffs 
offered  evidence  to  prove,  that,  on  the  14th  February,  1845,  Reed, 
the  drawer  of  the  order,  and  the  contractor  with  the  defendant, 
made  an  assignment  to  Rice  and  Jenkins  of  all  his  right  in  the 
contract ;  and  that  on  the  same  day  the  contract  was  cancelled  by 
Rice  and  Jenkins  and  Clark  ;  and  of  these  facts  there  is  no  dispute. 

Upon  these  facts,  the  Court  ruled,  at  the  instance  of  the  plaintiffs, 
that  if  the  order  was  conditional,  the  defendant,  and  the  drawer, 
that  is,  as  the  evidence  was,  the  assignee  of  the  drawer,  having 
cancelled  the  contract,  the  defendant  had  tliereby  rendered  him- 
self absolutely  liable  from  the  time  of  such  cancellation. 

This  direction  was,  in  our  judgment,  incorrect.  By  such  cancel- 
lation, the  condition  on  which  the  money  was  to  be  paid  did  not 
occur  ;  the  work  on  the  houses  was  not  done  by  Reed,  conformably 
to  his  contract,  so  as  to  bring  the  defendant's  engagement  within 
the  terms  of  the  order  and  acceptance  ;  and  the  defendant,  there- 
fore, did  not  become  liable  by  the  force  of  his  acceptance. 

We  do  not  mean  to  say,  that  when  a  party  has  obtained  such  an 
order  and  acceptance,  nothing  short  of  an  absolute  performance  of 
the  contract,  on  the  part  of  the  contractor  and  drawer,  will  give  the 
payee  any  remedy  against  the  acceptor.  The  holder  of  such  an 
order  is  a  holder  for  value,  and  has  an  interest  in  the  contract,  and 
in  its  execution,  as  a  means  of  raising  the  fund  to  which  he  has  a 


NEWHALL   V.    CLARK.  107 

right  to  look  for  his  pay.  If,  therefore,  after  the  acceptance  of  such 
an  order,  the  acceptor,  without  justifiahle  cause,  should  prohibit 
tlic  drawer  and  contractor  from  proceeding  to  such  a  completion  of 
the  contract,  as  will  make  the  acce[)tance  payable,  or  if  he  should 
collude  with  the  drawer  of  the  order,  to  put  an  end  to  the  contract, 
when,  but  for  such  fraudulent  interference,  the  drawer  would  be 
able  and  ready  to  go  on  and  complete  it,  we  are  not  prepared  to  say 
that  the  holder  of  the  order  would  not  have  a  remedy  by  a  special 
action,  setting  out  such  wrongful  act  of  the  acceptor,  and  the  loss 
sustained  by  the  holder  by  means  thereof.  Tlie  sum  thus  to  be 
recovered  would  not  be  the  debt  due  by  force  of  the  contract,  that 
is,  the  acceptance,  but  damages  for  the  wrongful  act  of  the  acceptor, 
in  preventing  the  completion  of  the  contract,  by  means  of  which  the 
holder  has  sustained  the  loss  of  the  debt.  In  such  action,  the 
burden  of  proof  would  be  on  the  plaintiffs  to  show,  that  the  preven- 
tion of  the  completion  of  the  cojitract  had  been  caused  by  the 
defendant,  to  avoid  the  order  ;  and  any  evidence,  on  the  part  of  the 
acceptor,  to  show  that  the  drawer  had  failed  or  been  unable  to  per- 
form his  contract,  by  reason  of  death,  sickness,  insolvency,  or  other 
inability,  would  be  competent  to  rebut  the  charge,  upon  which  such 
action  must  be  grounded. 

But,  even  if  the  plaintiffs,  under  a  count  in  indebitatus  assumpsit, 
■could  be  permitted  to  prove  facts  tending  to  show  that  the  perform- 
ance of  Reed's  contract,  and  the  earning  of  the  money  from  which 
the  acceptance  was  payable,  had  been  prevented  by  the  defendant, 
of  which  we  have  great  doubt,  it  must  be  done  not  merely  by  show- 
ing a  cancellation  of  the  contract,  before  its  completion  ;  but  also 
that  it  was  done  without  excuse  or  justification,  on  the  part  of  the 
defendant,  and  tliat  the  drawer  was  competent  and  willing,  and,  but 
for  such  interference  of  the  defendant,  would  have  been  able,  to 
complete  his  contract ;  and  thus  to  place  in  the  defendant's  hands 
the  fund  from  which  the  acceptance  was  payable.  In  the  present 
case,  this  must  have  been  done  by  proof  of  facts  aliunde  ;  and  the 
evidence  of  facts,  offered  by  the  defendant,  to  explain  and  avoid  the 
effect  of  these  acts  of  the  defendant  in  annulling  the  contract,  to 
wit,  that  Reed  had  wholly  failed  to  comply  with  the  terms  of  his 
contract,  &c.,  as  stated  in  the  bill  of  exceptions,  would  have  been 
competent  and  material,  and  the  rejection  of  such  evidence  by  the 
Court  was  therefore  incorrect. 

Exceptions  sustained,  verdict  set  aside,  and  new  trial  granted. 


108  ACCEPTANCE.  ^ 

A  conditional  acceptor  is  not  liable  if  compliance  is  prevented  by  the  operation 
of  law.     Browne  v.  Coit,  1  McCord,  408. 

In  this  case  the  defendant  accepted  a  bill  upon  condition  that  he  should  sell 
certain  goods  of  the  drawer  in  his  hands,  which  goods  were  attached  before  the 
maturity  of  the  bill  and  before  they  had  been  sold.  The  Court  held  that  the 
defendant  was  not  liable. 

So  if  a  merchant  undertake  to  accept  a  bill  on  condition  that  a  cargo  of  equal 
value  be  consigned  to  him,  and  the  cargo  consigned  be  not  of  equal  value,  he  is 
not  bound.     Mason  v.  Hunt,  1  Doug.  297. 

In  Wintermute  v.  Post,  4  Zabr.  420,  the  force  of  an  acceptance  "  when  in 
funds,"  came  under  consideration.  "  The  terra  '  when  in  funds  '  literally  means 
when  the  acceptor  is  in  the  possession  of  cash  which  the  drawer  has  a  present 
right  to  demand  and  receive  or  to  appropriate  by  his  bill,  whether  such  funds  be 
the  product  of  labor  or  of  commodities  furnished,  of  goods  sold  or  money  de- 
posited or  collected,  or  any  other  source.  And  such,  in  my  judgment,  is  its  fair 
commercial  and  judicial  construction."  Per  Haines,  J.  In  this  case  S.,  a  day 
laborer,  drew  on  his  employer,  P.  (to  whom  S.  was  indebted),  in  favor  of  the 
plaintiff.  P.  wrote  upon  the  bill  "  accepted  when  in  funds."  S.  continued  to 
draw  his  wages  as  he  earned  them ;  and  the  Court  held  that  it  was  not  to  be 
supposed  that  the  parties  meant  that  the  pittance  of  each  day's  work  should  be 
withheld  from  the  necessities  of  the  laborer's  family  till  they  should  accumulate 
to  the  amount  of  the  bill.  But  If  after  such  appropriation  for  the  necessaries  of 
life  a  balance  should  be  left  In  the  hands  of  the  acceptor,  then  his  acceptance 
would  become  absolute,  and  he  would  be  bound  to  pay,  and  not  till  then. 
lb.  424. 

See  Campbell  v.  Pettengill,  7  Greenl.  126,  where  it  was  determined,  in  con- 
struing the  same  expression,  that  available  securities  were  not  funds  until  actually 
converted  into  money.  See  also  Hunter  w.  Ingraham,  1  Strob.  271;  Gallery  u. 
Prindle,  14  Barb.  186  ;  Owen  v.  Iglanor,  4  Cold.  15. 

And  the  burden  of  proof  in  such  case  is  on  the  plaintiff,  in  an  action  against 
the  drawer,  to  show  funds  In  the  hands  of  the  acceptor.  Andrews  v.  Baggs, 
Minor,  173.     See  Owen  v.  Lavine,  14  Ark.  389. 

If  the  funds  are  not  received  in  the  lifetime  of  the  acceptor,  but  are  collected 
by  his  administrator,  the  latter  Is  liable  in  his  representative  character  upon  the 
acceptance  of  the  deceased.     Swansey  v.  Breck,  10  Ala.  533. 

In  Perry  v.  Harrington,  2  Met.  368,  It  was  held  that  an  acceptance  to  pay  a 
certain  sum  out  of  the  first  money  received  by  the  drawee,  bound  the  acceptor 
to  pay,  from  time  to  time,  on  reasonable  request,  such  funds  as  he  received  of 
the  drawer ;  and  that  a  judgment  for  a  sum  which  he  had  refused  to  pay  was  no 
bar  to  an  action  for  a  further  sum  received  since  the  first  action. 

But  the  payee  is  not  bound  to  receive  a  conditional  acceptance.  He  may 
refuse,  and  protest  the  bill  for  non-acceptance.  But  if  the  plaintiff  relies  upon 
such  acceptance,  he  must  show  that  the  condition  has  been  performed.  Ford  v. 
Angelrodt,  37  Mo.  50 ;  Wintermute  v.  Post,  4  Zabr.  420,  and  other  cases,  supra. 

Whether  an  acceptance  at  a  particular  place  Is  a  conditional  acceptance,  has 
been  a  subject  of  considerable  conflict.  In  England,  after  several  decisions  to 
the  contrary.  It  was  finally  decided  in  the  House  of  Lords,  in  Rowe  v.  Young, 
2  Brod.  &  B.  165;  s.  c,  2  Bligh,  391  (1820),  that  such  an  acceptance  was  con- 


NEWHALL   V.    CLARK.  109 

ditional,  requiring  the  holder,  in  an  action  against  the  acceptor  to  aver  and  prove 
presentinent  at  the  place  designated.  This  decision  gave  rise  to  tiie  Stat,  of  1 
ifc  2  (Jeo.  IV.  c.  78,  declaring  that  acceptance  at  a  particular  place  shall  not  be 
considered  conditional,  unless  the  bill  is  payable  at  a  designated  place  "  only, 
and  not  otherwise  or  elsewhere." 

In  America,  the  doctrine  generally  prevails  that  in  case  of  a  note  payable  at  a 
particular  place,  if  the  suit  is  against  the  maker,  demand  need  not  be  averred ; 
but  if  the  maker  was  at  the  place  designated  at  the  proper  time,  and  was  ready 
and  olFered  to  pay  the  note,  it  is  matter  of  defence  to  be  pleaded  and  proved  on 
his  part.     And  the  acceptor  of  a  bill  being  regarded  in  the  same  light  as  the 
maker  of  a  note,  it  follows  that  an  acceptance  at  a  particular  place  is  not  con^ 
ditional,  and  presentment  at  that  place  need  not  be  averred.    Wallace  v.  M'Con 
nell,  l;i  Pet.  136,  ante,  15 ;  Watkins  v.  Crouch,  5  Leigh,  522 ;  Bowie  v.  Duvall 
1  Gill  &  J.  175;  Ruggles  i'.  Fatten,  8  Mass.  480;  Weed  v.  Houten,  4  Halst 
189  ;  Mulherrin  v.  Hannum,  2  Yerg.  81  ;  Wolcott  v.  Van  Santvoord,  17  Johns 
248;  Caldwell  i\  C'assidy,  8  Cow.  271;  Fairchild  r.  Ogdensburgh,  &c.  R.  Co. 
15  N.  Y.  3;57;  Fleming  v.  Potter,  7  Watts,  380;  Brabston  r.  Gibson,  9  How 
263;  l\i[)ka  v.  Pope,  o  La.  An.  61 ;  McCalop  v.  Fluker,  12  La.  An.  551.     But 
the  rule  is  otherwise  in  Indiana.     See  Alden  v.  Barbour,  3  Ind.  414  ;  Palmer  v. 
Hughes,  1  Blackf.  328. 

The  law  is  dilTerent  as  to  an  indorser ;  he  can  require  presentment  at  the 
place  designated.  See  cases  above  cited.  See  also  State  Bank  v.  Napier,  6 
Humph.  270;  Taylor  v.  Snyder,  and  Chicopee  Bank  v.  Philadelphia  Bank,  post, 
and  note. 

The  following  cases  contain  further  examples  of  conditional  acceptance:  Kel- 
logg V.  Lawrence,  Hill  &  D.  332 ;  Kemble  v.  Lull,  3  McLean,  272 ;  Atkinson 
V.  Manks,  1  Cow.  691. 


110  INDORSEMENT. 


INDORSEMENT. 


Brown  v.  The  Butchers'  and  Drovers'  Bank. 

(6  Hill,  443.     Supreme  Court  of  New  York,  May,  1844.) 

Form  of  indorsement.  — The  following  figures  in  pencil,  on  a  bill  of  exchange,  viz.,  "  1,  2, 
8,"  in  connection  witli  evidence  tending  to  show  that  the  person  who  placed  them 
there  meant  thereby  to  bind  himself  as  an  indorser,  constitute  a  valid  indorsement ; 
though  it  also  appeared  that  he  could  write. 

Brown,  the  defendant  below,  was  sued  as  indorser  of  a  bill  of 
exchange,  upon  which  he  had  placed  the  figures  "  1,  2,  8,"  in  pen- 
cil. It  was  in  evidence  that  he  intended  thereby  to  bind  himself 
as  an  indorser ;  though  it  was  also  proved  that  he  could  write. 

Nelson,  C.  J.  It  has  been  expressly  decided  that  an  indorse- 
ment written  in  pencil  is  sufficient.  Geary  v.  Physic,  5  Barn.  & 
Cress.  234 ;  and  also  that  it  may  be  made  by  a  mark.  George  v. 
Surrey,  1  Mood.  &  Malk.  516.  In  a  recent  case  in  the  K.  B.,  it 
was  held  that  a  mark  was  a  good  signing  within  the  statute  of 
frauds ;  and  the  Court  refused  to  allow  an  inquiry  into  the  fact 
whether  the  party  could  write,  saying  that  would  make  no  differ- 
ence. Baker  v.  Dening,  8  Adol.  &  Ellis,  94.  And  see  Harrison  v. 
Harrison,  8  Ves.  185  ;  Addy  v.  Grix,  ib.  504. 

These  cases  fully  sustain  the  ruling  of  the  Court  below.  They 
show,  I  think,  that  a  person  may  become  bound  by  any  mark  or 
designation  he  thinks  proper  to  adopt,  provided  it  be  used  as  a 
substitute  for  his  name,  and  he  intend  it  to  bind  himself. 

Judgment  affirmed. 

In  2  Parsons,  Notes  and  Bills,  16,  note,  the  doctrine  of  this  case  is  ques- 
tioned ;  but  on  the  ground  of  the  evidence,  that  the  defendant  intended  to  bind 
himself  as  indorser  by  the  use  of  the  figures,  the  decision  seems  to  be  satisfac- 
tory. If  he  thereby  induced  another  party  to  take  the  bill,  it  is  clear,  both  on 
principle  and  authority,  that  he  would  be  precluded  from  setting  up  the  defence 


BROWN  V.   THE  BUTCHERS*  AND  DROVERS*  BANK.      Ill 

that  his  indorsement  was  not  formal  and  valid.  It  is  possible  that,  in  an  ac- 
tion against  (he  maker  of  a  note  or  acceptor  of  a  bill  thus  indorsed  by  the 
payee,  the  unusual  form  of  the  indorsement  might  be  considered  as  a  circumstance 
of  suspicion  so  strong  as  to  rcj)el  the  holder's  claim  ;  but  even  this  is  doubtful. 
See  George  r.  Surray,  1  Moody  &  M.  olC.  However  this  may  be,  the  case  is 
very  different  where  the  action,  as  here,  is  against  the  party  who  made  such  in- 
dorsement,—  the  proof  being  that  he  intended  to  render  himself  liable  as  an 
indorser.  It  is,  perhaps,  to  be  inferred  that  the  defendant  had  adopted  this 
method  of  indorsement  for  some  special  and  private  reason  ;  and  if  it  was  in 
proof  that  he  was  in  the  habit  of  thus  indorsing  paper,  the  case  would  be  stronger 
still  against  him. 

The  case  has  never  been  (juestioned  in  the  courts,  and  is  cited  as  authority  in 
Palmer  v.  Stephens,  1  Denio,  471,  where  it  was  held  that,  if  one  sign  a  note 
with  his  initials,  intcndinri  thereby  to  bind  himself,  he  is  as  effectually  bound  as 
if  he  had  written  his  name  in  full.  See  Merchants'  Bank  r.  Spicer,  6  Wend.  443, 
to  the  same  effect.  Also  Williamson  v.  Johnson,  1  Barn.  &  C.  146  ;  Bank  v. 
Flanders,  4  N.  Hamp.  239,  247,  248 ;  Ildgers  v.  Coit,  6  Hill,  322. 

Vincent  r.  Horlock,  1  ("amp.  442,  is  not  in  conflict  with  this  view.  In  that  case 
B  wrote  above  the  blank  indorsement  of  A,  the  following :  "  Pay  the  contents  to 
C."  It  was  held  that  B  was  not  an  indorser,  on  the  ground  that  he  did  not 
intend  to  render  himself  liable  as  such.  The  words  quoted  were  not  a  substitute 
for  his  name  as  in  the  principal  case. 

In  Partridge  r.  Davis,  20  Vt.  499,  the  payee  of  a  promissory  note  wrote  the 
following  words  upon  the  back  of  it :  "I  guaranty  the  payment  of  the  within 
note.  Isaac  D.  Davis."  The  Court  held  that  the  transaction  amcunted  to  an 
indorsement,  rendering  Davis  liable  upon  demand  and  notice,  to  any  subsequent 
holder,  even  though  not  the  immediate  assignee  of  the  payee.  To  the  same 
effect  is  Leggett  v.  Raymond,  6  Hill,  639;  but  Bronson,  J.,  in  delivering  the 
opinion  of  the  Court,  says  tliat  his  own  opinion,  which  is  overruled,  is  that  the 
contract  is  a  guaranty,  void  under  the  statute  of  frauds  for  want  of  a  considera- 
tion, and  not  negotiable  so  as  to  pass  a  title  to  any  one  except  to  the  person  to 
whom  the  promise  was  made.  He  distinguishes  the  case  from  Ketchell  v.  Burns, 
24  Wend.  456,  in  that  the  defendants'  contract  (guaranty)  in  that  case  was  to 
bearer,  and  therefore  negotiable.  In  this  case  (24  Wend.  456),  the  defendant 
was  held  liable  as  the  maker  of  a  new  note.  The  case  was  also  distinguished 
from  Manrow  v.  Durham,  3  Hill,  584,  as  the  guaranty  in  this  case  was  made  to 
the  plaintiff;  whereas 'in  Leggett  r.  Raymond,  as  in 'Partridge  v.  Davis,  the 
plainlilf  was  a  subsequent  assignee,  and  not  the  party  to  whom  the  promise  was 
made.  The  contract  in  Manrow  v.  Durham  was:  "We  guarantee  the  payment 
of  the  within  note."  Signed  by  the  defendants.  It  was  held  in  legal  effect  a 
promissory  note,  importing  a  consideration.  Bronson,  J.,  dissented,  consider- 
ing the  promise  as  a  guaranty,  as  he  did  that  in  Leggett  r.  Raymond  afterwards. 
This  case  of  Manrow  v.  Durham,  will  be  found  interesting  as  containing  an 
able  review  of  the  early  cases,  both  by  Nelson,  C.  J.,  in  delivering  the  opinion 
of  the  Court,  and  in  the  dissenting  opinion  of  Bronson,  J.  The  later  New  York 
cases,  however,  substantiate  the  view  taken  by  the  latter.  See  Waterbury  v.  Sin- 
clair, 26  Barb.  455 ;  Ellis  v.  Brown,  6  Barb.  282 ;  Cottrell  r.  Conkiin,  4  Duer,' 
453  ;  Spies  v.  Gilmore,  1  Comst.  321 ;  Hall  v.  Newcomb,  7  Hill,  410  ;  and  such 


112  INDORSEMENT. 

a  contract  as  that  in  Leggett  v.  Ra)'mond,  would,  now  be  considered  a  guaranty 
and  nothing  more.  This  shakes  the  authority  of  Partridge  v.  Davis ;  and  it 
may  be  considered  very  doubtful  whether  a  contract,  such  as  the  one  in  that  case, 
can  be  held  an  indorsement.  The  early  case  of  Upham  v.  Prince,  14  Mass.  14, 
held  the  same  doctrine  as  Partridge  v.  Davis.  See  also  Riggs  v.  Waldo,  2  Cal. 
485  ;  Pierce  v.  Kennedy,  5  Cal.  138.  See  Indorsement  by  one  not  a  party,  infra. 
■  A  written  agreement  to  pay  a  note  "as  if  by  me  indorsed,"  is  an  indorse- 
ment.    Pinnes  r.  Ely,  4  McLean,  173. 

It  is  most  usual  and  proper  to  place  an  indorsement  upon  the  back  of  the  bill 
or  note,  in  acc*brda.nce  with  the  literal  import  of  the  term ;  but  this  has  been 
held  not  essential.  It  may  be  upon  its  face,  upon  a  paper  attached,  and  with 
pencil  as  well  as  ink.  Folger  v.  Chase,  18  Pick.  63 ;  Geary  r.  Physick,  7  Dowl. 
&  R.  653 ;  Partridge  v.  Davis,  20  Vt.  499. 

If  there  is  an  intention  so  to  indorse  as  to  effect  negotiation,  the  form  of  the 
writing  is  immaterial.  lb.  503  ;  Sanford  v.  Norton,  14  Vt.  228  ;  Sylvester  v. 
Downer,  post. 

The  result  is,  as  stated  by  Davis,  J.,  in  Partridge  v.  Davis,  "that  no  pre- 
scribed formula  need  be  observed  to  constitute  an  indorsement.  It  is  governed, 
like  the  instrument  on  which  it  is  made,  by  those  liberal  principles  of  construc- 
tion which  pervade  all  mercantile  contracts,  paying  little  attention  to  mere  tech- 
nical rules,  but  endeavoring  to  ascertain  and  carry  into  effect  the  real  intentions 
of  the  parties  to  them." 


John  B.  Camden  et  al.^  Plaintiffs  in  Error,  v.  Kenneth 
McKoY  et  al.,  Defendants  in  Error. 

(3  Scammon,  437.     Supreme  Court  of  Illinois,  December,  1842.) 

*  Indorsement  by  one  not  a  party. — If  one  not  a  party  to  a  promissory  note  place  his 
name  on  the  back  thereof,  the  payee  not  having  indorsed  it,  he  is  to  be  regarded 
as  a  guarantor,  and  not  as  maker  or  surety ;  and  the  holder  has  no  authority  to 
write  over  tlie  name  any  thing  which  would  render  such  person  liable  as  an 
original  promisor,  in  the  absence  of  proof  of  intention. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Douglas,!  J.  This  was  an  action  of  assumpsit,  by  the  plain- 
tiffs against  the  defendants,  McKoy,  Johnson,  and  Gray,  as  maker 
of  a  promissory  note.  McKoy  and  Johnson  pleaded  the  general 
issue,  which  was  joined,  and  Gray  pleaded  a  former  recovery,  to 
which  the  plaintiffs  demurred.  Before  any  decision  was  had  on 
the  demurrer,  the  plaintiffs  entered  a  nolle  prosequi  as  to  Gray, 

^  Stephen  A. 


CAMDEN   V.    M'KOY.  '  113 

and  proceeded  to  trial  against  McKoy  and  Johnson.  By  agree- 
ment of  the  parties,  a  jury  was  dispensed  with,  and  the  matters  of 
fact  as  well  as  law  were  submitted  to  the  Court.  The  plaintiffs 
offered  in  evidence  the  following  promissory  note  and  indorse- 
ment: "Three  months  after  date,  I  promise  to  pay  J.  B.  and  M. 
Camden  &  Co.,  or  order,  four  hundred  and  eighty  dollars,  value 
received,  without  defalcation. 

John  C.  Gray. 

"January  26,  1838." 

Jitdorsc7nent. 

"  For  value  received,  we  jointly  and  severally  acknowledge  our- 
selves as  securities  of  John  C.  Gray,  for  the  payment  of  the  within 
note  at  maturity. 

Kenneth  McKoy, 
Jacob  Johnson." 

The  signatures  of  Gray,  McKoy,  and  Johnson  were  all  proven  to 
be  genuine,  and  the  plaintiffs'  counsel  admitted  that  the  names  of 
McKoy  and  Johnson  were  written  in  blank  on  the  back  of  the  note, 
and  that  they  wrote  said  indorsement  over  said  signatures  on  the 
trial.  Various  witnesses  were  then  examined  for  the  purpose  of  as- 
certiaining  at  what  time,  and  under  what  circumstances,  McKoy  and 
Johnson  indorsed  said  note  ;  but  the  whole  evidence  left  it  extremely 
doubtful  whether  they  placed  their  names  on  the  back  of  the  note 
at  the  time  of  its  execution,  or  long  subsequently  ;  and  there  was 
no  evidence  showing  that  they  were  privy  to,  or  participated  in  tlie 
consideration.  The  plaintiffs  then  offered  to  read  said  note  in  evi- 
dence, under  a  declaration  charging  said  McKoy,  Johnson,  and 
Gray  as  joint  and  several  makers  of  said  promissory  note,  to  wiiich 
the  defendants  objected,  and  the  Court  sustained  tlie  objection  ;  and 
the  plaintiffs  offering  no  other  evidence,  a  judgment  of  nonsuit,  and 
for  costs,  was  entered  against  the  plaintiffs. 

Tiie  assignment  of  errors  questions  the  decision  of  the  Court, 
excluding  the  note  from  evidence,  and  entering  the  judgment  of 
nonsuit.  Supposing  the  names  of  McKoy  and  Johnson  to  have 
been  indorsed  upon  the  note  at  the  time  of  its  execution  by  Gray, 
it  becomes  necessary  to  inquire  into  the  nature  and  extent  of  their 
liability,  and  especially  whether  they,  in  connection  with  Gray,  are 
liable,  as  joint  and  several  makers  of  the  note. 

The  general  rule  is,  that  an  indorsement  in  blank  operates  as 

8 


114  INDORSEMENT. 

authority  to  the  bona  fide  holder  of  the  note  to  fill  up  the  indorse- 
ment, by  writing  any  thing  over  the  signature  which  shall  be  con- 
sistent with  the  nature  of  the  instrument,  and  the  intention  of  the 
parties.  Great  difficulty  and  confusion  have  arisen  in  applying  the 
rule  to  the  peculiar  state  of  facts  existing  in  each  case.  Upon  an 
examination  of  the  various  cases  cited  in  the  argument,  and  others 
to  which  I  have  directed  my  attention,  I  find  many  apparently  con- 
tradictory decisions,  which  will  render  it  necessary  to  review  the 
leading  cases,  in  order  to  arrive  at  a  satisfactory  conclusion. 

Ilerrick  v.  Carman  ^  was  a  case  where  one  Ryan  had  executed 
his  note  to  Carman  &  Co.,  and  procured  Herrick  to  indorse  it  in 
blank.  Carman  &  Co.  assigned  the  note  to  J.  V.  Carman,  who 
sued  Herrick,  seeking  to  charge  him  on  his  indorsement.  The 
Court  held  that  as  it  did  not  appear  that  Herrick  gave  Ryan  credit 
with  Carman  &  Co.,  by  indorsing  the  note,  or  that  he  was  in  any 
wise  informed  of  the  use  to  which  Ryan  meant  to  apply  the  note,  it 
would  intend  that  Herrick  meant  only  to  become  second  indorser, 
with  all  the  rights  incident  to  that  situation  ;  that  the  fact  of  his 
indorsing  first,  in  point  of  time,  could  have  no  influence,  for  he 
must  have  known,  and  we  are  to  presume  he  acted  on  that  knowl- 
edge, that  though  the  first  to  indorse,  his  indorsement  would  be 
nugatory,  unless  preceded  by  that  of  the  payees  of  the  note.  -The 
Court  also  says,  had  it  appeared  that  Herrick  indorsed  the  note  for 
the  purpose  of  giving  Ryan  credit  with  Carman  &  Co.,  he  would 
have  been  liable  to  them,  or  any  subsequent  indorsers,  and  his 
indorsement  might  have  been  converted  into  a  guarantee  to  pay  the 
note,  if  Ryan  did  not,  according  to  the  decision  of  the  Supreme 
Judicial  Court  in  Massachusetts.^  From  this  decision,  it  appears 
that  the  indorser  was  not  liable,  either  as  maker  or  guarantor,  for  the 
reason  that  it  was  not  proven  that  the  payees  gave  the  credit  to 
him  at  the  time  they  received  the  note  ;  and  if  that  fact  had  been 
proven,  he  would  have  been  responsible  as  guarantor,  and  not  as 
maker  of  the  note. 

The  case  of  Herrick  v.  Carman,'^  was  an  action  on  the  same  note, 
and  the  Court  decided  that  it  could  not  be  maintained,  either  in  the 
names  of  the  payees,  or  the  assignees  of  the  note. 

In  Nelson  v.  Dubois,*  the  Court  maintains  the  same  doctrine, 
upon  a  case  similar  in  all  respects,  except  that  the  person  who 
indorsed  the  note  in  blank,  did  so  for  the  purpose  of  inducing  the 
1  12  Johns.  159.         2  3  Mass.  274.        3  10  Johns.  224.        *  13  Johns.  175. 


CAMDEN   V.    M'kOY.  115 

payees  to  accept  it,  and  part  witli  their  property  in  lieu  of  it.  In 
delivering  the  opinion,  Chief  Justice  Sjyencer  says,  the  facts  in  that 
case  (Ilerrick  v.  Carman)  are  tiie  same  as  in  this,  with  the  diiference 
only,  that  it  did  not  appear  that  Ilerrick  indorsed  the  note  for  the 
purpose  of  giving  Ryan  credit  with  Carman  &  Co.  It  was  then,  and 
still  is,  my  oj)inion,  that,  had  he  done  so,  he  would  have  been  liable 
to  them,  or  any  sulisecpient  indorsee,  and  that  Ilerrick's  indorse- 
ment might  have  been  converted  into  a  guarantee  to  pay  the  note, 
if  Ryan  did  not.  In  the  present  case,  it  does  appear  clearly  and 
affirmatively,  that  the  plaintiff"  refused  to  sell  the  horse  for  which 
the  note  was  given,  on  Brundige's  (the  maker's)  responsibility,  and 
that  the  defendant  put  his  name  upon  the  note  as  guaranty  for 
Brundige's  payment  of  it,  when  it  fell  due ;  and  that  but  for  the 
defendant's  undertaking,  as  guaranty,  the  })laintiff"  would  not  have 
parted  with  his  property. 

The  case  of  Campbell  v.  Butler,^  was  founded  upon  a  state  of 
facts  precisely  similar  in  all  respects  to  the  preceding  one.  One 
Law  executed  his  note  to  Butler,  and  Campbell  and  Harvey  indorsed 
their  names  on  the  back  of  the  note,  for  the  purpose  of  enabling 
Law  to  oljtain  from  Butler  a  horse  and  wagon,  in  exchange  for  the 
note.  Butler  sued  Campbell  upon  his  indorsement,  and  on  the 
trial  filled  up  the  blank  indorsement  as  follows  :  — 

"  For  value  received,  I  undertake  and  promise  to  guaranty  the 
payment  of  the  money  within  mentioned,  to  the  within  named 
James  Butler.  William  Campbell." 

"  Per  Curiam  :  The  question  is,  whether  the  plaintiff"  below  was 
authorized  to  write  such  a  contract  over  the  names  of  the  indorsers 
of  the  note,  respectively,  and  can  sustain  an  action  upon  that  con- 
tract. According  to  the  decision  in  Nelson  v.  Dubois,  and  as  the 
law  is  recognized  in  Herrick  v.  Carman,  we  think  the  plaintiff"  had 
a  perfect  right  to  recover,  as  on  an  original  undertaking  to  pay,  by 
each  of  the  indorsers,  as  guarantors  of  the  note.  The  defendant 
in  error  is,  therefore,  entitled  to  judgment."  ^ 

The  case  of  Josselyn  v.  Ames,-  which  was  cited  in  Herrick  v. 
Carman,  was  an  action  by  the  assignee  against  the  assignor  of 
a  note.  The  facts  disclosed  in  the  pleadings  and  proofs  are  these : 
Josselyn  held  a  note  against  John  Ames,  and  demanded  security 
upon  it.  John  proposed  his  brother  Oliver  as  surety,  who  was 
1  14  Johns.  349,  35L  'i  3  Mass.  274. 


116  INDORSEMENT. 

# 

accepted ;  and  accordingly,  John  executed  a  note  to  Oliver,  who 
indorsed  it  in  blank,  and  delivered  it  to  Josselyn  in  lieu  of  the 
first  note.  Josselyn  sued  Oliver  on  his  note,  averring  in  his 
declaration,  that  '"the  said  Oliver  then  and  there  promised  the 
said  Josselyn,  to  guaranty  to  him  the  payment  of  the  contents  of 
said  note,  on  demand,  and  then  and  there,  in  consideration  of  the 
premises,  promised  the  said  plaintiff  to  pay  him  the  contents  of 
said  note,  agreeable  to  the  tenor  of  the  same,"  &c.  The  Court 
held  that  the  blank  indorsement  did  not  authorize  such  an  aver- 
ment ;  but  did  authorize  the  following  indorsement  over  the  sig- 
nature :  — 

"  For  value  received,  I  undertake  to  pay  the  money  within  men- 
tioned, to  E.  J." 

I  confess  that  I  am  unable  to  discover  what  principle  this  case 
does  establish,  for  the  reason  that  I  can  perceive  no  material  differ- 
ence between  the  averment  in  the  declaration,  which  the  Court 
held  to  be  unauthorized  by  the  blank  indorsement,  and  the  one 
dictated  by  the  Court ;  and  it  seems  the  parties  took  the  same 
view  of  it,  for  they  immediately  agreed  to  have  judgment  entered 
upon  the  declaration  as  it  stood. 

The  case  of  Ulen  v.  Kittredge,^  was  upon  a  state  of  facts  sub- 
stantially the  same  as  Nelson  v.  Dubois,  and  Butler  v.  Campbell. 
Ulen  declared  against  Kittredge,  who  had  indorsed  the  note  in 
blank,  as  guarantor,  and  proved  a  parol  agreement  that  he  was  to 
guaranty  the  payment  in  the  event  that  the  maker  did  not  pay  it 
by  a  certain  time ;  and  he  recovered  according  to  his  averments 
and  proof.  The  question  there  was,  whether  the  indorsement 
was  valid,  as  against  the  statute  of  frauds,  and  the  Court  says, 
we  are  of  opinion  that  the  defendant's  signature  on  the  back 
of  the  note,  with  the  authority  given  by  him  to  the  witness  to 
write  over  the  signature  a  sufficient  guarantee,  and  such  guarantee 
being  accordingly  written  by  the  witness,  pursuant  to  such  author- 
ity, may  be  considered  as  a  memorandum  signed  by  the  party, 
within  the  intent  of  the  statute,  as  fally  as  if  it  had  been  written 
in  the  defendant's  presence,  immediaiely  after  the  signature. 

In  Moies  v.  Bird,-  the  action  was  brought  by  the  payee  against 
an  indorser  in  blank,  who  was  not  in  any  other  manner  a  party 
to  the  note ;  but  there  w'as  proof,  showing  that  the  indorser  had 
affixed  his  signature  there  in  pursuance  of  an  agreement  between 

1  7  Mass.  233.  2  11  Mass.  435. 


CAMDEN   V.   M'KOY.  117 

the  maker  and  the  payee,  at  the  time  of  the  sale  of  the  land,  and 
the  execution  of  the  note.  The  defendant  insisted,  that  if  liable 
at  all,  he  was  only  rcsimnsible  as  indorscr  ;  but  the  Court  held 
that  in  consequence  of  the  parol  agreement,  \\t  was  liable  as  orig- 
inal obligor. 

Tenney  v.  Prince,^  was  a  case  where  a  person  indorsed  a  note  in 
blank,  nine  months  after  date,  and  three  montlis  before  maturity, 
and  the  payee  brought  suit  against  the  indorser,  charging  him  as 
original  promisor.  The  Court  held  that  he  could  not  be  rendered 
liable  in  that  capacity,  nor  in  any  other,  unless  the  indorsement 
was  based  upon  some  new  consideration,  and  then  only  as  guar- 
antor. 

In  Sumner  v.  Gay ,2  the  plaintiff  declared  against  the  defendant, 
who  had  indorsed  a  note  in  blank,  as  maker  of  the  note  in  the  first 
count,  and  as  guarantor  in  the  second ;  and  the  suit  was  main- 
tained ;  but  it  docs  not  appear  whether  as  maker  or  guarantor, 
nor  was  it  material  in  that  case,  for  the  liability  would  have  been 
the  same. 

Baker  v.  Briggs,^  was  an  action  brought  to  recover  the  amount 
of  a  note  made  by  Ryan  to  Baker,  and  indorsed  in  blank  by 
Briggs.  It  appears,  from  the  report,  that  one  count  charged 
Briggs  as  maker  of  the  note ;  but  we  have  no  means  of  knowing 
in  what  character  he  was  declared  against  in  the  other  counts. 
The  proof  in  the  case  shows  that  it  was  the  understanding  of  the 
parties  that  he  should  be  held  responsible  as  surety,  and  the  Chief 
Justice  treats  him  as  an  original  promisor. 

It  is  wortliy  of  note,  that,  in  each  of  the  preceding  cases,  the 
indorsement  was  in  blank  ;  the  indorser  was  sued  alone,  uncon- 
nected with  the  maker ;  and  in  every  one,  where  a  recovery  was 
had,  there  was  proof  showing,  affirmatively,  the  understanding  of 
the  parties,  and  the  nature  of  the  transactions  between  them. 
There  are  two  other  cases  in  the  Massachusetts  Reports,  which 
belong  to  a  dilTorent  class,  and  deserve  attention. 

The  case  of  Hunt  (Adra'r)  v.  Adams,'*  was  on  a  promissory 
note  made  by  one  Chaplin,  to  the  plaintiff,  with  the  following 
indorsement  at  the  bottom  :  — 

"I  acknowledge  myself  holden  as  surety  for  the  payment  of  the 
demand  of  the  above  note.     Witness  my  hand. 

"  Barnabas  Adams." 

1  4  Pick.  385.  2  4  Pick.  311.  '  8  Pick.  122.  *  6  Mass.  358. 


118  INDORSEMENT. 

Adams  was  sued  as  surety  in  said  note ;  and  the  Court  decided 
that  the  suit  was  well  brought,  saying  that  the  defendant  is  an 
original  party  to  the  contract,  as  well  as  Chaplin.  The  contract, 
in  its  legal  construction,  is  a  promise  made,  as  well  by  the  defend- 
ant as  by  Chaplin,  for  value  received,  to  pay  fifteen  hundred 
dollars  to  plaintiff's  intestate.  To  this  promise  Chaplin  has  signed 
as  principal,  and  defendant  as  surety.  This  mode  of  signing  is 
an  accommodation  between  the  promisors,  by  which  the  defendant 
is  entitled,  if  he  pay  the  note,  to  an  indemnity  from  Chaplin ; 
but  as  to  the  intestate,  they  must  be  considered  as  joint  and  sev- 
eral promisors.  Again  the  Chief  Justice  says,  the  legal  effect  of  a 
note  in  this  form  is  not  different  from  a  note  in  the  form  of  "  I,  A 
B,  as  principal,  and  I,  C  D,  as  surety,  promise  to  pay,  &c."  This 
last  form  is  not  uncommon,  and  the  promise  has  always  been 
holden  to  be  made  by  each  as  original  promisor. 

The  other  is  the  case  of  White  v.  Howland,^  and  is  similar  to 
this  in  the  facts  of  the  case,  the  form  of  the  action,  and  the  reason- 
ing of  the  Court.  These  are  distinguishable  from  all  the  other 
Massachusetts  cases  in  this,  that  the  indorsement  was  written  out 
in  full,  and  mutually  agreed  upon,  by  the  parties,  before  signing. 
The  terms  of  the  contract,  and  the  character  and  extent  of  the 
indorser's  liability,  were  matter  of  agreement  between  the  parties, 
and  it  only  remained  for  the  Court  to  execute  that  agreement 
according  to  its  spirit  and  legal  effect.  If  the  indorser  was  liable 
as  a  joint  maker  of  the  note,  in  the  capacity  of  surety,  he  became 
80  in  pursuance  of  the  provisions  of  an  agreement  written  and 
signed  by  himself,  and  not  by  virtue  of  a  contract  made  for  him, 
by  the  Court,  or  the  construction  of  law,  over  a  blank  indorsement 
upon  the  back  of  a  promissory  note. 

In  Dean  v.  Hall,^  the  doctrine  upon  this  subject  is  discussed 
with  great  learning  and  ability.  The  New  York  and  Massachu- 
setts cases  are  all  reviewed  ly  Justice  Coiven,  and  the  conclusion 
seems  to  be,  that  the  indorser  cannot  be  charged  as  maker  unless 
there  are  some  peculiar  circumstances  arising  out  of  a  promise  to 
become  originally  and  directly  responsible,  or  a  participation  in 
the  consideration  for  which  the  note  was  given.  In  fact,  such  a 
state  of  case  was  shown,  by  proof,  to  exist  in  Nelson  v.  Dubois, 
and  Campbell  v.  Butler,  and,  indeed,  in  all  the  New  York  cases 
where  the  indorser  in  blank  was  held  responsible  as  guarantor ; 
1  9  Mass.  314.  2  17  Wend.  214. 


CAMDEN    V.    m'kOY.  119 

and  for  the  want  of  such  evidence,  it  was  held,  in  IleiTick  v. 
Carman,  that  the  indorser  was  not  lialjlc,  citlicr  as  maker  or 
guarantor. 

Besides  the  absence  of  any  evidence  connecting  McKoy  and 
Johnson  with  the  original  consideration  of  the  note,  the  case  under 
consideration  diflers  from  those  referred  to,  or  any  I  have  Ijeen 
able  to  find  in  the  books,  in  one  essential  particular.  Here  the 
makers  and  indorsers  are  sued  jointly,  as  makers  of  a  joint  and 
sevei'al  promissory  note.  In  each  of  tlie  others,  the  suit  was 
against  the  indorser  alone ;  and  I  have  been  able  to  find  no  case 
in  which  the  maker  and  indorser  were  joined  in  one  action.  This 
difference  becomes  important,  for  the  reason  that  in  most,  if  not 
all  the  cases,  except  Moies  v.  Bird,  where  the  indorser  has  been 
held  to  be  an  original  j)roraisor,  the  declaration  contained  counts 
charging  the  defendant  as  guarantor,  as  well  as  maker ;  and  the 
language  of  the  Court  usually  is,  that  he  is  responsil)le  as  original 
promisor  or  undertaker,  without  distinguishing  between  maker 
and  guarantor. 

In  those  cases  it  was  not  material  in  which  character  the  defend- 
ant was  responsible,  as  the  effect  would  have  been  the  same,  as  it 
regards  tiie  form  of  the  action,  and  the  extent  of  the  lial)ility.  If, 
then,  this  question  is  to  be  determined  upon  the  weight  of  author- 
ity, we  do  not  feel  authorized,  in  the  absence  of  any  testimony 
showing  the  understanding  of  the  parties,  to  treat  McKoy  and 
Johnson  as  joint  and  several  makers  of  the  note  witii  Gray. 
Aside  from  authority,  and  relying  upon  general  principles,  tiie 
question  is,  in  our  opinion,  free  of  difficulty.  Whilst  the  law 
requires  no  particular  form  of  words  to  constitute  a  j)romissory 
note,  and  designates  no  particular  place  at  which  the  owner  shall 
affix  his  name,  in  order  to  establish  his  liability  in  that  capacity, 
yet,  by  the  universal  consent  and  acquiescence  of  commercial  and 
business  men,  custom  has  established  and  sanctioned  a  form  and 
mode  of  signing,  which  furnish  a  legal  presumption  of  the  inten- 
tion of  the  parties,  and  the  precise  character  of  the  liability 
attaching  to  the  signature,  which  presumption  may,  in  many  cases, 
be  rebutted  by  parol  evidence.  For  instance,  a  signature  at  the 
bottom  of  a  note,  on  the  right-hand  side  of  the  paper,  is  prima 
facie  evidence  that  it  was  affixed  there  in  the  character  of  maker, 
whilst  the  same  signature,  at  tlie  left-hand  side  of  the  paper,  would 
furnish  equally  satisfactory  evidence  that  it  was  placed  there  only 


120  INDORSEMENT. 

as  a  witness  to  the  instrument.  So  the  signature  of  a  third  per- 
son, upon  the  back  of  a  note,  after  the  payee  has  indorsed  it,  is 
evidence  of  a  contract  to  become  responsible  as  second  indorser. 
If  custom  has  ripened  into  the  form  of  legal  presumption,  in  these 
respects,  it  would  seem  to  follow,  that  a  departure  from  this  cus- 
tom would  negative  such  presumption,  and  furnish  prima  facie 
evidence  of  a  different  kind  of  liability.  The  authorities  are  not 
definite  and  conclusive  as  to  the  technical  character  of  this  lia- 
bility ;  yet  their  general  tendency,  as  well  as  the  nature  of  the 
transaction,  lead  us  to  the  conclusion  that  it  amounts  to  a  guar- 
anty. 

Upon  the  ground  of  variance,  the  note  was  clearly  inadmissible 
in  evidence.  The  note  declared  on  purported  to  be  made  and 
signed  by  McKoy,  Johnson,  and  Gray,  and  the  note  offered  in 
evidence  was  signed  by  John  C.  Gray  alone,  and  indorsed  by 
McKoy  and  Johnson,  with  implied  authority  to  write  a  guaranty 
over  the  signatures.  Upon  the  well-settled  principle,  tliat  the 
pleadings  and  proofs  must  correspond,  the  note  was  properly  re- 
jected. 

In  this  case,  it  is  unnecessary  to  inquire  whether  the  plaintiffs, 
after  entering  a  nolle  prosequi  as  to  Gray,  could  proceed  to  trial 
and  judgment  against  the  other  defendants. 

The  judgment  is  affirmed. 

Caton,  J.,  dissenting.  I  regret  that  I  feel  compelled  to  dis- 
agree with  a  majority  of  the  Court  in  this  case.  After  a  careful 
examination  of  the  authorities  and  general  principles  applicable 
to  the  main  questions  involved,  I  am  constrained  to  the  conclu- 
sion, that  where  a  name  is  found  on  the  back  of  a  promissory 
note  in  the  hands  of  the  original  payee,  the  presumption  of  law 
is,  in  the  al)sence  of  proof  on  the  subject,  that  it  was  put  there 
at  the  time  of  the  making  of  the  note,  and  as  part  of  the  original 
transaction.  In  the  case  under  consideration,  the  proof  is  so 
entirely  uncertain  and  unsatisfactory,  that  it  leaves  the  mind 
without  a  bias  or  inclination  one  way  or  the  other,  and  the  law 
is  left  to  raise  its  own  presumption  on  the  subject.  The  name 
on  the  back  of  a  note,  while  in  the  hands  of  the  original  payee, 
does  not  make  the  writer,  in  a  technical  sense,  an  indorser.  He 
cannot  be  the  first  indorser,  because  he  is  not  the  payee  of  the  note, 
nor  can  he  be  a  second  or  any  subsequent  indorser,  because  his 


CAMDEN    V.    M  KOY.  121 

indorsement  is  not  preceded  by  the  name  of  the  payee.  The  very 
term  indorscr  presupposes  that  the  note,  either  is,  or  lias  been 
negotiated.  The  defendants,  then,  cannot  I^c  treated  as  indorsers 
of  this  note.  Then  for  what  purpose  were  the  names  put  on  the 
back  of  it?  Not  being  indorsers,  it  was  not  for  the  jjurpose  of 
giving  the  note  ncgotial)iUty,  but  must  have  been  for  the  purpose  of 
increasing  the  payee's  security  ;  and  if  this  was  the  object,  there  is 
nothing  unreasonable  in  presuming  that  the  security  was  required 
and  obtained,  at  the  time  the  note  was  given.  This  security  was 
required  because  the  payee  was  not  satisfied  with  the  responsibility 
of  the  maker  of  the  note.  If  this  responsibility  of  the  defendants 
was  undertaken  at  the  time  the  note  was  given,  then  no  new  con- 
sideration was  necessary  to  make  their  undertaking  obligatory  on 
them,  because  the  presumption  of  law  is,  that  it  was  a  part  of  the 
original  contract  between  the  plaintiff  and  Gray,  that  this  security 
should  be  given.  l>y  presuming  that  this  indorsement  (and  I  use 
the  terra  not  in  its  technical  sense)  was  made  at  the  time  the  note 
was  given,  and  was  a  part  of  the  original  contract,  we  give  effect 
and  efficacy  to  the  acts  of  the  defendants.  If  we  do  not  presume 
that  the  undertaking  was  made  at  that  time,  we  let  go  every  thing  like 
certainty,  and  determine  without  any  fixed  principle  or  certain  rule. 
If  we  determine  that  it  was  made  after  the  execution  and  delivery 
of  the  note,  and  on  a  new  arrangement,  it  would  be  an  undertaking 
on  the  part  of  the  defendants  to  pay  the  pre-existing  debt  of  Gray, 
whicii,  by  the  statute  of  frauds,  must  be  in  writing,  on  a  good  con- 
sideration. By  adopting  the  construction  which  I  give,  a  manifest 
embarrassment  is  avoided,  and  the  evident  intent  of  the  parties  is 
carried  into  execution  ;  and  unless  we  do  adopt  that  construction, 
we  shall,  in  most  instances,  discharge  the  liabilities  of  such  sureties 
altogether.  Unless  the  presumption  of  law  is  that  such  an  indorse- 
ment was  made  at  the  same  time  with  the  note,  we  must  presume 
it  was  made  afterwards  ;  and  if  we  do  this,  we  determine  that  the 
act  was  prima  facie  void,  because  we  make  it  a  new  and  independ- 
ent transaction,  unconnected  with  the  consideration  of  the  note, 
and  requiring  a  new  consideration  to  be  proved  to  support  it.  But 
I  do  not  understand  the  opinion  of  Mr.  Justice  Doujlas,  to  deter- 
mine that  the  presumption  of  law  is,  that  the  names  of  the  defend- 
ants were  written  on  the  note  after  its  execution.  But  in  the 
absence  of  all  proof  on  the  subject,  the  law  must  determine  at  what 
time  this  undertaking  was  entered  into^by  the  defeildants,  whenever 


122  INDORSEMENT. 

that  question  of  time  becomes  material,  as  it  most  unquestionably 
does  in  a  case  like  this.  It  will  not  be  denied,  I  presume,  that  if  it 
were  proved  by  testimony  on  the  trial,  that  the  defendants  wrote 
their  names  on  the  back  of  this  note,  at  the  time  the  note  was  made, 
it  would  all  be  considered  one  transaction,  and  supported  by  the 
same  consideration,  and  their  liability  would  be  fixed  ;  while,  on 
the  other  hand,  if  it  were  proved  that  their  names  were  not  put 
there  till  afterwards,  it  would  be  a  new  and  independent  undertak- 
ing, to  support  which  the  plaintiff  must  prove  a  new  consideration. 
I  think,  then,  that  tlie  Courts  of  New  York  and  Massachusetts,  in 
determining,  in  the  absence  of  all  proof  on  the  subject,  in  cases  like 
the  present,  that  the  indorsement  was  made  at  the  time  the  note  was 
made,  and  for  the  same  consideration,  have  adopted  a  sound  and 
salutary  rule,  perfectly  consistent  with  the  general  principles  of 
law,  and,  in  fact,  the  only  one  that  can  secure  to  the  parties,  in 
many,  if  not  in  most  instances,  the  rights  and  liabilities  intended 
by  them  ;  and  against  this  I  have  been  unable  to  find  a  solitary 
decision  or  dictum. 

If  I  have  not  failed,  then,  in  what  I  have  been  attempting  to 
show  was  the  time  and  consideration  of  this  indorsement,  then  it 
was  competent  for  the  payee  to  write  any  agreement  over  the 
names  of  the  defendants,  consistent  with  tlie  nature  of  the  instru- 
ment, and  the  agreement  of  the  parties  ;  ^  and  when  this  is  done, 
the  parties  are  liable  on  that  agreement,  in  the  same  way  that  they 
would  have  been,  had  they  filled  up  the  indorsement  themselves, 
at  the  time. 

The  inquiry  now  is,  what  was  the  nature  of  the  liability  they 
intended  to  assume  ?  This,  too,  in  the  absence  of  all  proof  on  the 
subject,  the  law  must  determine,  from  the  nature  of  the  case,  and 
the  circumstances  of  the  transaction  ;  while,  if  there  is  any  satis- 
factory proof,  that  must  control  and  determine  the  nature  and  extent 
of  the  liability.  I  have  already  said  that  the  defendants  here  cannot 
be  considered  indorsers,  because  the  paper  was  never  put  in-  circu- 
lation,^  but  has  always  remained  in  the  hands  of  the  original  payee, 
to  whom  alone  the  defendants  are  liable,  if  they  are  liable  at  all,  and  . 
to  wliom  an  indorser  can  never  be  liable,  where,  as  in  this  State, 
a  note  can  only  be  put  in  circulation  by  indorsement.  Tlie  payee 
of  a  note  here  must  be  the  first  indorser  ;  and  he,  as  first  indors- 

^  Chitty,  Bills,  257,  note  1 ;  Josselyn  v.  Ames,  3  Mass.  274,  and  cases  there  cited  ; 
Beckwith  v.  AngellfB  Conn.  315.  2  Chitty,  Bills,  44. 


CAMDEN   V.    m'KOT.  123 

er,  must  stand  between  all  subsequent  indorsers  and  danjrer  ;  so 
tbat  here,  if  we  treat  the  defendants  as  indorsers  at  all,  they  are 
second  and  third  indorsers,  so  that,  instead  of  their  being  liable  to 
the  payee,  he  in  fact  might  become  liable  to  them.  The  liability  of 
an  indorser  is  only  conditional  ;  while  I  presume  it  will  hardly  be. 
doubted,  the  liability  these  defendants  intended  to  assume  was 
absolute.  If  I  am  not  mistaken  in  the  presumptions  which  the  law- 
raises,  then  the  nature  of  the  defendants'  liability  is  precisely  the 
same  as  if  it  had  been  proved,  on  the  trial,  that  the  defendants  and 
Gray  put  their  names  to  this  paper  at  the  same  time,  and  for  the 
purpose  of  increasing  the  plaintiffs'  security,  and  that  in  considera- 
tion of  their  becoming  such  security,  the  plaintiffs  gave  the  credit, 
which,  without  their  names,  might  not  have  l)ccn  given.  Upon 
such  a  state  of  facts  1  hold,  and  upon  the  authority  of  the  cases 
referred  to  in  tlie  o[iinion  of  the  majority  of  the  Court  ;  that  these 
defendants  became  original  joint  and  several  promisors  with  Gray, 
for  the  payment  of  the  sum  of  money  in  this  note  mentioned,  and 
that  their  agreement  with  the  plaintiffs  was  absolute,  that  the  money 
should  be  paid  as  in  the  note  expressed  ;  and,  in  pursuance  of  such 
understanding,  the  plaintiffs  were  authorized  to  write  an  agreement 
over  the  defendants'  names,  so  as  to  charge  them  either  as  guaran- 
tors or  as  sureties  ;  this  being  perfectly  consistent  with  the  nature 
of  the  instrument,  and  the  agreement  of  the  parties,  which  was  that 
their  responsibility  should  be  absolute,  for  the  payment  of  the 
money,  and  not  conditional,  as  it  would  have  been,  had  they  been 
technical  indorsers.  In  this  case,  then,  I  hold  tliat  the  plaintiffs 
had  a  right  to  fill  up  this  contract  as  they  have  done  ;  to  wit,  "  For 
value  received,  we  jointly  and  severally  acknowledge  ourselves  as 
securities  of  John  Gray,  for  the  payment  of  the  within  note  at 
maturity."  The  plaintiffs  having  chosen,  as  they  had  a  right  to  do, 
to  treat  the  defendants  as  sureties  to  this  note,  the  authorities 
clearly  establish  that  they  are  liable  as  joint  and  several  makers  of 
the  note,  precisely  the  same  as  if  the  note  had  read,  '•  We  jointly 
and  severally  promise  to  pay,  the  first  as  principal,  and  the  other 
as  sureties,"  &c.,  and  their  names  had  all  been  put  to  the  bottom 
of  the  note. 

It  is  said,  however,  that  this  case  is  distinguishalilo  IVom  any  of 
the  cases  to  which  reference  has  been  made,  in  this,  that,  in  the 
case  before  us,  the  principal  and  sureties  were  all  charged  in  the 
same  suit,  whereas,  in  all  the  other  cases,  where  tile  person,  whose 


124  INDORSEMENT. 

name  is  found  on  the  back  of  the  note,  has  been  treated  as  original 
maker  of  the  note,  he  has  been  sued  separately.  But  this,  I  sub- 
mit, can  make  no  difference  in  principle,  and  is  attributable  rather 
to  accident  tlian  necessity.  If  all  can  be  treated  as  joint  and 
several  makers  of  the  note,  there  is  certainly  no  reason  why  all  may 
not  be  sued  jointly,  and  the  sureties  surely  ought  not  to  object  that 
their  principal  is  joined  with  them.  But  at  the  time  this  note  was 
offered  in  evidence,  and  rejected  by  the  Court,  Gray  was  not  a 
party  to  tlic  suit.  The  Court  had  permitted  the  plaintiffs  to  dis- 
miss their  suit  as  to  him,  and  proceed  as  to  the  present  defendants, 
so  that,  if  the  Court  was  correct  in  permitting  this  to  be  done,  the 
suit  then  stood  precisely  as  if  Gray  had  never  been  made  a  party 
to  it. 

A  majority  of  the  Court  differing  with  me  in  opinion  on  this 
question,  I  have  deemed  it  unnecessary  to  examine  the  question, 
whether  the  Covirt  below  was  correct  in  allowing  the  plaintiffs  to 
discontinue  as  to  Gray,  and  proceed  as  to  the  other  defendants ; 
while  this  would  have  been  an  important  inquiry,  had  a  majority  of 
the  Court  been  with  the  plaintiffs  on  the  other  points. 

Judgment  affirmed. 

This  case  has  been  followed  in  Illinois  by  Cushman  v.  Dement,  3  Scam.  497  ; 
Carroll  v.  Weld,  13  111.  682 ;  Klein  v.  Currier,  14  111.  237 ;  Webster  v.  Cobb, 
17  111.  459.  See  also  Watson  v.  Hurt,  6  Gratt.  633 ;  Clark  v.  Merriara,  25 
Conn.  576  ;  Perkins  v.  Catlin,  11  Conn.  213;  Beckwith  v.  Angell,  6  Conn.  315; 
Ranson  v.  Slierwood,  26  Conn.  437  ;  Schollenberger  v.  Nehf,  28  Penn.  State, 
189 ;  Fegenbush  v.  Lang,  28  Penn.  State,  193,  and  the  cases  infra. 


President,  Directors,  &c.,  of  The  Union   Bank  of  Wey- 
mouth   AND    BrAINTREE    V.    TiLLEY    WiLLIS. 

(8  Metcalf,  504.     Supreme  Court  of  Massachusetts,  October,  1844.) 

Indorsement  by  one  not  a  party.  —  If  a  person  not  a  party  to  a  note  place  his  name  upon 
the  back  of  it  at  the  time  it  was  made,  he  is  liable  as  maker  ;  and  when  the  note 
is  in  the  hands  of  a  bona  fide  holder,  the  presumption  in  the  absence  of  proof  is 
that  the  name  was  placed  upon  it  at  the  time  it  was  executed. 

Assumpsit  by  the  indorsees  against  the  indorser  of  a  promis- 
sory note  of  the  following  tenor :  "  August  8th,  1843.     For  value 


UNION   BANK    OF    WEYMOUTH    AND    BRAINTREE   V.    WILLIS.        125 

received,  I  promise  Tilley  Willis,  to  pay  hira,  or  order,  $350,  in 
four  mojitlis  from  date.  T.  D.  Thomijsoii."  On  the  back  was  the 
name  of  B.  L.  Mirick  &  Co.,  and  under  that  name  was  the  name 
of  the  defendant,  both  indorsements  being  in  blank. 

At  the  trial  before  the  Chief  Justice,  the  plaintiffs'  cashier  tes- 
tified that  they  discounted  the  note  for  Thompson,  and  that,  when 
it  was  discounted,  the  names  stood  on  the  note  as  they  now  do. 
There  was  no  evidence  that  the  note  was  presented  to  Mirick  & 
Co.  for  payment ;  but  there  was  evidence  tending  to  show  that 
notice  of  dishonor  was  given  to  them,  as  indorsers,  as  well  as  to 
the  defendant. 

The  defendant  contended  that  Mirick  &  Co.  were  to  be  considered 
as  joint,  or  joint  and  several,  promisors,  and  that  the  defendant 
was  not  responsible  as  indorser,  without  proof  of  presentment  to 
them  for  payment.  But  it  was  ruled  that  they  were  not  to  be  so 
considered  as  promisors,  as  that  presentment  of  the  note  to 
them,  and  demand  of  payment  of  them,  were  necessary  to 
charge  the  defendant.  A  verdict  was  returned  for  the  plaintiffs, 
which  is  to  be  set  aside,  and  a  new  trial  granted,  if  the  ruling  was 
incorrect. 

Hubbard,  J.  It  is  admitted  that  the  note  was  not  presented  for 
payment  to  Mirick  <fe  Co. ;  and  the  question  is,  whether  the  omis- 
sion to  do  it  discharges  the  indorser. 

If  the  subject  now  brought  before  us  were  a  new  one,  we  should 
hesitate  in  giving  countenance  to  such  an  irregularity,  as  to  hold 
that  any  person  whose  name  is  written  on  the  back  of  a  note 
should  be  chargeable  as  a  ])romisor.  We  should  say,  that  a  name 
written  on  the  paper,  which  name  was  not  that  of  the  payee,  nor 
following  his  name  on  his  having  indorsed  it,  was  either  of  no 
validity  to  bind  such  individual,  because  the  contract  intended  to 
be  entered  into,  if  any,  was  incomplete  or  within  the  statute  of 
frauds ;  or  that  he  should  be  treated,  by  third  parties,  simply  as  a 
second  indorser  ;  leaving  the  payee  and  himself  to  settle  their 
respective  liabilities,  according  to  their  own  agreement. 

But  the  validity  of  such  contracts  has  been  so  long  established, 
and  the  coflrse  of  decisions,  on  the  whole,  so  uniform,  that  we 
have  now  only  to  apply  the  law,  as  it  has  been  previously  settled, 
in  order  to  decide  the  present  suit. 

The  first  case' of  this  description,  of  which  any  mention  is  made 


126  INDORSEMENT. 

in   the  reports,  is  that  of  Humner  v.  Parsons,  tried  before  this 
Court  in  Lincohi  county,  July  term,  1801.     The  facts  were  these : 
"  Parsons  wrote  his  name  on  a  paper  and  gave  it  to  John  Brown, 
but  there  was  no  evidence  of  the  intent,  or  of  any  connection  in 
business  between  them.     Brown  made  a  note  on  the  other  side, 
payable  to  Jesse  Sumner  or  order,  on  demand,  with  interest,  and 
signed  it,  and  thirty  days  after  made  a  partial   payment  on   it. 
Sumner  then  got  a  writing  in  these  words  over  the  name  of  Par- 
sons :  '  In  consideration  of  the  subsisting  connection  between  me 
and  my  son-in-law,  John  Brown,  I  promise  and  engage  to  guaranty 
the  payment  of   the   contents   of  the  within    note,  on    demand.' 
And  he  sued  Parsons,  declaring  on  the  promise,  specially  stating 
it,  and  the  note,  but  did  not  aver  any  demand  on  John  Brown,  or 
notice  to  Parsons.     In  two  trials  in  the   Supreme  Judicial  Court, 
it  was  held  that  Parsons  was  liable,  and  that  Sumner  had  a  right 
to  fill  the  indorsement  so  as  to  make  Parsons  a  common  indorser 
of  the  note,  with  the  rights  and  obligations  of  such,  or  a  guar- 
antor, warrantor,  or  surety,  liable  in  the  first  instance,  and  in  all 
events,  as  a  joint  and  several  promisor  would  be."     Am.  Prec. 
Declarations,  113.      Mr.  Dane,  who  cites  it  in  his  Abridgment, 
Vol.  I.  416,  417,  remarks,  that  "  this   case  was  carried  as  far  as 
any  case  had  gone,  and  on   the  review  the  Court  was  not  unan- 
imous ;  and  it  has  since  been  questioned ;  "  and  we  have  no  doubt 
with  good  reason  ;  for  the  holder  of  the  paper,  having  himself  set 
out  the  contract  by  the  words  written   over  the  name  of  the  de- 
fendant, should  have  been  held  by  its  terms,  and  the  legal  effect 
should  have  been  given  to  the  material  word  "  guaranty."     And  in 
that  view  of  the  contract,  the  promise  of  Parsons  was  only  to  pay 
after  a  demand  upon  Brown  for  payment,  and  a  refusal  by  him, 
and  of  which  Parsons   should  have  had  notice.     But  the  Court 
must  have  construed  the  writing  as  constituting  him  an  original 
promisor,  and  so  bound,  absolutely,  without  notice.     And  in  our 
apprehension,  the  writing  of  the  guaranty  over  the  name  of  Par- 
sons ought  not  to  have  been  held  as  an  act  obligatory  on  him ;  but 
he  should  have  been  treated,  if  held  at  all,  as  an  indorser  of  the 
note,  and,  as  such,  subject  to  the  liabilities,  and  entitled   to  the 
notice  of  an   indorser.     See   Beckwith  v.  Angell,  6 'Conn.   325, 
opinion  of  Hosmer,  C.  J. 

The  next  case  which  came  before  the  Court  was  that  of  Josselyn 
V.  Ames,  3  Mass.  274.     By  the  report,  it  appears  that  John  Ames 


UNION    BANK    OF    WEYMOUTH    AND    BRAINTREE    V.    WILLIS.        127 

was  indebted  on  note  to  the  plaintiff,  who  demanded  security,  and 
Jolin  ofTcred  his  brother  Oliver  as  surety,  who  was  accepted. 
John  then  made  a  note  to  Oliver,  not  negotiable,  and  Oliver  put 
his  name  on  the  back  in  blank.  The  plaintiff  received  it  and  gave 
up  his  formeir  note,  and  afterwards  wrote  over  the  defendant's 
name  the  same  words  as  in  Sumner  v.  Parsons,  with  this  addi- 
tional clause :  "  and  in  consideration  of  receiving  from  Elisha 
Jossclyn  a  note  of  the  said  John  of  the  same  amount."  The 
Court  held  that  the  plaintiff  could  not  recover  in  that  action,  but 
might  cancel  the  words  written,  and  sul)stitute,  "  for  value  re- 
ceived, I  undertake  to  pay  the  money  within  mentioned  to  Elisha 
Josselyn,"  and,  upon  such  an  indorsement,  might  maintain  an 
action  upon  the  facts  reported. 

In  what  light  the  Court  held  the  defendant,  does  not  distinctly 
appear  ;  but  we  presume  as  an  original  promisor,  from  the  manner 
in  which  the  case  of  Sumner  v.  Parsons  is  spoken  of.  "  The  guar- 
antor in  that  case,"  they  say,  "  was  not  the  promisee,  but  a 
stranger,  who  warranted  the  payment  to  him.  He  cannot  himself 
warrant  to  a  third  person  payment  of  a  note  made  payable  to  him- 
self and  not  negotiable." 

Tiie  next  reported  case  is  that  of  Hunt  v.  Adams,  5  Mass.  358, 
which  was  assumpsit  on  a  note  given  by  Cliaplin  to  Bennet,  under 
which  the  defendant  wrote,  "  I  acknowledge  myself  holden  as 
surety  for  the  payment  of  the  demand  of  the  above  note.  Wit- 
ness my  hand.  Barnabas  Adams."  This  cause  was  much  con- 
sidered, and  the  Court  ruled  that  the  defendant,  Adams,  was  to  be 
charged  as  a  promisor,  and  that  his  holding  himself  as  surety  did 
not  abridge  or  affect  the  plaintiff's  rights,  but  only  was  evidence, 
as  between  the  promisor  and  himself,  that  he  had  signed  for  his 
accommodation.  Other  cases  between  the  same  parties,  on  similar 
notes,  afterwards  arose,  and  were  decided  in  the  same  manner. 
6  Mass.  519. 

Immediately  after,  occurred  the  case  of  Carver  v.  Warren,  5 
Mass.  545.  That  was  on  a  note  made  by  one  Cobb  to  the  plain- 
tiff, and  on  the  back  of  which  the  defendant  wrote  his  name  ;  and 
the  plaintiff  filled  the  indorsement,  and  declared  upon  it  as  his 
promise.  The  defendant  demurred  to  the  declaration,  on  the 
ground  that  this  was  but  a  promise  to  pay  the  debt  of  another, 
and  was  void  for  want  of  consideration.  But  the  Court  held  that, 
by*  the  pleadings,  each  promised  to  pay  the  same  sum,  and  that  the 


128  •  INDORSEMENT. 

defendant's  promise  did  not  import  any  guaranty  or  collateral 
stipulation  ;  and  that  if  the  defendant  had  indorsed  as  guarantor, 
and  the  present  indorsement  was  filled  up  without  his  consent,  or 
any  authority  from  him,  he  should  have  pleaded  the  general  issue, 
and  on  the  trial  he  might  have  availed  himself  of  this  defence. 
And  so  the  plaintiff  had  judgment  on  the  demurrer. 

The  case  of  Hemmenvvay  v.  Stone,  7  Mass.  58,  followed.  There 
the  note  ran,  "  I  promise  to  pay  F.  M.  Stone  or  order,"  and  was 
signed  B,  Chadwick ;  and  below  was  signed  by  the  defendant. 
The  Court  held  that  it  was  a  joint  and  several  note,  like  the  case 
of  March  v.  Ward,  Peake's  Cas.  130.  See  also  Bayley,  Bills 
(2d  Am.  ed.),  44. 

The  next  case  was  White  v.  Howland,  9  Mass.  314,  which  was 
on  a  note  payable  by  one  Taber  to  the  plaintiff,  and  on  the  back 
of  it  was  written,  "  for  value  received,  we  jointly  and  severally 
undertake  to  pay  the  money,  within  mentioned,  to  the  said  Wil- 
liam White.  I.  Coggeshall,  Jr.  Jno.  H.  Howland."  The  Court 
held  that  this  undertaking  was  within  the  principle  settled  in 
Hunt  V.  Adams,  and  was  the  same  as  if  the  party  had  signed  his 
name  on  the  face  of  it ;  and  that  he  was  well  charged  as  a  several 
original  promisor. 

The  case  of  Moies  v.  Bird,  11  Mass.  436,  which  succeeded,  is 
substantially  like  the  present.  A  note  was  made  to  the  plaintiff, 
and  signed  by  Benjamin  Bird,  and  the  defendant  signed  his  name 
in  blank  on  the  back  of  the  note.  The  Court  say,  the  defendant 
"  leaves  it  to  the  holder  of  the  note  to  write  any  thing  over  his 
name  which  might  be  considered  not  to  be  inconsistent  with  the 
nature  of  the  transaction.  The  holder  chooses  to  consider  him 
as  a  surety,  binding  himself  originally  with  the  principal ;  and  we 
think  he  has  a  right  so  to  do.  If  he  was  a  surety,  then  he  may  be 
sued  as  an  original  promisor." 

In  the  case  of  Baker  v.  Briggs,  8  Pick.  130,  which  was  an 
action  to  recover  the  amount  of  a  promissory  note  made  by  one 
Eyan  to  the  plaintiff,  the  name  of  the  defendant,  Briggs,  was 
written  on  the  back  of  it,  and  the  Court  say  that,  according  to 
several  decisions,  it  was  right  to  declare  against  him  as  promisor, 
though  he  stood  in  the  relation  of  surety  to  Ryan,  who  signed  the 
note  on  the  face  of  it. 

The  case  of  Chaffee  v.  Jones,  19  Pick.  260,  was  assumpsit  on  a 
note  signed  by  Israel  A.  Jones,  as  principal,  and  Eber  Jones  and 


UNION   BANK    OF   WEYMOUTH    AND    BRAINTREE   V.    WILLIS.        129 

E.  Owen  and  Sons,  as  sureties,  l)y  which  tliey  jointly  and  severally 
promised  to  pay  the  president,  &c.,  of  the  Housatonic  Bank,  or 
their  order ;  and  the  plaintiff  put  his  name  on  the  back  of  the 
note,  in  blank.  The  jduintiff  was  called  upon,  after  the  neglect 
of  the  makers,  and  he  paid  it  to  the  bank.  The  Court  held  that 
where  one,  not  a  jjromisor,  nor  indorser,  puts  his  name  on  a  note, 
meaning  to  make  himself  liable  with  the  promisor,  he  is  to  be 
regarded  as  a  joint  promisor  and  surety.  He  is  not  lial)le  as 
indorser,  for  the  note  is  not  negotiated,  nor  a  title  made  to  it, 
through  his  indorsement;  nor  as  guarantor,  there  being  no  dis- 
tinct consideration  ;  but  he  means  to  give  security  and  validity  to 
the  note  by  his  credit  and  promise,  and  it  is  immaterial,  for  this 
purpose,  on  what  part  of  the  note  he  places  his  name.  So  in 
Austin  V.  Boyd,  24  Pick.  64,  where  the  defendant's  name  was,  in 
like  manner,  on  the  note,  it  was  held  that  the  party,  by  thus  put- 
ting his  name  on  the  back,  makes  himself  an  original  promisor. 
He  intends  by  it  to  give  credit  to  the  note. 

The  case  of  Samson  v.  Thornton,  3  Met.  275,  was  assumpsit  on 
a  note  made  by  Benjamin  Russell  to  the  plaintiff,  and  was  indorsed 
by  the  defendant  Thornton  ;  and  the  declaration  charged  him  as 
an  original  ])romisor.  The  Court  there  ruled  that  the  defendant, 
not  being  the  payee  of  the  note,  must  be  held  to  stand  in  the 
character  of  an  original  joint  promisor  and  surety. 

The  case  of  Richardson  v.  Lincoln,  5  Met.  201,  is  of  the  same 
type.  There  the  Court  held  that  the  defendant,  not  being  payee, 
but  having  put  his  name,  in  blank,  on  the  note,  must  be  consid- 
ered as  an  original  promisor  and  surety,  if  he  put  it  on  simulta- 
neously with  the  promisor,  as  an  original  contractor.  See  also 
Sumner  v.  Gay,  4  Pick.  311. 

The -same  questions  have  arisen  in  New  York,  in  various  cases, 
and  have  been  decided  in  a  similar  manner.  Tiiey  will  be  found 
cited  in  Story  on  Notes,  §§  59,  472-480,  where  the  subject  is  fully 
discussed,  and  the  authorities  examined. 

To  hold  the  party,  however,  as  promisor,  where  the  name  alone 
is  written,  it  must  appear  that  he  made  the  promise  at  the  time 
when  the  note  itself  was  made ;  otherwise,  he  may  cither  not  be 
chargeable  at  all,  or  be  chargeable  as  surety  or  guarantor,  accord- 
ing to  the  facts  proved.  Carver  v.  Warren,  5  Mass.  545  ;  Tenney 
V.  Prince,  4  Pick.  3cS5  ;  Baker  f.  Briggs,  8  Pick.  122, 130  ;  Oxford 
Bank  v.  Haynes,  8  Pick.  423;  Story  ou  Notes,  §§   473,   474; 

9 


130  INDORSEMENT. 

Beckwith  v.  Angell,  6  Conn.  315.  But  that  the  promise  was 
made  at  the  same  time  with  the  note,  is  a  fact  which  is  to  be 
presumed  when  the  note  is  in  the  hands  of  a  bona  fide  holder,  and 
nothing  is  shown  to  the  contrary.  And  in  the  present  case,  the 
note  was  offered  to  the  plaintiffs  for  discount,  by  the  maker  him- 
self, with  the  names  of  Mirick  &  Co.  and  Willis  on  the  back  of  it; 
showing  it,  therefore,  to  have  been  an  original  undertaking  on 
their  part. 

It  was  contended,  in  the  argument,  that  Mirick  &  Co.  were 
merely  sureties,  and  tliat  the  plaintiffs  had  a  right  to  treat  them 
as  such,  and  therefore  were  not  bound  to  demand  payment  of 
them  as  makers,  as  a  necessary  step  to  enable  them  to  charge  the 
indorser  ;  the  relation  of  promisor,  surety,  and  guarantor  being 
distinct.  There  is,  unquestionably,  a  distinction  between  these 
several  undertakings  ;  and  always  so  in  regard  to  a  mere  guarantor. 
But  as  to  the  subsisting  relations  between  a  principal  and  surety, 
they  rarely  affect  the  contract  between  the  creditor  and  surety. 
A  man  may  be  equally  a  surety  and  an  original  promisor ;  as 
where  the  promise  is,  I,  A  B,  as  principal,  and  I,  C  D,  as  surety, 
promise  to  pay ;  or  where  the  party  signs,  and  adds  to  his  name 
the  word  surety.  This  does  not  make  him  less  a  promisor.  It 
only  defines  the  relation  between  him  and  his  co-promisor ;  and  as 
promisor,  the  necessity  of  a  presentment  to  him  is  not  dispensed 
with,  if  the  intention  of  the  holder  of  the  note  is  to  charge  the 
indorser.  It  is  not  for  the  holder  to  choose  in  what  character  he 
will  consider  the  party  who  has  put  his  name  on  the  note  ;  but  he 
must  treat  him  as  sustaining  that  legal  relation  which  the  facts 
establish.  If  he  put  his  name  on  the  note  at  the  time  it  was 
made,  like  the  case  at  bar,  he  is  a  promisor  ;  if  after  the  making 
of  the  paper,  he  is  a  surety  or  a  guarantor,  according  to  the  agree- 
ment upon  which  he  gives  his  signature.  The  fixing  of  the  rela- 
tion of  the  party,  when  he  enters  into  the  contract,  is  necessary 
for  the  protection  of  holders,  and  for  guarding  the  rights  of  in- 
dorsers,  whose  liability  is  conditional.  If  it  were  held  otherwise, 
1  do  not  well  see  how  such  contracts  could  be  supported  against 
the  objection  of  being  void  as  within  the  statute  of  frauds.  And, 
as  it  is,  I  consider  these  engagements  rather  as  exceptions  to  the 
statute,  than  in  any  other  light,  and  as  growing  out  of,  or  rather 
ingrafted  upon,  the  law  merchant  applicable  to  regularly  drawn 
bills  of  exchange  and  promissory  notes. 


HALL   V.    NEWCOMB.  131 

Upon  this  view  of  the  law,  as  drawn  from  the  various  cases,  we 
consider  Mirick  <t  Co.  to  have  been  joint  and  several  j)romi8ors 
with  Thompson,  and  liable  in  like  manner  with  him. 

This  case  is  f'ullowiMl  ih  Massachusetts  by  Ilawkcs  v.  Pliillips,  7  Gray,  284, 
and  by  Draper  v.  Weld,  l.j  (jiray,  580;  the  latter  holding  evidence  to  show  that 
the  third  party  put  his  name  on  the  note  witli  authority  to  fill  the  blank  with  a 
guaranty,  inadmissible  against  one  who  took  the  paper  without  notice.  But  if 
the  payee  afterwards  indorse  above  the  signature  of  the  third .  party,  the  latter 
then  becomes  an  ordinary  itidorser,  and  his  liability  cannot  be  changed  by  parol. 
Clapp  V.  Rice,  13  Gray,  403.  See  Howe  v.  Merrill,  5  Gush.  80;  Vore  v.  Ilurst, 
\'.\  Ind.  551.  If  the  signature  of  such  person  is  written  subsequently  to  the 
execution  of  the  paper,  and  as  an  independent  transaction,  the  signer  is  a 
guarantor.  Benthall  c.  Judkins,  13  Met.  265 ;  Irish  v.  Cutter,  31  Maine,  536. 
See  preceding  and  following  cases. 

See  also,  to  the  same  effect,  Wetherwax  v.  Paine,  2  Mich.  555 ;  Lewis  v.  Har- 
vey, 18  Mo.  74;  Schneider  v.  Schiffman,  20  Mo.  571;  Childs  v.  Wyman,  44 
Maine,  433;  ^lartin  t\  Boyd,  UN.  Hamp.  385 ;  Carpenter  i\  Oaks,  10  Rich, 
Law,  17.  In  McCiuire  v.  Bosworth,  1  La.  An.  248,  it  is  held  that  such  third 
person  binds  himself  as  surety. 


Hall  v.  Newcomb. 

(7  Hill,  41G.     Court  of  Errors  of  New  York,  December,  1844.) 

Indorsemcul  by  one  not  a  juirty.  —  If  one  who  is  not  a  party  to  a  promissory  note  place 
his  name  upon  the  back  thereof,  the  payee  not  having  indorsed  it,  he  is  to  be  re- 
garded as  an  indorser,  and  not  as  maker  or  guarantor. 

The  case  is  stated  in  the  opinion  of  the  Court. 

The  Chancellor.  In  April,  1840,  Peter  Farmer  made  a  prom- 
issory note  for  two  hundred  and  fifty  dollars,  payable  to  Samuel 
Hall,  the  plaintiff,  or  his  order,  on  demand,  with  interest ;  on  the 
back  of  which  note  Newcomb,  the  defendant,  indorsed  his  name  in 
blank,  at  the  request  of  Farmer,  to  enable  him  to  get  the  money 
on  the  note.  In  November,  1841,  Hall,  without  having  demanded 
payment  of  the  note  from  the  maker,  or  given  notice  of  non-pay- 
ment to  the  indorser,  brought  a  suit  against  the  indorser  alone,  to 
recover  the  amount  of  the  note  and  interest.  And  the  question 
for  our  consideration  is,  whether  a  person  who  ])uts  his  name  in 
blank  u})on  the  back  of  a  negotiable  note,  which  is  drawn  in  such 


132  INDORSEMENT. 

a  form  that  lie  may  be  charged  as  indorser  in  the  usual  mode,  if  a 
demand  is  made  and  notice  of  non-payment  given,  can  be  charged 
as  a  general  surety,  without  such  demand  and  notice,  by  parol 
evidence  merely.  In  the  case  of  Prosser  v.  Luqueer,  which  was 
decided  by  this  Court  in  December  last,  I  expressed  the  opinion 
that  he  could  not.  See  4  Hill,  420.  Tlie  reporter  misunderstood 
my  opinion  in  that  case,  however,  if  he  supposed  I  intended  to 
intimate  that  I  thought  the  holder  of  the  note,  which  was  recovered 
on  there,  could  have  maintained  a  joint  action  against  the  makers 
and  the  indorser  of  the  note  in  a  count  charging  them  all  as  joint 
and  several  makers  of  the  note.  The  joint  action  was  sustained 
against  them,  in  that  case,  upon  the  common  money  counts,  under 
the  statute,  as  makers  and  indorsers,  and  the  service  of  a  copy  of 
the  note  with  the  declaration.  But  as  the  indorser  had  waived 
notice  of  non-payment,  and  had  absolutely  guaranteed  the  payment 
of  the  money,  for  value  received,  I  thought,  upon  the  authority  of 
the  decisions  there  referred  to,  his  guaranty  w^as  itself  a  several 
promissory  note  payable  to  the  bearer  of  the  note  written  by  Edson 
and  Arnold  on  the  other  side  of  the  paper ;  not  tliat  he  could  be 
considered  as  having  made  a  joint  promise  with  them. 

The  courts  have  gone  far  enough  in  repealing  the  statute  to 
prevent  frauds  and  perjuries,  by  introducing  parol  evidence  to 
charge  a  mere  surety  for  the  principal  debtor,  by  showing  that  his 
written  agreement  means  something  else  than  what  upon  its  face 
it  purports  to  mean.  And  I  fully  concur  in  the  opinion  expressed 
by  Mr.  Justice  Branson,  in  Seabury  v.  Hungerford,  2  Hill,  80,  that 
where  a  man  writes  his  name  in  blank  upon  the  back  of  a  nego- 
tiable promissory  note,  he  only  agrees  that  he  will  pay  the  note  to 
the  holder,  on  receiving  due  notice  that  the  maker,  upon  demand 
made  at  the  proper  time,  has  neglected  to  pay  it.  Mere  proof  that 
he  indorsed  the  paper  to  enable  the  maker  to  raise  money  on  it, 
does  not  change  the  nature  of  his  legal  liability  as  indorser,  where 
the  note  is  in  the  hands  of  a  bona  fide  holder  for  a  good  considera- 
tion. Such  was  the  whole  effect  of  the  parol  proof  in  this  case. 
And  for  the  courts  to  allow  proof  by  parol  to  charge  a  mere  surety, 
beyond  the  legal  effect  of  his  written  blank  indorsement  on  such 
paper,  would  bring  them  in  direct  conflict  with  the  provisions  of 
the  statute  of  frauds.     2  Rev.  Sts.  135,  §  2,  sub.  2. 

Here  there  was  no  difficulty  in  charging  Newcomb  as  indorser 
of  the  note,  in  favor  of  Hall,  from  whom  it  appears  the'  maker 


HALL    V.    NEWCOMB.  133 

intended  to  get  the  $250  to  enable  him  to  take  up  a  former  note. 
It  docs  not  appear  in  this  case  whether  the  former  note  had  been 
protested,  so  as  to  charge  Newcomb  as  indorser,  or  not ;  or  who 
was  the  holder  of  that  note.  All  that  appears  is,  that  Newcomb 
knew  that  Hall  would  lend  Farmer  the  $250  to  enable  him  to  take 
it  up  ;  and  that  Newcomb  indorsed  this  note  for  Farmer, "fls  a  mere 
accommodation  indorser,  when  the  name  of  Hall,  to  whose  order 
the  note  was  made  payable,  was  not  indorsed  thereon.  Where  a 
note  is  made  payable  to  an  individual  or  his  order,  and  is  indorsed 
by  iiim  in  blank,  and  in  that  situation  is  presented  to  anotlier  per- 
son for  his  accommodation  indorsement,  who  indorses  it  accord- 
ingly, the  legal  effect  of  his  indorsement  is  to  make  him  liable  in 
the  character  of  second  indorser  merely  ;  and  he  can  in  no  event 
be  made  legally  liable  to  the  first  indorser.  And  if  the  maker,  or 
the  first  indorser,  or  any  other  person  into  whose  hands  the  note 
might  subsequently  come,  should,  without  the  consent  of  the 
second  indorser,  fill  up  the  first  indorsement  specially,  without 
recourse  to  such  first  indorser,  so  as  to  deprive  the  second  in- 
dorser of  his  remedy  over  in  case  he  should  be  compelled  to  pay 
the  note,  it  would  be  a  gross  fraud  upon  him,  if  not  a  forgery. 
But  when  such  a  note  is  presented  to  the  accommodation  indorser, 
and  is  indorsed  by  him  without  having  been  previously  indorsed 
by  the  person  to  whose  order  tiie  same  is  made  payable,  the  latter 
may,  at  tiie  time  he  puts  his  indorsement  upon  it,  indorse  it 
specially  without  recourse  to  himself;  so  as  to  leave  the  second  in- 
dorser lial)le  to  any  person  into  whose  hands  it  may  subsequently 
come  for  a  good  consideration,  and  without  any  remedy  over 
against  the  first  indorser.  Or,  if  tbe  ol)ject  of  the  second  indorser 
was  to  enable  tiie  drawer,  as  in  tliis  case,  to  obtain  money  from 
the  payee  of  the  note,  upon  the  credit  of  such  accommodation 
indorser,  he  may  indorse  it  in  the  same  way  without  recourse  ; 
and  by  such  indorsement  may  cither  make  it  payable  to  tlie  second 
indorser,  or  to  tlic  Ijcarer.  And  such  original  payee  may  then,  as 
the  legal  holder  and  owner  of  the  note,  recover  thereon  against 
such  second  indorser,  upon  a  declaration  stating  such  s|)ecial  in- 
dorsement by  him,  and  subsequent  indorsement  of  the  note  to 
him  by  tiie  second  indorser.  Or  ho  may  recover  on  the  common 
money  counts,  under  tiie  statute,  by  serving  a  copy  of  the  note 
and  of  the  indorsements  so  made  thereon,  with  his  declaration. 
But  as  the  second  indorser,  if  he  has  not  waived  notice  of  the 


134  INDORSEMENT. 

demand  of  and  non-payment  by  the  maker,  cannot  be  made  liable 
upon  his  indorsement  without  proof  of  such  demand  and  notice, 
the  plaintiff  at  the  trial  must  prove  the  same,  or  he  cannot  re- 
cover. 

In  the  case  of  Herrick  v.  Carman,  12  Johns.  159,  the  payees  of 
the  note,Vho  had  received  it  on  the  credit  of  Herrick,  had  them- 
selves made  a  general  indorsement  of  the  note,  instead  of  a 
restricted  one ;  so  that  if  Carman  recovered  against  Herrick  who 
had  been  duly  charged  as  indorser,  the  original  payees  would  be 
liable  to  him  as  first  indorsers.  And  a  recovery  by  Carman  would 
therefore,  have  rendered  them  liable,  contrary  to  their  agreement 
with  him.  And  in  Tillman  v.  Wheeler,  17  Johns.  326,  the  payee 
of  the  note  attempted  to  charge  the  indorser  as  upon  a  general 
guaranty,  without  having  made  him  liable  as  indorser  by  a  demand 
of  the  makers  of  the  note,  and  notice  of  its  non-payment.  Both 
cases,  therefore,  were  rightly  decided.  The  remarks  of  the  judges 
as  to  the  right  of  the  Court  to  turn  an  indorsement  into  an  abso- 
lute guaranty,  upon  a  different  state  of  facts,  were  uncalled  for, 
and  are  therefore  not  entitled  to  the  weight  of  judicial  decisions 
in'  opposition  to  the  provisions  of  the  statute  of  frauds.  The 
decision  of  the  majority  of  the  Supreme  Court  in  the  case  of  Nel- 
son V.  Dubois,  13  Johns.  175,  was  clearly  wrong.  The  note  in 
that  case  being  payable  to  Nelson  or  bearer,  the  defendant  might 
have  been  charged  as  the  indorser  of  the  note  without  any  indorse- 
ment by  Nelson.  For  where  a  note  payable  to  bearer  is  indorsed 
by  another  person  generally,  the  person  who  thus  puts  his  name 
upon  it  is  liable  as  an  indorser,  and  may  be  charged  as  such  upon 
due  notice  to  him  of  demand  and  non-payment  of  the  note  by  the 
maker.  Hill  v.  Lewis,  Skin.  410  ;  Bank  of  England  v.  Newman, 
1  Ld.  Raym.  442 ;  Eccles  v.  Ballard,  2  McCord,  388 ;  Brush  v. 
The  Administrators  of  Reeves,  3  Johns.  439, 440.  It  was  improper 
therefore  to  allow  parol  evidence  to  enable  the  holder  of  the  in- 
dorsement to  turn  a  conditional  liability,  as  indorser,  which,  the 
plaintiff  had  lost  the  benefit  of  by  his  neglect  to  give  notice  of 
demand  and  non-payment,  into  an  absolute  contract  to  pay  the 
note,  in  disregard  of  the  provisions  of  the  statute  of  frauds.  In 
declaring  specially  upon  such  an  indorsement,  the  proper  course 
is  to  set  out  the  making  of  the  note,  the  special  indorsement 
thereof  by  the  plaintiff  to  tlie  defendant,  where  it  is  payable  to 
order,  or  the  delivery  to  him  where  it  is  payable  to  bearer  or  to 


'  HALL    V.    NEWCOMB.  13/) 

the  plaintiff  or  bearer  ;  and  then  to  state  the  subsequent  indorse- 
ment of  the  note  by  the  defendant,  by  which  he  ordered  and 
appointed  the  contents  thereof  to  be  paid  to  the  plaintiff,  and  the 
demand  of  the  maker  of  the  note  and  notice  of  non-payment  duly 
given  to  the  defendant  as  such  indorser.  The  erroneous  decision 
of  the  majority  of  the  Judges  of  the  Supreme  Court  in  Nelson  v. 
Dubois  not  having  received  the  sanction  of  this  Court  and  being 
in  conflict  with  the  statute  of  frauds,  it  is. not  too  late  to  declare 
the  law  in  conformity  to  the  statute,  as  a  majority  of  the  judges 
of  the  present  Supreme  Court  have  done  in  tliis  case.  I  conclude, 
therefore,  that  the  decision  of  the  common  pleas  in  this  case  was 
right,  and  that  the  judgment  of  the  Sujjremc  Court  sustaining 
that  decision  was  not  erroneous,  and -should  be  affirmed. 

Senators  Barloiv  and  Wright  delivered  opinions  in  favor  of 
affirming  the  judgment  of  the  Supreme  Court,  concurring  in  the 
view  taken  of  the  case  by  the  Chancellor. 

Bockee,  Senator.  It  appears  very  satisfactorily  from  the  testi- 
mony in  this  cause,  and  the  nature  of  the  transaction,  that  the 
parties  intended  to  give  a  note  or  security  on  which  Newcorab,  as 
well  as  Farmer,  should  be  liable  to  the  plaintiff  for  the  money  to 
be  advanced  by  him.  They  failed  in  effecting  that  object  in  the 
usual  form  of  an  indorsed  promissory  note,  probably  from  mistake 
or  ignorance  of  the  proper  form  of  negotiable  instruments.  In  the 
form  in  which  the  note  is  presented  to  us,  Xewcomb  cannot  be 
treated  as  an  indorser.  An  indorser  is  one  who,  by  his  signature, 
transfers  the  legal  interest  in  the  note.  From  sucli  indorsement, 
whether  tiie  signature  is  on  the  back  or  the  face  of  the  note,  result 
the  liabilities  and  privileges  of  a  commercial  indorser.  Newcomb 
had  no  such  legal  interest  in  the  note,  and  could  not  make  such  an 
indorsement,  because  the  note  is  payable  to  Hall,  and  is  not  indorsed 
by  him.  Newcomb  can  never  be  made  liable  to  Hall  as  indorser. 
The  payee  of  a  note  cannot  maintain  an  action  against  the  in- 
dorser. So  it  was  ruled  in  the  case  of  Herrick  r.  Carman,  10 
Johns.  224,  where  the  indorsee  failed  in  maintaining  an  action 
against  the  second  indorser,  because  it  was  proved  that  he  was  the 
mere  agent  of  the  payee  and  first  indorser.  Taking  this  note  in 
the  precise  form  in  which  it  is,  payable  to  Hall,  with  the  signature 
of  Newcomb  on  the  back  of  it,  and  laying  aside  all  the  other  tes- 
• 


136  INDORSEMENT. 

timony  in  the  cause,  it  would  be  the  case  of  Herrick  v.  Carman 
above  cited,  and  Newcomb  could  not  be  made  liable  in  any  form. 
Had  Newcomb  put  his  name  on  a  note  designed  for  discount  at 
a  bank  or  otherwise,  intending  to  be  the  second  indorser,  and 
knowing  that  his  indorsement  would  be  inoperative  until  the  note 
was  indorsed  by  the  payee,  he  would  then  be  strictly  within  the 
rule  applicable  to  a  commercial  indorsement,  and  entitled  to  its 
privileges.  The  evidence  in  this  case,  however,  excludes  such  a 
snpposition.  It  is  very  clear  that  Newcomb  put  his  name  on  the 
note,  knowing  that  the  money  was  to  be  obtained  from  Hall,  the 
payee.  The  inference  is  very  strong,  at  least  a  jury  might  think 
so,  that  Newcomb  intended  to  be  surety  for  the  money  so  advanced 
by  Hall  to  Farmer,  and  did  not  intend  to  make  himself  the  in- 
dorser of  a  negotiable  promissory  note.  The  signature  of  New- 
comb is  a  nullity,  unless  he  is  liable  as  guarantor,  or  on  an  original 
undertaking  as  surety,  to  pay  the  note.  It  is  immaterial  in  which 
character  he  is  made  liable.  Here  we  may  safely  rest  upon  the 
principle  laid  down  by  the  Supreme  Court  in  the  decision  of  this 
cause,  that  such  a  construction  should  be  given  to  the  contract  as 
will  prevent  its  failure  altogether.  The  maxim  ut  magis  res  valeat 
quam  pereat,  quoted  by  the  learned  judge,  comes  in  aid  of  the 
plaintiff,  and  is  decisive  in  his  favor.  It  is  suggested  by  the 
learned  judge  who  delivered  the  opinion  of  the  Supreme  Court, 
and  the  decision  appears  to  be  mainly  founded  upon  this  sugges- 
tion, that  the  plaintiff,  by  indorsing  the  note,  might  have  put  it  in 
a  form  in  which  it  would  be  available  to  the  holder  against  New- 
comb as  second  indorser.  True,  he  might  have  indorsed  the 
note  and  sent  it  into  the  market,  so  that  an  innocent  bona  fide 
holder  might  have  recovered  against  Newcomb  as  second  indorser, 
but  in  such  case  Hall,  as  first  indorser,  would  have  been  liable 
to  Newcomb.  The  order  of  liability  would  be  reversed.  Hall 
would  become  surety  to  Newcomb,  instead  of  holding  Newcomb 
as  surety  for  Farmer. 

It  is  said  that  Hall  might  have  indorsed  the  note  without  re- 
course, and  then,  althougli  he  was  the  payee  and  first  indorser, 
might  himself  have  recovered  as  the  indorsee  of  Newcomb.  This 
would  be  placing  Hall  in  a  position  never  intended  by  the  contract. 
I  think  we  must  take  this  instrument  and  decide  the  rights  of  the 
parties  under  it  in  the  precise  shape  and  form  in  which  it  appears 
to  us,  without  indorsement  by  the  payee.     Viewing  this  instru- 


**  HALL   V.    NEWCOMB.  137 

ment  as  commercial  paper,  indorsed  by  Newcomb  for  tlie  accom- 
modation of  the  maker,  I  doubt  the  ri^ht  of  the  jiayee  to  nego- 
tiate it  by  a  restricted  indorsement,  in  which  case  it  might  operate 
as  a  fraud  upon  the  person  who  puts  his  name  upon  the  note  with 
the  view  of  being  the  second  indorser.  If  the  payee  makes  such 
indorsement,  I  think  it  would  not  avail.  An  indorsement  is 
strictly  and  literally  an  order  to  pay  money.  Hall  orders  the 
money  to  be  paid  to  Newcomb,  wliose  name  already  stands  upon 
the  note,  we  may  presume,  as  second  indorser.  He  writes  over 
Newcoinlt's  signature  an  order  to  i)ay  back  the  money  to  himself. 
By  this  little  contrivance  it  is  supposed  that  a  right  of  action  would 
accrue  to  Hall  against  Newcomb  as  indorser,  when  he  had  not 
before  any  such  right  of  action.  This  sort  of  finesse  and  shutliing 
game  is  below  the  dignity  of  the  law.  We  must  take  this  con- 
tract as  the  parties  left  it,  complete  and  perfected  when  the  note 
was  delivered  to  Hall,  and  we  have  no  right  to  ask  iiim  to  resort 
to  practices  bordering  on  trick  and  deception,  for  the  purpose  of 
clianging  the  character  and  liability  of  the  parties.  If  Mr.  Hall 
could  legally  and  properly  pursue  the  course  advised  by  some  of 
our  learned  friends,  I  can  see  no  reason  why  a  restricted  indorse- 
ment may  not  be  written  over  the  name  of  any  prior  indorser  of 
accommodation  paper,  and  so  the  person  who  has  lent  his  signa- 
ture on  the  faith  of  the  responsibility  of  those  who  have  preceded 
him,  may  be  utterly  ruined,  and  that  without  remedy.  I  think 
that  Judge  Spencer,  in  the  case  of  Herrick  v.  Carman,  12  Johns. 
101,  states  the  law  of  this  case  correctly,  and  draws  the  proper 
distinction.  Where  a  person  indorses  a  note  for  the  purpose  of 
giving  the  maker  credit  with  the  payee,  and  with  knowledge  of 
the  use  to  be  made  of  tiie  note,  he  is  liable  as  on  an  original  un- 
dertaking, and  his  indorsement  may  be  turned  into  a  guarantee. 
Otherwise,  if  he  indorses  tlie  note  without  any  such  knowledge.  It 
must  tiien  be  presumed  that  he  intended  only  to  become  a  second 
indorser,  with  all  the  rights  which  i)ertain  to  that  character.  In 
the  latter  case  he  is  not  liable  to  the  payee,  nor  to  any  person  de- 
riving title  from  him  with  knowledge  of  the  circumstances  attend- 
ing the  indorsement.  This  j)rinciplo  has,  I  think,  been  recognized 
and  sanctioned  by  every  analogous  case  to  be  found  in  the  books 
from  12  Johns,  down  to  ">  Hill,  and  ought  at  this  day  to  be  con- 
sidered as  settled  and  established  law,  if  in  the  conflict  of  deci- 
sions and  diversity  of  opinion  among  judges  any  principles  can 


138  INDORSEMENT. 

be  considered  as  settled  and  established.  The  case  of  Seabury 
V.  Hungerford,  2  Hill,  80,  on  the  authority  of  which  the  decision 
of  the  Supreme  Court  mainly  rests,  is  not  an  exception.  The 
principle  of  that  case  is  not  adverse  to  the  present  plaintiff's 
right  to  recover.  The  maker  drew  a  note  payable  to  Seabury  or 
bearer,  with  a  view  of  borrowing  money  from  him,  which  note, 
before  delivery,  was  indorsed  by  Hungerford  ;  and  it  was  held 
that  Hungerford  could  not  be  charged  as  maker  or  guarantor, 
but  only  as  indorser.  Now  two  remarks  may  be  made  explana- 
tory of  the  difference  between  that  case  and  the  present.  It  does 
not  appear  that  Hungerford  knew  that  the  money  was  to  be  ad- 
vanced by  the  payee,  and  it  is  not  disputed  that,  on  a  mere  naked 
indorsement  of  negotiable  paper,  unconnected  with  knowledge  of 
the  use  to  be  made  of  it,  the  party  could  be  charged  only  as  in- 
dorser. It  may  be  further  remarked,  that  the  note  in  that  case 
was  payable  to  Seabury  or  bearer,  and  the  observation  of  Judge 
Cowen  would  be  apt  and  pertinent,  that  the  payee  might,  by  trans- 
ferring the  note,  render  it  available  to  any  holder  against  Hunger- 
ford as  indorser.  Not  so  in  the  present  case,  where,  though  words 
of  negotiability  are  used,  they  are  entirely  inoperative,  and  might 
as  well  have  been  left  out  of  the  instrument.  The  plaintiff"  could 
not  have  transferred  the  note  without  involving  himself  in  re- 
sponsibilities never  intended,  and  entirely  inconsistent  with  the 
contract  between  the  parties.  Tiien  let  the  rule  of  Seabury  v. 
Hungerford  be  applied  to  this  case,  and  as  there  is  no  possibility 
of  charging  Newcomb  as  indorser,  consistently  with  the  contract 
and  intention  of  the  parties ;  and  as  he  knowingly  undertook  to 
be  surety  for  Farmer  to  Hall  in  some  form,  lie  must  be  held  liable 
either  as  guarantor  or  as  an  original  promisor.  He  may  be  sued 
in  either  character. 

Another  point  made  on  the  argument  of  this  cause  is,  "  that  the 
statute  of  frauds  would  bar  a  recovery  against  the  defendant  on 
any  other  ground  than  that  of  an  indorser."  The  case  of  Leon- 
ard V.  Vredenburgh,  8  Johns.  29,  is  exactly  analogous  to  the 
present,  and  appears  to  settle  the  principle  very  conclusively  in 
favor  of  the  plaintiff".  Here,  as  well  as  there,  the  undertaking 
was  a  part  of  the  original  transaction,  and  tlie  defendant's  under- 
taking was  the  inducement  to  the  creation  of  the  debt.  Parol 
testimony  was  admitted  without  objection  on  the  trial,  and  was 
properly  admitted  to  show  the  attending  circumstances,  and  the 


SYLVESTER    V.    DOWNER.  139 

purpose  and  design  for  which  the  signature  of  the  defendant  was 
affixed  to  the  instrument. 

The  nonsuit  was  improperly  granted,  and  the  judgment  of  the 
Court  of  Common  Pleas,  and  of  the  Supreme  Court  are  erro- 
neous, and  should  be  reversed. 

Judgment  affirmed} 

This  case  is  followed  in  New  York  by  Spies  v.  Gilmore,  1  Comst.  321 ;  Ellis 
V.  Brown,  6  Barb.  28J ;  Watcrbury  v.  Sinclair,  26  Barb.  4.')5.  See  also,  to  the 
same  effect,  Clouston  v.  Barl)ierc,  4  Sneed,  33G,  approving  Comparree  v.  Brock- 
way,  11  Hum.  3.^0  ;  Fear  r.  Dunlap,  1  Greene  (Iowa),  331  ;  Jennings  i'.  Thomas, 
13  Sniedes  &  M.  617  ;  lliggs  r.  Waldo,  2  Cal.  485 ;  Pierce  v.  Kennedy,  5  id.  138 ; 
Wells  r.  Jackson,  6  Blackf.  40;  Vore  r.  Ilurst,  13  Ind.  551.  See  preceding 
and  following  cases. 


Barzillai  Sylvester,  Executor,  &c.,  v.  Solomon  Downer. 

(20  Vermont,  355.     Supreme  Court,  March,  1848.) 

Indorsement  hi/  one  not  a  party.  —  One  who  is  not  a  party  to  a  promissory  note,  by  plac- 
ing his  name  upon  the  same,  the  payee  not  having  indorsed  it,  renders  himself 
prima  facie  Uable  as  maker  ;  but  evidence  may  be  received  to  show  the  real  inten- 
tion of  the  signer. 

Assumpsit  against  the  defendant  as  maker  of  a  promissory  note 
payable  to  Austin  and  Fay,  or  order,  and  by  them  indorsed  to  the 
plaintiffs  intestate.  The  declaration  also  contained  a  count  for 
money  had  and  received.  Plea,  the  general  issue,  and  trial  by 
jury,  Alarch  term,  184G, —  Redjicld,  J.,  presiding. 

On  trial  the  plaintiff  offered  in  evidence  a  promissory  note,  for 
$75.00,  signed  by  one  David  E.  Strong,  dated  March  27,  1837,  and 
made  payable  to  Austin  and  Fay,  or  order,  in  the  month  of  February 
then  next,  with  the  following  indorsements :  "  For  value  received, 
pay  the  contents  to  Lemuel  Sylvester,  (signed)  Austin  and  Fay ; " 
"  For  value  received,  I  promise  to  pay  this  note  according  to  its 
tenor  to  Lemuel  Sylvester,  (signed)  Solomon  Downer."  To  this 
evidence  the  defendant  objected,  for  variance  ;  but  the  objection 
was  overruled  by  the  Court.     It  appeared  that  the  indorsements 

1  The  vote  of  the  Court  stood  :  For  aflirmance,  17  ;  for  reversal,  8. 


140  INDORSEMENT. 

were   made  in  blank,  and  were  filled  up  by  the  plaintiff  before 
trial. 

Redfield,  J.  This  is  an  action,  in  common  form,  against  the 
defendant  as  a  sole  maker  of  a  promissory-  note.  The  note,  on 
being  produced,  showed  his  name  indorsed  upon  it,  and  also  that 
of  the  payees  of  the  note.  This,  according  to  the  decisions  of  this 
Court,  repeatedly  made,  imposed  upon  the  defendant  the  obligation 
of  the  maker  of  the  note,  with  this  difference  only,  that,  his  under- 
taking being  in  blank,  as  between  the  parties  to  it,  it  was  suscep- 
tible of  being  controlled  by  oral  evidence  of  the  real  obligation 
intended  to  be  assumed  at  the  time  of  signing.  This  has  been  so  - 
often  declared  by  this  Court,  that  it  seems  needless  to  refer  to  the 
decisions.  But  I  will  advert  to  some  of  them,  with  a  view  to 
extract  from  them  the  principle  of  the  decisions. 

The  first  case,  which  distinctly  assumed  this  ground,  is  that  of 
Knapp  V.  Parker,  6  Vt.  642.  In  that  case  the  note  had  been  due, 
before  it  was  indorsed  by  the  defendant,  and  he  was  sued  as  maker, 
and  the  suit  sustained.  It  is  true,  the  Court,  in  their  opinion, 
advert  to  a  prior  contract,  resting  in  parol  merely  ;  but  this  was 
clearly  merged  in  the  writing.  It  was  of  no  importance,  in  deter- 
mining the  prima  facie  legal  obligation  resulting  from  the  signature. 
The  law  determines  that ;  and  the  oral  evidence  was  important  only 
as  tending  to  show,  that  the  defendant  intended  to  assume  just  such 
an  obligation,  as  he  did  by  the  blank  signature. 

But  to  show  that  the  circumstance  of  the  previous  contract  is  not 
of  importance,  we  need  only  advert  to  the  subsequent  cases.  In 
Flint  V.  Day,  9  Vt.  345,  the  former  case  is  cited  by  the  late  Chief 
Justice,  as  a  decision  of  the  Court  to  the  effect,  that  one,  who  signs 
a  note  after  it  becomes  due,  and  by  merely  indorsing  his  name  upon 
the  back,  is  nevertheless  holden  as  a  maker,  and  to  the  same  extent 
as  those  who  sign  upon  the  face  of  the  note.  And  in  this  latter 
case  the  defendant,  who  wrote  his  name  upon  the  back  of  the  note, 
because  the  bank  would  not  take  it  upon  the  names  already  upon 
it,  was  holden  liable  to  contribute  with  a  surety,  who  signed  the 
note  upon  its  face,  and  who  was  compelled  to  pay  the  whole 
note.  The  Court  declare,  that  the  defendant  (who  declared  at  the 
time  he  signed  the  note,  that  he  knew  the  plaintiff  to  be  good,  and 
was  not  afraid  to  "  back  the  note  ")  became  a  joint  principal  to  the 
bank  (the  payee),  and  must  stand  as  a  co-surety  with  the  other 
sureties. 


SYLVESTER   V.    DOWNER.  141 

The  case  of  iSanford  v.  Norton,  14  Vt.  228,  was  where  the  de- 
fendant wrote  his  name  npon  the  back  of  the  note,  after  it  was 
negotiated,  and  l)efure  it  came  into  the  hands  of  the  plaintiff.  And 
the  Court  had  no  difficulty  in  holding  the  defendant  jonwia/acz'g 
liable,  as  a  maker  of  the  note,  and  lialjle  to  all  the  incidents  result- 
ing from  becoming  a  maker.  But  the  judgment  of  Chief  Justice 
Williams^  in  tlic  County  Court,  was  reversed  in  the  Supreme 
Court,  upon  the  ground  that  he  should  have  received  evidence, 
which  was  oifered  by  the  defendant,  to  show  that,  at  the  time  he 
wrote  his  name  upon  the  back  of  the  note,  he  was  understood  to 
assume  only  the  obligation  of  a  common  indorser,  and  was  there- 
fore entitled  to  require  a  demand  upon  the  maker  and  notice  back. 
At  the  next  trial  in  the  County  Court  I  was  myself  present,  and 
admitted  the  evidence,  according  to  the  decision  of  the  Supreme 
Court,  and  the  plaintiff  again  ol)tained  a  verdict  by  showing  demand 
and  notice.  And  that  jndgmcnt  was  affirmed  in  this  Court.  It  is 
true  that  the  Chief  Justice,  in  declaring  the  judgment  of  this  Court, 
or  rather,  in  writing  out  his  opinion  for  the  press,  took  occasion  to 
pass  some  strictures  upon  the  decision  of  the  Court  in  the  former 
case.  And  however  just  they  may  be,  or  however  unjust,  it  is  not 
important  now  to  inquire.  They  were  certainly  not  pertinent  to 
the  decision  then  made,  which  was,  in  fact,  a  full  and  unqualified 
affirmance  of  the  former  decision,  and  not,  as  the  Chief  Justice 
undertook  to  show,  a  departure  from  it. 

This  case,  then,  establishes  the  doctrine,  that  one  who  indorses 
his  name  on  the  back  of  a  negotiable  promissory  note,  while  it  is 
in  circulation,  prima  facie  assumes  the  obligation  of  maker,  if  he 
were  not  before  a  party  to  the  instrument ;  and  that  his  obligation 
is  negotialjle,  in  the  same  sense  as  the  original  contract,  and  may 
be  sued  in  the  name  of  any  person  into  whose  hands  the  note  comes 
in  the  course  of  its  circulation. 

•  The  same  was  in  effect  decided  in  Strong  v.  Riker,  16  Yt.  554. 
The  point  was  expressly  made  in  that  case,  that  the  defendant 
indorsed  his  name  upon  the  note  long  after  it  was  made  ;  but  the 
Court  held  that  fact  to  be  unimportant.  In  that  case  the  note  had 
passed  out  of  the  hands  of  the  payee,  long  before  the  defendant 
indorsed  it,  but  had  not  been  indorsed  by  the  payee.  In  passing  it 
to  still  another  person,  not  a  party  to  the  note,  the  defendant  wrote 
his  name  upon  the  back  of  tiie  note  ;  and  the  Court  held  that  he 
«    was  holdcn  as  maker,  and  that  he  might  be  sued  in  the  name  of  the 


142  INDORSEMENT. 

payee^  who  had  no  interest  whatever  in  the  note,  at  the  time  the 
defendant  became  a  party  to  it,  —  thus  making  the  defendant  liable 
as  maker  of  the  note  to  the  fullest  extent,  the  same  as  if  he  had 
signed  the  note  originally,  and  in  the  same  form. 

In  all  this  it  is  not  understood  that  the  Court  have  ever  decided 
that  a  more  guaranty  is  negotiable,  whether  it  be  collateral  and 
conditional,  or  absolute.  The  contrary  is  no  doubt  true,  as  was 
declared  in  Sanford  v.  Norton,  14  Yt.  228. 

But  what  this  Court  has  repeatedly  held  upon  this  subject,  is,  that 
he  who  writes  his  name  upon  the  back  of  a  note,  if  he  were  not 
before  a  party  to  it,  assumes  the  same  obligation  as  if  he  wrote  his 
name  upon  the  face  of  the  instrument ;  and  that,  although  he  do 
this  long  after  the  making  of  the  note,  it  shall  make  no  difference ; 
if  he  consent  to  be  thus  bound,  and  induce  others  to  take  the  note 
under  that  expectation,  he  shall  be  estopped  to  deny  that  fact,  and 
is  treated  to  all  intents  the  same,  precisely,  as  if  he  had  signed  the 
note  in  its  inception.  But,  the  signature  being  blank,  he  may 
undoubtedly  show  that  he  was  not  understood  to  assume  any  such 
obligation. 

But  the  proof  in  the  present  case  tended  to  show,  and  the  jury 
have  so  found,  that  the  defendant  did  intend  to  assume  an  uncondi- 
tional obligation  to  pay  the  note,  according  to  its  tenor.  This  puts 
at  rest  all  pretence,  that  the  defendant  was  not  understood  to  assume 
the  common  obligation,  which  his  signature  imported.  This  was, 
that  of  the  maker  of  the  note  to  Austin  and  Fay,  as  that  was  the  form 
of  the  note  at  the  time  he  indorsed  it ;  and  had  they  refused  to 
indorse  it,  the  defendant  might  have  been  sued,  as  maker,  in  their 
na7nes,  according  to  the  case  of  Strong  v.  Riker,  16  Vt.  554.  But 
they  did  indorse  it.  He  was  then  liable,  as  maker,  to  any  person 
who  might  become  a  holder  of  the  note  ;  and  especially  to  the 
plaintiff's  testator,  for  he  assumed  the  obligation  with  the  under- 
standing that  the  note  was  going  immediately  into  his  hands,  and 
that  the  defendant  was  liable  to  him.  This  point  is  fully  decided 
by  Sanford  v.  Norton,  14  Vt.  228.  The  declaration  in  this  case, 
then,  was  precisely  according  to  the  proof,  —  that  the  defendant 
made  a  note  to  Austin  and  Fay,  which  was  indorsed  to  the  plaintiff's 
testator. 

The  fact,  that  the  defendant's  indorsement  was  filled  up  differ- 
ently from  the  declaration,  and  differently  from  the  import  of  his 
undertaking,  is  of  no  importance,  as  that  is  mere  form,  and  may  be    , 


GREENOUGH   V.    8MEAD.  143 

made  at  any  time,  and,  if  made  wrong,  may  be  corrected  at  any 
time.     It  is  just  as  well  if  it  be  not  made  at  all. 

Judgment  affirmed. 

Cook  V.  Southwick,  9  Texas,  G15,  and  Carr  v.  Rowland,  ll  Texas,  275,  hold 
a  similar  doctrine  to  that  of  the  above  case.  It  is  true  those  cases  say,  that 
where  the  name  of  the  third  party  is  on  the  bill  or  note  at  its  inception, 
which  is  the  presumption  in  the  absence  of  proof,  he  is  regarded  as  a  guarantor 
or  surety  ;  but  they  use  the  word  guarantor  as  ecjuivalent  to  maker  in  both  cases, 
citing,  in  Cook  v.  Southwick,  the  case  of  Leonard  v.  Sweetzer,  10  Ohio,  1,  which 
holds  that  a  guaranty  of  the  fulfilment  of  a  contract,  written  below  the  contract, 
and  executed  at  the  same  time,  renders  the  party  liable  as  an  original  contractor. 
See  also  Watson  i'.  Hurt,  6  Gratt.  633 ;  Clark  v.  Merriam,  25  Conn.  576 ;  Per- 
kins V.  Catlin,  11  Conn.  213;  SchoUenberger  v.  Nehf,  28  Penn.  State,  189; 
Jennings  v.  Thomas,  13  Smedes  &  M.  617  ;  Schneider  v.  Schiffman,  20  Mo. 
571.  In  the  last-named  case  it  is  held  that,  although  it  may  be  shown,  as 
between  parties  entitled  to  look  into  the  real  transaction,  that  the  third  person 
signed  as  indorser,  and  not  as  maker,  this  cannot  be  shown  against  a  subsequent 
bona  Jide  holder.  But  see  Carpenter  v.  Oakes,  10  Rich.  Law,  19.  See  pre- 
ceding and  following  cases. 


B.  F.  Greenough  et  al.  v.  W.  Smead  et  al. 

(3  Ohio  State,  415.     December,  1854.) 

Indorsement  by  one  not  a  party.  —  If  one  not  a  party  to  a  note  put  his  name  on  the  bafck 
thereof,  the  note  being  subsequently  indorsed  by  the  payee  below  liis  signature, 
but  not  being  intended  for  the  payee,  such  party  is  to  be  regarded  as  an  indorser  ; 
but  if  tlie  note  were  intended  for  the  payee,  the  liability  of  such  third  person  is 
that  of  maker  or  guarantor. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Ranney,  J.  An  action  was  brought  and  recovery  had  by  the 
defendants  in  error  in  the  Commercial  Court  of  Cincinnati,  upon 
the  promissory  note  following :  — 

$4000.  Cincinnati,  30th  May,  1850. 

Sixty  days  after  date  I  promise  to  pay  to  the  order  of  Samuel  R.  Bates, 
four  thousand  dollars,  value  received. 


Written  on  the  back  in  the  following  order :  — 


George  H.  Bates. 

B.  F.  Greenough. 
Samuel  R.  Bates. 
Butler  &  Brotuer. 


144  INDORSEMENT. 

From  the  bill  of  exceptions,  taken  at  the  trial,  it. appears  that 
the  note  was  discounted  by  the  defendant  in  error,  after  all  the 
names  were  upon  it,  for  the  exclusive  benefit  of  t\]£  maker,  George 
H.  Bates.  On  the  morning  of  the  day  the  note  matured,  George 
H.  Bates  died.  It  was  duly  presented  at  his  last  place  of  busi- 
ness, and  also  at  his  dwelling-house,  and  payment  requested,  and 
notice  of  non-payment  immediately  given  to  all  the  persons  appear- 
ing upon  the  back  of  the  note  as  indorsers.  The  plaintiff's  coun- 
sel insist  that  Greenough  was  in  fact,  and  should  have  been,  treated 
by  the  holders  as  an  original  promisor  and  joint  maker  of  the 
note  with  Bates ;  and,  inasmuch  as  no  demand  of  payment  was 
made  upon  him,  tliat  the  indorsers,  Samuel  R.  Bates  and  Butler 
and  Brotlier,  are  discharged  from  all  liability  upon  it.  This  is  sup- 
posed to  result  from  the  fact  that  his  name  was  placed  upon  the 
paper  before  it  was  indorsed  by  the  payee,  and  from  the  position  it 
is  there  found  to  occupy. 

Notwithstanding  the  great  importance  of  a  definite  and  uniform 
rule,  fixing  the  liability  incurred  by  a  party  to  negotiable  paper 
thus  situated,  a  most  perplexing  contrariety  of  opinion  is  found  to 
exist  in  the  reported  cases. 

In  Massachusetts,  and  several  of  the  New  England  States,  he  is 
presumed,  in  the  absence  of  proof  of  a  different  intention,  to  be 
an  original  promisor. 

The  cases  will  be  found  collected  and  ably  examined,  by  J. 
Hubbard,  in  the  Union  Bank  of  Weymouth  v.  Willis,  8  Met.  504.^ 
In  that  case  A  made  a  note  payable  to  B,  and  C  put  his  name  in 
blank  on  the  back  of  the  note.  B,  the  payee,  then  placed  his 
name  in  blank  on  tlie  back  of  the  note  under  that  of  C. 

In  this  condition,  it  was  discounted  by  the  plaintitf  for  A,  the 
maker. 

It  was  held  that  C  was  an  original  promisor,  and  in  an  action 
against  B,  the  payee  and  indorser,  the  holders  were  defeated,  be- 
cause no  demand  of  payment  had  been  made  of  C.  The  Court 
regarded  itself  bound,  by  the  previous  course  of  decisions  in  that 
^'?tate,  remarking  that  if  the  subject  were  brought  before  it  for  the 
first  time,  they  "  should  say,  that  a  name  written  on  the  paper, 
which  name  was  not  that  of  the  payee,  nor  following  his  name  on 
his  having  indorsed  it,  was  either  of  no  validity  to  bind  such  indi- 
vidual, because  the  contract  intended  to  be  entered  into,  if  any, 
was  incomplete,  or  within  the  statute  of  frauds ;  or,  that  he  should 

1  Ante,  124. 


GREENOUGII    V.    PMEAD.  145 

be  treated  bv  third  parties,  simply  as  a  second  indorser,  leaving 
the  payee  antl  himself  to  settle  their  rcspcetive  lialnlities  according 
to  their  own  agreement." 

Whatever  may  have  been  the  principle  upon  which  the  earlier 
decisions  in  New  York  j^roceeded,  the  snbjoct  has  more  recently 
been  fully  examined  Ijy  the  Supreme  Court  of  that  State  in  tiie 
case  of  Ellis  v.  Brown,  G  Barb.  S.  C.  282,  and  l)y  the  Court  of 
Appeals  in  Spies  v.  (Jilmore,  1  Comst.  321,  and  Hall  v.  Newcomb, 
7  Hill,  41G.1 

These  cases  seem  to  affirm  that  he  can  only  be  made  liable  as  a 
second  indorser;  that  he  is  within  the  protection  of  the  statute  of 
frauds,  and  therefore  parol  evidence  is  not  admissible  to  show  that 
he  intended  to  bind  liimself  as  an  original  promisor  or  guarantor. 
That  the  indorsement  is  entirely  nugatory  until  the  note  has  been 
indorsed  by  the  i)ayee,  and  that  he  is  then  to  be  charged  l)y  a  sub- 
sequent holder  only  upon  due  demand  of  the  maker  and  notice 
thereof. 

In  Ohio,  the  case  of  Champion  and  Lathrop  v.  Griflfith,  13  Ohio, 
228,  followed  by  Robinson  v.  Abell,  17  Ohio,  30,  42,  has  settled  that 
the  mere  indorsement  upon  the  note,  of  a  stranger's  name  in 
blank,  is  prima  facie  evidence  of  guaranty.  That  to  charge  such 
person  as  maker  there  must  be  proof  that  his  indorsement  was 
made  at  the  time  of  execution  by  the  other  party,  or,  if  afterward, 
that  it  was  in  pursuance  of  an  agreement  or  intention  that  he 
should  become  responsible  from  the  date  of  the  execution  ;  that 
such  agreement  or  intention'  may  be  proved  by  parol  evidence  ;  and 
that  the  rule  is  the  same  whether  the  instrument  is  negotiable  or  not. 

The  dilTerence  amounts  to  this:  in  Massachusetts  such  a  party 
is  presumed  t<j  be  an  original  promisor ;  in  Ohio,  he  is  presumed 
to  be  a  guarantor:  but,  in  either  State,  parol  evidence  is  received 
to  rebut  tlic  j)resunii)lion,  and  show  what  liability  it  was  intended 
he  should  assume,  and  what  relation  he  should  sustain  to  the 
paper.  In  New  York,  he  is  presumed  to  have  intended  to  assume 
the  liabilities  of  an  indorser,  and  parol  evidence  is  not  admissible 
to  show  a  ditterent  intention. 

We  are  not  disposed  to  doubt  the  correctness  of  tlio  rule  laid 

down  in  the  decisions  already  made  in  this  State,  when  confined 

to  the  facts  of  the  several  cases  in  which  it  has  been   applied. 

This  rule  admits  parol  evidence  to  ascertain  the  intention  of  the 

»  Ante,Vdl. 
10 " 


146  INDORSEMENT, 

parties,  and  requires  iis  to  consider  what  evidence  w^s  before  the 
Commercial  Court. 

From  the  bill  of  exceptions  it  appears  that  the  note  was  indorsed 
by  all  tlie  i)arties  for  the  accommodation  of  George  H.  Bates. 
That  Greenough  indorsed  it  before  it  was  filled  np ;  that  George 
H.  Bates  on  the  samp  day  filled  up  the  note  for  $4000,  payable  to 
the  order  of  Samuel  R.  Bates,  whose  indorsement  he  then  pro- 
cured, and  subsequently  that  of  Butler  and  Brother.  In  this  con- 
dition he  took  it  to  the  defendants  in  error,  and  procured  it  to  be 
discounted.  It  further  appeared  from  the  testimony  of  Greenough, 
who  was  called  and  examined  as  a  witness  for  Butler  and  Brother, 
that  he  had  been  in  the  habit  of  exchanging  accommodation 
indorsements  with  George  H.  Bates ;  that  Samuel  R.  Bates  had 
usually  been  a  party  to  this  paper  ;  and  that  whenever  it  was  in- 
tended that  he  should  be  the  first  indorser,  his  name  was  used  as 
the  payee.  That  without  having  any  distinct  recollection  of  this 
particular  note,  he  was  able  to  say  from  the  course  of  business 
between  them,  that  he  intended  to  authorize  George  H.  Bates  to 
make  him  appear  in  any  character  upon  the  paper  that  would  best 
serve  the  purpose  of  raising  the  money.  This  constituted  a  gen- 
eral letter  of  attorney  to  Bates  to  bind  Greenough  in  any  form  he 
saw  fit ;  but  while  it  obligated  Greenough  to  submit  to  any  obliga- 
tion that  Bates  saw  fit  to  impose  upon  him,  it  also  entitled  him  to 
the  full  benefit  of  any  arrangement  that  Bates  intended  for  his 
benefit.  Looking  at  tlie  transaction  fairly,  we  cannot  doubt  that 
Bates,  the  maker,  and  his  brother,  the  payee,  intended  to  bind  him 
as  one  of  the  indorsers  of  the  paper,  and  to  impose  upon  him  all 
the  obligations,  and  secure  him  all  the  privileges  of  that  position ; 
and  that  such  was  the  understanding  of  Butler  and  Brother  is  per- 
fectly manifest  from  the  declarations  of  one  of  them,  made  after 
the  note  had  been  protested,  in  which  he  treated  George  H.  Bates 
as  the  sole  party  primarily  liable. 

But  if  this  testimony  is  loft  entirely  out  of  view,  and  we  have 
nothing  but  the  fact  that  the  note  was  discounted  for  the  sole  ben- 
efit of  the  maker,  and  became  first  legally  operative  when  received 
by  the  defendants  in  error,  we  are  still  brought  to  the  same  con- 
clusion. 

In  the  common  understanding  of  business  men,  it  is  very  sel- 
dom supposed  that  one  placing  his  name  upon  the  back  of  a  note 
becomes  primarily  liable  for  the  payment  of  the  debt.  Tiiis  under- 
standing ought  to  be  no  further  interfered  with  than  is  absolutely 


GREENOUGH    V.    SMEAD.  147 

necessary  ta  give  full  effect  to  the  lawful  contracts  of  parties,  and 
alTortl  a  remedy  to  the  creditor  conirnonsurate  with  what  he  may 
1)0  presumed  to  have  expected  when  the  promise  was  made.  To 
do  tliis  it  is  only  necessary  to  give  effect  to  the  undertaking  of 
each  of  the  parties  upon  the  paper,  precisely  as  they  appear  at  the 
moment  the  instrument  itself  takes  effect  and  becomes  legally 
operative.  If  he  then  appears  to  be  a  stranger  to  tiie  title,  he 
must  assume  the  position  and  responsiliilities  of  a  stranger,  and 
as  lie  cannot  in  such  case  be  charged  as  an  indorser,  and  as  it  can- 
not l)e  supposed  that  he  did  not  intend  to  bind  himself  in  some 
way,  he  must  be  charged  as  a  maker  or  guarantor.  This  will 
happen  in  all  cases  where  the  i)aper  is  designed  for  the  payee,  and 
the  name  of  the  stranger  is  i)ut  on  the  back  for  security.  .Such 
were  all  tiic  cases  yet  decided  in  this  State.  There  was  no  middle 
course ;  either  the  undertaking  which  the  party  intended  to  as- 
sume, and  upon  the  faith  of  whicii  the  creditor  had  parted  with 
his  money  or  property,  must  take  effect  in  that  manner,  or  it  was 
nugatory  and  without  any  effect  whatever. 

Nor  would  his  position  or  responsibilities  be  changed,  although 
the  payee  should  afterward  transfer  the  obligation.  Once  im- 
pressed with  the  character  of  maker  or  guarantor,  they  remain 
the  same  into  whose  hands  soever  it  may  come. 

But  the  case  is  widely  different  when  the  paper  is  not  designed 
for  the  payee,  and  the  arrangement  contemplates  his  indorsement 
as  an  accommodation  party  also,  before  it  is  used.  In  such  case, 
there  is  no  oldigation  incurred,  no  contract  made,  until  the  note 
is  accepted  by  the  person  advancing  the  consideration  upon  it. 
Where  it  is  so  accepted,  it  then,  for  the  first  time,  has  its  effect. 
It  then  has  the  indorsement  of  the  payee,  to  transfer  it  to  the 
party  whose  name  is  already  upon  it,  evidencing  his  willingness  to 
receive  and  transmit  the  title,  and  in  his  turn  to  assume  the  re- 
sponsibility of  an  indorser  when  the  note  shall  have  accomplished 
its  purpose,  by  being  accepted  by  the  party  becoming  benelicially 
entitled  thereto.  The  order  of  this  indorsement,  in  point  of  time 
or  locality,  is  of  no  importance,  but  it  is  controlled  wholly  by  the 
order  contemjilated  by  the  contract  of  indorsement.  Chalmers  v. 
McMurdo,  o  Muul'ord,  2.")2.  The  fact  that  the  party  indorsed 
before  the  payee,  as  was  well  said  by  Spencer,  J.,  in  llcrrick  v. 
Carman,  12  Johns.  IGl,  "  can  iiave  no  inllucnce,  for  he  must  have 
known,  and  we  are  bound  to  presume  that  he  acted  on  that  knowl- 


148  INDORSEMENT. 

edge,-  that  though  the  first  to  indorse,  his  indorsement  would  be 
nugatory,  unless  preceded  by  that  of  the  i)ayee." 

Two  governing  principles  should  be  kept  constantly  in  view : 
first,  that  such  a  construction  should  be  placed  upon  the  contract 
as  will  prevent  its  failure,  and  will  give  effect  to  tlic  obligation  of 
each  of  the  parties  appearing  upon  it  at  the  moment  the  contract 
itself  takes  effect,  —  ut  res  magis  valeat  quam  pereat ;  second,  when- 
ever the  obligation  of  a  party  appearing  upon  the  back  of  nego- 
tiable paper,  can,  at  that  time,  take  effect  as  an  indorsement,  it 
should  always  be  held  to  do  so,  as  conforming  more  nearly  to  the 
general  intention  of  parties  assuming  that  position  upon  it. 

The  first  of  these  principles  is  disregarded  by  the  present  hold- 
ing of  the  courts  in  New  York,  in  treating  as  nugatory  the  obliga- 
tion assumed  by  a  stranger  to  the  paper,  when  it  is  designed  for 
and  received  by  the  payee,  and  when  the  name  is  indorsed  to  give 
credit  to  the  paper  with  him.  The  last  is  disregarded  in  the  case 
cited  from  Metcalf,  in  pushing  the  principle  of  original  liability 
beyond  the  necessity  of  its  application,  and  when  at  the  moment 
the  contract  is  consummated,  the  obligation  of  the  party  thus  situ- 
ated, can,  and  should  have  effect  as  an  indorsement. 

In  New  York,  the  present  holding  is  directly  opposed  to  a  long 
series  of  earlier  decisions,  as  is  abundantly  proved  by  the  dissent- 
ing opinions  in  Hall  v.  Newcomb,  and  Ellis  v.  Brown,  in  which 
the  very  distinction  we  have  made,  is  recognized  and  enforced, 
while  in  Massachusetts,  not  one  of  the  numerous  cases  cited  by 
the  Court  in  the  Union  Bank  v.  Willis,  had  carried  the  principle 
beyond  the  liability  assumed  for  the  benefit  of  the  payee. 

Two  states  of  the  case  may  be  supposed,  in  neither  of  which 
would  Smead  &  Co.  be  obliged  to  treat  Greenougli  as  an  original 
promisor.  If  the  paper  upon  its  face  placed  him  in  that  position, 
yet,  if  in  point  of  fact  the  arrangement  between  the  parties  was 
such  as  to  entitle  him  to  the  privileges  of  an  indorser,  no  demand 
need  be  made  upon  him,  for  the  other  indorsers  having  no  re- 
course against  him  as  maker,  could  lose  nothing  for  the  want 
of  it. 

On  the  other  hand,  if  he  appeared  to  be  an  indorser,  but  in  fact, 
as  between  him  and  the  other  indorsers,  he  had  agreed  to  assume 
the  responsibilities  of  maker,  yet  Smead  &  Co.,  having  no  notion 
of  such  an  arrangement,  would  not  be  bound  to  regard  it. 

In  our  opinion,  not  only  the  paper  upon  its  face  presented  him 
as  an  indorser,  but  the  evidence  given,  also  comes  to  the  same 


GREENOUGH    V.    SMEAD.  149 

result,  and  sliows  him  a  joint  accommodation  indorser  witli  the 
other  parties  appearing;  upon  the  back  of  the  note;  and,  as  such, 
under  the  ruling  in  Douglas  v.  Waddle,  1  Ohio,  413,  liable  only 
for  his  proper  proportion  of  the  debt,  as  a  co-security. 

This  view  of  the  sul)ject  makes  it  unnecessary  to  pass  upon  the 
question  made,  as  to  the  sufficiency  of  the  demand.  It  may  not 
be  improper,  however,  to  say  that  if  Greenough  could  be  treated 
as  a  joint  maker,  we  should  be  of  the  opinion  that  the  demand 
made,  or  rather  the  excuse  for  not  making  a  demand,  would  be 
insufficient  to  charge  the  indorsers. 

The  question  is  not  covered  by  the  case  of  Harris  v.  Clark,  10 
Ohio,  5,  and  we  feel  no  hesitation  in  saying  that  the  rule  tliere 
adopted,  should  be  confined  to  the  precise  state  of  facts  upon 
which  the  decision  was  made.  A  demand  upon  one  of  several 
partners  in  business,  is  clearly  sufficient,  and  the  Court,  in  that 
case,  considered  the  several  "  makers  of  a  joint  and  several  prom- 
issory note,  in  the  light  of  jjartners  in  that  particular  transaction.''^ 
But  surely  the  principle  could  have  no  application  after  the  death 
of  one  of  the  parties  had  terminated  the  implied  agency  of  the 
survivor  ;  and  it  could  not  be  deemed  due  diligence  in  the  holder 
to  present  the  note  at  the  residence  of  the  deceased  partner,  when 
the  survivor  was  within  his  reach. 

It  is  also  assigned  for  error,  that  the  Court  refused  to  require 
the  plaintiffs  to  fill  up  the  blank  indorsements,  upon  the  trial.  In 
this,  we  think  there  was  no  error.  When  the  plaintiffs  gave  tliQ 
note  in  evidence,  with  the  names  of  all  the  defendants  upon  it, 
they,  at  tiie  same  time,  established  the  lialiility  of  all,  and  title  in 
themselves.  They  were  as  well  entitled  to  the  legal  presumptions 
and  inferences  to  be  drawn  from  the  face  of  the  paper,  as  they 
were  to  what  was  fully  expressed  in  it.  All  this  belonged  to  its 
construction  and  legal  effect,  and  as  they  claimed  nothing  more, 
there  was  no  occasion  for  writing  out  what  the  law  presumed  with- 
out it.  The  name  of  the  payee  appeared,  transferring  the  title ; 
and  while  it  is  true  that  the  precise  order  in  which  it  had  passed 
to  and  from  tlie  other  indorsers,  might  not  be  ap))arent,  a  sufficient 
answer  is,  that  tliis  was  wholly  immaterial.  In  no  ])ossible  case, 
could  it  defeat  the  title,  or  be  a  defence  for  any  one  of  them. 

If  the  plaintiffs  had  endeavored  to  establish  a  liability,  not  re- 
sulting from  a  fair  construction  of  the  paper  itself,  there  would 
have  been  great  propriety  in  compelling  them  to  specify  tiie  precise 
nature  of  the  lyidertaking,  and  of  confining  the  evidence  to  its 


150  INDORSEMENT. 

support ;  but  when  nothing  but  the  legal  consequences  of  the  in- 
strument arc  invoked,  we  can  see  no  possible  benefit  to  accrue  to 
the  defendants  from  complying  with  such  a  demand,  unless  it 
should  be  the  very  illegitimate  advantage  arising  from  the  plain- 
tiffs having  mistaken  their  legal  rights. 

The  judgment  of  the  District  Court  is  affirmed. 

This  very  ably  considered  case  is  cited  as  declaring  the  settled  law  of  Ohio, 
in  Seymour  v.  Leyman,  10  Ohio  State,  283.  The  same  rule  prevails  in  Minne- 
sota, that  the  third  party  becomes  liable  as  maker,  if  he  signs  before  delivery 
to  the  payee,  and  lor  further  security  to  him.  Nor  will  parol  evidence  be 
received  in  such  case  to  show  that  he  was  to  be  bound  as  an  indorser.  Peckam 
V.  Oilman,  7  Minn.  446.  The  law  in  Georgia  is  similar.  Quin  v.  Sterne,  26  Ga. 
223.  And  in  Rhode  Island,  Perkins  v.  Barstow,  6  R.  I.  505.  See  following 
case. 


Alexander  Rey,  William  R.  Marshall,  and.  Joseph  M. 
Marshall,  partners  under  the  firm  name  of  Marshall  & 
Co.,  Plaintiffs  in  Error,  v.  James  W.  Simpson. 

(22  Howard,  341.     Supreme  Court  of  the  United  States,  December,  1859.) 

Indorsement  by  one  not  a  party.  —  The  defendants,  W.  M.  and  J.  M.,  not  parties  to  the 
note  in  suit,  placed  their  firm  name  on  the  back  of  the  note,  at  its  inception,  and 
before  it  liad  been  passed  or  offered  to  the  plaintiff,  at  the  request  of  the  other  de- 
fendant, tlie  maker,  knowing  that  the  note  had  not  been  indorsed  by  the  payee, 
and  with  a  view  to  give  credit  to  the  same,  for  the  benefit  of  the  maker,  held, 
that  W.  M.  and  J.  M.  were  original  promisors  with  the  maker ;  evidence  being  ad- 
missible to  show  their  intention. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Clifford,  J.  This  is  a  writ  of  error  to  the  Supreme  Court 
of  the  Territory  of  Minnesota. 

According  to  the  transcript,  the  suit  was  commenced  by  James 
W.  Simpson,  the  present  defendant,  on  the  twenty-first  day  of 
«  December,  1855,  in  the  District  Court  of  the  Territory,  for  the 
second  judicial  district,  against  the  plaintiffs  in  error,  who  were 
the  original  defendants.  It  was  an  action  of  assumpsit,  and  was 
brought  upon  a  certain  promissory  note  for  the  sum  of  three 
thousand  five  hundred  and  seventeen  dollars  and  seven  and  a  half 
cents,  bearing  date  at  St.  Paul,  in  that  Territory,  on  the  four- 
teenth day  of  June,  1855,  and  was  made  payable  to  the  order  of 
the  plaintiff  six  months  after  date,  for  value  received.     At  the 


REY  V.    SIMPSON.  151 

period  of  the  date  of  the  note,  as  well  as  at  the  time  the  suit  wus 
instituted,  two  of  tiifs  dcfiindauts,  William  R.  Marshall  and  Jost?|»h 
M.  Marsnall,  were  partners,  doing  husiness  under  the  style  and 
firm  of  Marshall  and  (Company. 

As  appears  by  the  declaration,  the  note  was  made  and  signed  hy 
the  defendant  first  naiyed  in  the  original  suit,  at  the  time  and 
place  it  bears  date. 

And  the  plaintiif  further  alleges  in  the  declaration,  tha|^after 
making  and  signing  the  note,  the  same  defendant  then  and  there 
delivered  the  note  to  the  other  two  defendants  ;  and  that  they  then 
and  there,  by  their  partnership  name,  indorsed  the  same,  by  writ- 
ing the  name  of  their  firm  on  the  back  of  the  note,  and  then  and 
there  re-delivered  the  same  to  the  first-named  defendant,  who  after- 
wands,  and  i)efore  the  maturity  of  the  note,  delivered  it  so  indorsed 
to  the  plaintitf.  He  also  alleges  that  the  defendants,  William  R. 
Marshall  and  Joseph  M.  Marshall,  so  indorsed  the  note  for  the 
purpose  of  guaranteeing  the  i)ayment  of  the  same,  and  of  becom- 
ing sureties  and  security  to  him,  as  the  payee  thereof,  for  the 
amount  therein  specified,  and  that  he,  relying  upon  their  indorse- 
ment, took  the  note,  and  paid  the  full  consideration  thereof  to 
the  first-named  defendant. 

Other  matters,  such  as  due  presentment,  non-payment,  and  j)ro- 
test,  are  also  alleged  in  the  declaration,  which  it  is  unnecessary  to 
notice  at  the  present  time,  as  the  questions  to  be  determined  arise 
out  of  the  allegations  previously  mentioned  and  described. 

Personal  service  was  made  on  each  of  the  defendants,  1)ut  the 
one  fust  named  did  not  apjiear  ;  and  after  certain  interlocutory 
proceedings,  conforming  to  the  laws  of  the  Territory  and  the  i>rac- 
tice  of  the  Court,  he  was  defaulted. 

On  the  thirty-first  day  of  December,  185"),  the  counsel  of  the 
other  two  defendants  served  notice  of  a  motion  to  strike  out  all 
that  part  of  the  declaration  which  sets  forth  the  purpose  for  which 
it  is  alleged  they  indorsed  the  note,  and  so  much  of  the  declara- 
tion, also,  as  alleges  that  the  plaintiff  took  the  note  as  payee,  rely- 
ing upon  the  indorsement,  and  paid  to  the  first-named  defendant 
the  full  consideration  thereof,  as  before  stated.  That  motion  was 
subsequently  heard  before  the  Court ;  and  on  the  ninth  day  of 
February,  185G,  was  denied  and  wholly  overruled.  After  the  mo 
tion  was  overruled,  the  defendants,  whose  firm  name  is  on  the 
back  of  the  note,  demurred  specially  to  the  declaration. 

None  of  the  causes  of  demurrer  need  be  stated,  as  they  will  be 


152  INDORSEMENT. 

t 

sufficiently  brought  to  view  in  considering  the  several  propositions 
assumed  by  the  counsel  "on  the  one  side  and  the  otiier,  iu  the  ar- 
gument at  the  bar.  Suffice  it  to  say,  that  the  demurrer  was  over- 
ruled ;  and  on  the  tenth  day  of  July,  1856,  judgment  was  entered 
for  the  plaintiff  against  all  of  the  defendants  for  the  amount  of  ■ 
the  note,  with  interests  and  costs.  b 

On  the  eighteentli  day  of  September,  1856,  the  defendants  sued 
out  fn  writ  of  error,  and  removed  the  cause  into  the  Supreme 
Court  of  the  Territory,  where  the  judgment  of  the  District  Court 
was  in  all  things  affirmed  ;  and  on  the  fourth  day  of  February, 
1857,  a  final  judgment  was  entered  for  the  plaintiff,  that  he 
recover  the  amount  of  the  judgment  rendered  in  the  District 
Court,  with  interest,  costs,  and  ten  per  cent  damages,  amounting 
in  the  wliole  to  the  sum  of  four  thousand  three  hundred  seventy- 
one  dollars  and  ninety-seven  cents.  Whereupon  the  defendants 
sued  out  a  writ  of  error  to  this  Court,  which  was  properly  dock- 
eted at  the  December  term,  1857. 

All  civil  suits  in  the  courts  of  Minnesota  are  commenced 
by  complaint ;  and  suitors  are  enjoined  by  law,  in  framing  their 
declarations,  to  give  a  statement  of  the  facts  constituting  the 
cause  of  action  ;  which  statement  is  required  to  be  expressed  in 
ordinary  and  concise  language,  without  repetition,  and  in  such  a 
manner  as  to  enable  a  person  of  common  understanding  to  know 
wliat  is  intended. 

Pursuant  to  that  requirement,  and  the  practice  of  the  courts  of 
the  Territory  at  the  time  the  suit  was  commenced,  the  plaintiff  in 
this  case  set  forth  the  facts  already  recited  as  contained  in  the 
complaint  or  declaration. 

Facts  thus  stated  in  the  declaration,  pursuant  to  the  directions 
of  the  law  of  the  Territory,  and  which  were  material  to  the  under- 
standing of  the  rights  of  the  parties  to  the  controversy,  could  not 
properly  be  suppressed  by  the  Court.  Irrespective,  therefore,  of 
the  question  whether  or  not  the  motion  of  the  defendants  to  strike 
out  that  part  of  the  declaration  was  waived,  because  not  pressed 
in  the  Supreme  Court  of  the  Territory,  no  doubt  is  entertained  by 
this  Court  that  the  motion  was  properly  overruled  by  the  District 
Court  upon  the  merits. 

Proof  of  the  attending  circumstances  under  wliich  the  defend- 
ants, William  R.  Marshall  and  Joseph  M.  Marshall,  had  placed 
tlieir  firm  name  upon  the  back  of  the  note,  would  clearly  have 
been  admissible  in  a  trial  upon  the  general  issue  ;  and  if  so,  no 


REY    V.    SIMPSON.  153 

f 

reason  is  perceived  why  it  was  not  proper  for  the  plaintiff,  under 
tlie  peculiar  system  of  pleading  which  prevailed  in  the  courts  of 
the  Territory  at  the  time  the  suit  was  commenced,  to  state  those 
circumstances  in  the  declaration.  Beyond  question,  they  were  a 
part  of  the  facts  constituting  the  cause  of  action  ;  and,  if  so.  they 
were  exjtrcssly  i-C(iuirud  4o  l)e  stated  by  the  law  of  the  Territory 
prescribing  the  rules  of  pleading  in  civil  cases.  And  having  been 
alleged  in  ])ursuance  to  such  a  requirement,  and  being  material  to 
a  proper  understanding  of  the  rights  of  the  parties  to  the  suit,  it 
must  be  considered,  by  analogy  to  the  rules  of  pleading  at  common 
law,  that  they  are  admitted  by  the  demurrer. 

l>y  the  admitted  facts,  then,  it  appears  the  defendants,  William 
R.  Marshall  and  Joseph  M.  Marshall,  placed  their  firm  name  on 
the  back  of  the  note  at  its  inception,  and  before  it  had  been 
passed  or  offered  to  the  plaintiff.  They  placed  their  firm  name 
there  at  the  request  of  the  other  defendant,  knowing  that  the  note 
had  not  been  indorsed  by  the  payee,  and  with  a  view  to  give  credit 
to  the  note,  for  the  benefit  of  the  immediate  maker,  at  whose  re- 
(jnest  they  became  a  party  to  the  same. 

Whatever  diversities  of  interpretation  may  be  found  in  the  au- 
thorities, where  either  a  blank  indorsement  or  a  full  indorsement 
is  made  by  a  third  party  on  the  back  of  a  note,  payable  to  the 
payee  or  order,  or  to  the  payee  or  bearer,  as  to  whether  he  is  to  be 
deemed  an  absolute  promisor  or  maker,  or  guarantor  or  indorser, 
there  is  one  principle  upon  the  subject  almost  universally  admitted 
by  them  all,  and  that  is,  that  the  interpretation  of  the  contract 
ought  in  every  case  to  be  such  as  will  carry  into  effect  the  inten- 
tion of  the  parties;  and  in  most  instances  it  is  conceded  that  the 
intention  of  the  parties  may  be  made  out  by  parol  proof  of  the 
facts  and  circumstances  which  took  place  at  the  time  of  the  trans- 
action.    Story,  Prom.  Notes,  §§  08,  50,  479. 

When  a  promissory  note,  made  payal)le  to  a  particular  person 
or  order,  as  in  this  case,  is  first  indorsed  by  a  third  person,  such 
third  i)erson  is  held  to  be  an  original  promisor,  guarantor,  or  in- 
dorser, according  to  the  nature  of  the  transaction  and  the  under- 
standing of  the  parties  at  the  time  the  transaction  took  place.  If 
he  put  his  name  on  the  back  of  the  note  at  the  time  it  was  made, 
as  surety  for  the  maker,  and  for  his  accommodation,  to  give  him 
credit  with  the  payee,  or  if  he  particij)ated  in  the  consideration 
for  which  the  note  was  given,  he  must  l)e  considered  as  a  joint 
maker  of  the  note.     On  the  other  hand,  if  his  indorsement  was 


154  INDORSEMENT. 

subsequent  to  the  making  of  the  note,  and  he  put  his  name  there 
at  the  request  of  the  maker,  pursuant  to  a  contract  with  the  payee 
for  further  indulgence  or  forbearance,  lie  can  only  be  held  as  a 
guarantor.  l>ut  if  the  note  was  intended  for  discount,  and  he  put 
his  name  on  the  back  of  it  with  the  understanding  of  all  the  par- 
ties that  his  indorsement  would  be  inojierative  until  it  was  in- 
doi-sed  by  the  payee,  he  would  then  be  liable  only  as  a  second 
inddtser  in  the  commercial  sense,  and  as  such  would  clearly  be 
entitled  to  the  privileges  which  belong  to  such  indorsers. 

Decided  cases  are  referred  to  by  the  counsel  of  the  defendants, 
which  seemingly  deny  that  such  parol  proof  of  the  attending  cir- 
cumstances of  the  transaction  is  admissible  in  evidence  ;  but  the 
weight  of  authority  is  greatly  the  other  way,  as  is  abundantly 
shown  by  the  cases  cited  on  the  other  side.  Whenever  a  written 
contract  is  presented  for  construction,  and  its  terms  are  ambigu- 
ous or  indefinite,  it  is  always  allowable  to  weigh  its  language  in 
connection  with  the  surrounding  circumstances  and  the  subject- 
matter,  and  we  see  no  reason,  as  question  of  principle,  why  any 
different  rule  should  be  adopted  in  a  case  like  the  present.  Such 
evidence  has  always  been  received  in  the  courts  of  Massachusetts, 
as  appears  from  numerous  decisions,  and  the  same  rule  prevails  in 
most  of  the  other  States  at  the  present  time.  1  Am.  Lead.  Cas. 
4th  ed.  322.  Repeated  decisions  to  the  same  effect  have  been 
made  in  the  courts  of  New  York,  and  until  within  a  recent  pe- 
riod it  appears  to  have  been  the  settled  doctrine  in  the  courts  of 
that  State. 

Recent  decisions,  it  must  be  admitted,  wear  a  different  aspect ; 
but  they  have  not  had  the  effect  to  produce  a  corresponding  change 
in  other  States,  and,  in  our  view,  deny  the  admissibility  of  parol 
evidence  in  cases  where  it  clearly  ought  to  be  received.  Hawkes 
V.  Phillips  ct  al,  7  Gray,  284. 

Applying  these  principles  to  the  present  case,  it  is  obvious  that 
the  contract  of  the  two  defendants  whose  firm  name  is  upon  the 
back  of  the  note  was  an  original  undertaking,  running  clear  of  all 
questions  arising  out  of  the  statute  of  frauds. 

They  placed  their  names  there  at  the  ince})tion  of  the  note, 
not  as  a  collateral  undertaking,  but  as  joint  promisors  with  the 
maker,  and  are  as  much  affected  by  the  consideration  paid  by  the 
plaintiff,  and  as  clearly  liable  in  the  character  of  original  prom- 
isors, as  they  would  have  been  if  they  had  signed  their  names 
under  the  name  of  the  other  defendant  upon  the  inside  of  the  in- 


"      REY   V.    SIMPSON.  155 

strunicnt.  Numerous  decisions  in  the  State  courts  might  Ije  cited 
ill  support  of  tlie  )»ro|)Ositioii  as  stated,  but  we  think  it  unnecessary, 
as  they  will  be  found  collated  in  the  elementary  works  to  which 
reference  has  already  been  made,  and  in  many  others  which  treat 
of  this  sul)ject. 

Another  objection  to  t}\e  right  of  recovery  in  this  case  deserves 
a  brief  notice.  It  is  insisted  by  the  counsel  of  the  defendji^its, 
that  the  complaint  or  declaration  is  not  sufficient  to  maintaii»this 
suit  against  tiiese  defendants  as  original  j>romisors.  That  ol»jec- 
tion  must  be  considered  in  connection  with  the  system  of  plead- 
ing which  [prevailed  in  the  courts  of  the  Territory  at  the  time  the 
suit  was  commenced.  By  that  system,  suitors  were  only  required 
to  state  the  facts  which  constituted  the  cause  of  action.  In  this 
case  the  plaintilT  followed  that  mode  of  pleading,  and  we  think  he 
has  set  forth  enough  to  constitute  a  substantial  compliance  with 
the  law  of  the  Territory,  and  the  practice  of  the  Court  where  the 
suit  was  instituted.  He  alleges,  among  other  things,  that  the 
defendants  whose  firm  name  is  on  the  back  of  the  note  placed  it 
there  for  the  purpose  of  becoming  sureties  and  security  to  him  as 
payee  for  the  amount  therein  specified.  That  allegation,  to  use 
the  language  of  the  statute  of  Minnesota,  is  expressed  in  ordi- 
nary and  concise  language,  and  in  such  a  manner  as  to  be  easily 
understood,  and  that  is  all  which  is  required  by  the  law  of  the 
Territory  prcscrilMiig  the  rules  of  pleading  in  civil  cases.  Under 
tlic  system  of  pleading  which  prevailed  in  the  courts  of  the  Ter- 
ritory, the  objection  cannot  be  sustained. 

Tlic  judgment  of  the  Supreme  Court  of  the  Territory  is  there- 
fore alhrmed  with  costs. 

It  may  be  stated,  as  the  result  ol'  the  foregoing  cases  and  citations,  that  in 
the  folh)wing  States,  one  who,  not  a  party  to  negotiable  paper,  places  his  name, 
without  more,  on  the  back  of  the  same,  before  an  indorsement  by  the  payee,  renders 
himself,  in  the  absence  of  proof,  liable  as  maker  or  surety  :  ^Massachusetts,  Vermont, 
Maine.  Xew  Hampshire,  Michigan,  Louisiana,  Missouri,  South  Carolina,  Texas  5 
also  in  Rhode  Island,  Georgia,  Ohio,  and  Minnesota,  if  the  party  signed  before 
deliver}'  to  and  to  secure  the  payee. 

In  the  following,  as  indorser:  New  York,  Mississippi,  Pennsylvania,  Tennes- 
see, Iowa,  Wisconsin,  California,  Indiana.  In  New  York  this  liability  cannot 
be  changed  by  ])arol  proof. 

In  the  following,  as  guarantor:  Illinois,  Connecticut,  Ohio:  also  in  Virginia, 
if  the  paper  is  not  negotiable.  In  New  York  and  Louisiana,  if  the  paper  is 
uniiegotiable,  such  person  becomes  maker  or  guarantor.  Griswold  r.  Slocum, 
10  Barb.  402;  Cooley  v.  Lawrence,  4  Martin,  639. 


156 


INDORSEMENT. 


In  Kentucky,  as  indorser  or  guarantor,  as  to  which  proof  of  intention  will  be 
received ;  but  evidence  is  inadmissible  to  bind  such  signer  as  maker.  Kellogg 
V.  Dunn,  2  Met.  Ky.  215. 

But  proof  of  intention  is  admissible  in  the  courts  of  the  United  States,  and 
probably  in  all  the  above-named  States  excepting  New  York  and  Massachusetts ; 
and  in  the  latter  State  it  may  be  shown  that  the  third  person  signed  subsequently, 
to  the  execution  of  the  paper,  thus  repelling  the  presumption  that  he  is  an  orig- 
inal^promisor.  But  if  the  flict  is  established,  either  by* direct  proof  or  by  the 
legal  presumption  in  the  absence  of  proof,  that  the  signature  was  contem- 
poraneous with  the  making,  no  proof  of  intention  will  be  received.  See  Essex 
Company  v.  Edmands,  12  Gray,  273 ;  Bigelow  v.  Colton,  13  Gray,  309 ;  Lake 
V.  Stetson,  ib.  310 ;  Pearson  v.  Stoddard,  9  Gray,  199  ;  Wright  v.  Morse,  9 
Gray,  337;  also  note  to  Union  Bank  of  Weymouth  w.  Willis,  ante,  p.  124. 

The  above  supposes  the  mere  signature  of  the  name  without  more.  If  the 
party  write  a  guaranty  over  his  own  name,  the  better  opinion  seems  to  be  that 
his  liability  is  that  of  guarantor.  See  Spies  v.  Gilmore,  1  Comst.  321 ;  Tinker 
V.  McCauley,  3  Mich.  188,  overruling  Higgins  v.  Watson,  1  Man.  428.  But 
such  a  contract  was  held  an  indorsement  in  Partridge  v.  Davis,  20  Vt.  499,  and 
in  some  other  early  cases.  See  note  to  Brown  v.  Butchers'  and  Drovers'  Bank, 
ante,  p.  110. 


Leavitt,  President  of  the  American  Exchange  Bank,  v. 
Putnam  et  al. 

(3  Comstock,  494.     Court  of  Appeals  of  New  York,  July,  1850.) 

Indorsement  after  maturity.  —  Negotiable  paper  does  not  lose  its  negotiable  character  by 
being  dishonored ;  not  even  though  indorsed  to  a  particular  person  without  other 
words. 

The  case  is  stated  in  the  opinion  of  the  Court. 

BuRLBUT,  J.  On  the  twenty-ninth  day  of  August,  1844,  Messrs. 
J.  W.  and  R.  Leavitt  made  their  note  for  $1570.52,  payable  to  the 
order  of  T.  Putnam  &  Co.  (the  defendants),  eight  months  after  date. 
A  few  days  after  the  maturity  of  the  note,  the  defendants  indorsed 
it  as  follows  :  "  Pay  the  within  to  A,  Thacher,  value  received, 
May  21,  1845.  T.  Putnam  &  Co."  Thacher  indorsed  without 
recourse,  and  delivered  the  note  for  a  valuable  consideration  to  the 
American  Exchange  Bank,  in  whose  behalf  this  action  is  brought. 

On  the  trial,  the  defendants  urged,  among  other  grounds  of 
objection  to  the  plaintiff's  recovery,  that  the  defendants'  indorse- 


LEAVITT  V.    PUTNAM.  157 

inent  was  in  effect  a  new  draft  payable  to  Thacher  only,  and  not 
negotiable,  so  that  no  action  conld  be  maintained  upon  it  in  the 
name  of  the  i)laintill'.  In  this  they  were  sustained  by  the  Court, 
and  the  plaintiff  was  nonsuited. 

The  other  oljjcctions  taken  by  the  defendants  on  their  motion 
for  a  nonsuit  were  not  considered  by  the  Court  below,  and  under 
the  circumstances  of  the  case  cannot  be  noticed  on  this  appSal ; 
so  that  the  only  thing  for  us  to  consider  is,  whether  the  indorse- 
ment of  a  note  made  after  due,  differs  from  one  made  before 
maturity  in  respect  to  its  negotial)ility.  It  was  conceded  on  the 
argument  that  no  express  authority  could  be  found  sustaining 
the  distinction  upon  which  the  decision  of  the  Superior  Court 
was  based,  l)ut  it  was  urged  that  the  defence  could  be  sustained 
upon  the  ])rinciple  that  a  dishonored  note  loses  its  mercantile 
character,  and  its  indorsement  l)ecomes  an  original  contract  wiiich 
must  be  made  expressly  negotiable  in  terms,  or  it  could  not  be 
held  to  possess  the  character  of  negotiability.  There  is  unques- 
tional)ly  a  difference  between  the  indorsement  of  a  note  after  due 
and  one  while  it  is  running  to  maturity,  but  this  relates  only  to  a 
single  point  arising  from  the  necessity  of  the  case ;  to  wit,  the 
time  of  payment,  which,  in  the  latter  indorsement,  is  fixed  at  a 
future  day  by  the  express  agreement  of  the  parties,  while  in  the 
former,  it  is  declared  by  law  to  be  within  a  reasonable  time,  upon 
demand.  But  in  all  other  respects  the  contract  is  the  same  as  an 
indorsement  in  tlie  usual  course  of  trade  ;  and  it  is  difficult  to 
perceive  how  the  single  difference  referred  to  can  at  all  affect  the 
negotiability  of  the  indorsement.  A  bill  or  note  does  not  lose  its 
negotiable  character  by  being  dishonored.  If  originally  negotiable 
it  may  still  pass  from  hand  to  hand  ad  infinitum  until  paid  by  the 
drawer.  Moremer  the  indorser  after  maturity  writes  in  the  same 
form,  and  is  l)ound  only  uj)on  the  same  condition  of  demand  upon 
the  drawer  and  notice  of  non-payment  as  any  other  indorser. 
Thus  the  paper  preserves  its  mercantile  existence  and  retains  the 
main  attributes  of  a  proper  ])ill  or  note,  and  circulates  as  such  in 
the  commercial  community.  Exceptions  to  a  general  rule  affect- 
ing so  important  and  numerous  a  class  of  transactions  as  the  one 
under  consideration  must  be  productive  of  great  inconvenience, 
and  will  not  be  indulged  except  for  urgent  reasons;  and  nothing 
has  been  made  to  appear  in  tlie  argument  or  seems  to  exist  in  the 
case,  which  warrants  the  Court  in  treating  the  ordinary  indorse- 
ment of  a  dishonored  bill  or  note  as  without  the  law  merchant 


If 

158  INDORSEMENT. 

and  not  negotiable.  While  it  was  questioned  whetlier  such  a  note 
was  negotiable,  and  whether  the  indorser  was  chargeable  except 
upon  the  usual  condition  of  demand  and  notice,  there  was  perhaps 
reason  enough  to  sustain  the  decision  of  the  Court  below.  But  since 
both  the  note  and  its  indorsement,  by  a  long  course  of  decisions, 
have  been  treated  as  within  the  law  merchant  in  respect  to  their 
main  attributes,  the  indorsement  ought  to  be  regarded  as  negoti- 
able to  tiie  same  extent  as  an  indorsement  before  maturity.  The 
latter  follows  the  nature  of  the  original  bill,  and  is  equally  nego- 
tiable. Edie  V.  The  East  India  Co.,  2  Burr.  1216  ;  Mutford  v. 
Walcot,  1  Ld.  Raym.  571;  Allwood  v.  Hazelton,  2  Baylies,  S.  C. 
457;  Bishop  v.  Dexter,  2  Conn.  419;  Berry  v.  Robinson,  9 
Johns.  121. 

The  note  in  the  present  case  was  upon  its  face  transferable, 
and  its  character  in  respect  to  negotiability  could  only  have  been 
changed  by  an  indorsement  containing  express  words  of  restric- 
tion. The  defendants'  indorsement  was  a  full  one,  containing  the 
name  of  the  person  in  whose  favor  it  was  made,  but  omitting  the 
words  "  or  order,^^  the  legal  effect  of  which  was,  nevertheless,  to 
make  the  note  payable  to  him  or  his  order,  and  his  indorsement 
therefore  was  effectual  to  transfer  the  note  to  the  plaintiff.  Chitty, 
Bills,  136  ;  Story,  Prom.  Notes,  §  139. 

I  am  of  opinion  that  the  judgment  of  the  Superior  Court  should 
be  reversed,  and  a  new  trial  awarded.  Judgment  revei'sed. 

The  doctrine  of  this  case  is  well  settled.  See  Chitty,  Bills,  215 ;  Story, 
Promissory  Notes,  §  178;  Id.  Bills  of  Exchange,  §§  220-223,  and  cases  cited. 

Upon  the  subject  of  defences  in  the  case  of  paper  overdue,  see  Holder  Foii 
Value,  i^ost. 


Ebenezer  R.  Estabrook  v.  Willis  Smith. 

(6  Gray,  570.     Supreme  Court  of  Massachusetts,  September,  1856.) 

Indorsement  of  firm  note  bi/  partner  in  his  own  name.  —  An  indorsement  by  one  partner,  in 
his  individual  name,  to  liis  copartner,  the  paper  being  payable  to  the  firm  or  order, 
will  not  enable  the  indorsee  to  sue  thereon  in  his  own  name. 

The  case  is  sufficiently  stated  in  the  opinion  of  the  Court. 

Dewey,  J.     We  take  the  rule  to  be    uncontroverted,   that   a 
promissory  note  payable  "  to  A  B  or   order  "    cannot   be    trans- 


EsTABIlOOK    V.    SMITH.  159 

ferrcd,  so  as  to  give  a  right  of  action  in  the  name  of  a  liolder, 
not  the  original  party,  without  an  indorsement  hy  the  payee. 
The  a[)plication  of  tliis  principle  seems  to  be  decisive  against 
the  right  of  the  [)UiintilT  alone  to  maintain  this  action.  The 
action  is  brought  by  Estabrook  upon  a  note  made  to  a  copartner- 
ship, Estabrook  and  Richmond,  promising  them,  by  the  name  of 
their  copartnership,  to  pay  them  or  order  a  certain  sura  of  money. 
That  this  action  cannot  1)C  maintained  Ijy  the  plaintiff,  as  payee  of 
the  note,  is  obvious  ;  as  that  would  at  once  present  a  case^vhere 
there  was  an  omission  to  join  all  the  payees  as  plaintiffs,  which 
would  be  fatal  to  the  action.  The  only  question  therefore,  is, 
whether  this  note  is  legally  indorsed,  so  as  to  enable  the  plaintiff 
to  maintain  the  action  as  indorsee. 

The  payees  of  the  note  are  Estabrook  and  Riciimond,  who  cora- 
j)ose  a  partnership.  An  indorsement  of  the  note  by  the  payees 
would  therefore  be  an  indorsement  by  Estabrook  and  Richmond, 
and  this  would  correspond  with  the  form  of  the  note,  and  trans- 
fer the  same  to  their  indorsee.  One  partner  might  properly 
transfer  the  note  by  indorsement,  but  he  must  do  it  by  indorsing 
the  partnership  name.  Any  thing  less  than  this  seems  to  be  an 
irregularity,  and  a  departure  from  the  legitimate  mode  of  transfer 
of  a  negotial)le  note  or  bill,  payable  to  the  order  of  a  copartnership. 

It  is  not  contended  that  the  indorsement  by  Richmond  alone 
would  have  l^ccn  sufficient  to  authorize  an  action  in  the  name  of 
a  third  })erson  as  indorsee  ;  but  it  is  urged  that  such  indorsement 
is  sufficient  to  authorize  an  action  by  the  other  partner,  Esta- 
brook, as  indorsee.  The  position  taken  is,  that  Richmond,  by  his 
indorsement,  has  parted  with  all  his  interest,  and  so  vested  the 
entire  note  in  Estal)rook.  This  may  be  all  true  as  between  Rich- 
mond and  Estabrook,  and  might  be  quite  sufficient  to  settle,  as 
between  them,  to  whose  use  this  money  was  to  be  held  when  col- 
lected. But  the  question  still  recurs,  as  to  the  effect  of  such  an 
indorsement  as  against  the  maker  of  the  note,  and  whether  it 
creates  the  legal  relation  of  indorsee.  As  already  remarked,  the 
present  action,  if  maintainable  at  all,  is  maintainable  by  Esta- 
brook as  indorsee  of  the  note.  To  constitute  a  legal  indorsement, 
the  payees,  Estabrook  and  Richmond  must  be  the  indorsers.  But 
no  such  indorsement  has  ever  been  made.  No  one  has  ])rofessed 
to  indorse  the  note  in  the  partnership  name.  The  only  indorse- 
ment is  that  of  Richmond  individually  ;  and  although  it  might  be 


160  INDORSEMENT. 

quite  competent  for  the  payees,  Estabrook  and  Richmond,  in  their 
partnership  name,  to  have  indorsed  it  to  Estabrook,  yet  they  have 
not  done  so. 

We  have  found  no  authority  for  maintaining  an  action  by  an 
indorsee  under  such  circumstances.  Tlie  case  of  Goddard  v.  Ly- 
man, 14  Pick.  268,  which  seems  to  be  the  most  favorable  case 
cited  to  sustain  the  position  taken  by  the  plaintiff,  was  widely 
different  from  the  present  case.  In  that  case,  although  the  orig- 
inal i^^dorscmcnt  was  by  two  only  of  three  payees,  and  made  to 
the  other  payee  and  a  third  person,  yet  it  was  subsequently  in- 
dorsed by  the  third  payee,  and  came  to  the  hands  of  the  plaintiff, 
who  instituted  the  suit  with  the  indorsement  of  all  the  payees. 
That  case,  upon  its  facts,  does  not  therefore  furnish  any  precedent 
for  this  case ;  although  some  of  the  remarks,  as  found  in  the 
opinion  of  the  Court,  might  seem  to  indicate  a  broader  doctrine 
than  the  case  required. 

Robb  V.  Bailey,  13  La.  An.  457,  was  a  case  similai-  to  the  principal  case ;  and 
the  same  rule  was  adopted.  See  also  Fergusons.  King,  5  La.  An.  642  ;  Fletcher 
V.  Dana,  4  Blackf.  377  ;  Desha  v.  Stewart,  6  Ala.  852 ;  Moore  v.  Denslow,  14 
Conn.  235;  Absolon  v.  Marks,  11  Q.  B.  19;  Russell  v.  Swan,  16  Mass.  314; 
Hooker  v.  Gallagher,  6  Fla.  351 ;  2  Greenl.  Ev.  §  163. 

Upon  the  death  of  a  member  of  a  firm,  the  survivor  may  indorse  in  the  firm 
name  paper  payable  to  the  firm.  Jones  v.  Thorn,  14  Martin,  463.  Though  it 
was  not  necessary  in  this  case  for  the  Court  to  go  farther  than  to  say  that,  in 
indorsing  the  firm  name,  the  survivor  thus  passes  all  of  his  own  interest,  still 
the  doctrine  of  survivorship  in  partnerships  seems  broad  enough  for  the  rule  that 
such  indorsement  passes  full  and  complete  title  to  the  paper,  as  much  so  as  if 
recfularly  indorsed  by  the  firm  in  the  lifetime  of  the  deceased  copartner.  Mr. 
Justice  Story,  in  his  Treatise  on  Promissory  Notes,  §  125,  states  that  in  such 
case,  "  The  note,  or  chose  in  action,  vests  exclusively  in  the  partner  by  survi- 
vorship, although  he  must  account  therefor,  as  part  of  the  assets  of  the  partner- 
ship ;  "  citing  Crawshay  v.  Collins,  15  Ves.  218,  226. 

"Where  the  paper  is  indorsed  in  blank  to  a  firm,  and  one  of  the  firm  dies  there- 
after and  before  suit,  the  other  members  need  not,  as  in  contracts  generally,  de- 
clare as  surviving  partners,  as  they  were  not  bound  to  prove  the  partnership,  or 
that  the  paper  was  indorsed  or  delivered  to  them  jointly  with  their  deceased 
partner.  Attwood  v.  Rattenbury,  6  J.  B.  Moore,  579.  But  it  is  otherwise  if 
the  paper  is  indorsed  specially.  Ibid.,  per  Pui^k,  B.,  who  said,  in  relation  to  spe- 
cial indorsements  :  '*  It  has  often  been  ruled  that,  in  an  action  by  the  payees  or 
indorsees,  strict  evidence  must  be  given  that  the  firm  to  whom  it  is  indorsed  con- 
sists of  the  persons  who  sue  as  plaintiffs  on  the  record,  whilst  an  indorsement  in 
blank  conveys  a  joint  right  of  action  to  as  many  as  agree  to  sue  on  the  bill." 

This,  in  substance,  is  the  language  of  Lord  Ellcnborough  in  Ord  v.  Portal,  3 
Camp.  239 ;  and  again  in  Rordasnz  v.  Leach,  1  Stark.  446.     See  also  Machell  v. 


STEVENS   V.    REALS.  161 

Kinnear,  1  Stark.  499,  in  wliicli  it  appeared  that,  though  the  indorsement  was  in 
blank,  a  rif^lit  of  aetion  was  vested  in  a  firm  as  tru.ste<!s  of  an  insolvent.  It  was 
hild  that  two  oi'  this  firm  could  not,  jointly  with  a  third  trustee,  not  a  ineinber 
of  the  firm,  maintain  an  action  on  the  hill,  without  some  evidence  of  the  trans- 
fer of  the  bill  to  them  by  the  firm,  by  delivery  or  otherwise.  See  also  Guidon  v. 
Robson,  2  C'anip.  302;  Low  r.  Copestake,  .'5  Car.  &  P.  300;  Bawden  v.  Howell, 
3  Man.  &  G.  638  ;  Whitlo<k  v.  McKechnie,  1  Bosw.  427  ;  Robb  v.  Bailey,  13  La. 
An.  4.07  ;  2  Cireenl.  Ev.  §  1()3 ;  and  cases  cited  at  the  beginning  of  this  note. 

The  following  cases  deny  the  |)ower  of  one  of  a  firm  to  indorse  paper  pay- 
able to  the  firm,  when  the  partnership  has  been  dissolved  in  the  lifetime  of 
its  members :  Sanford  v.  Mickles,  4  Johns.  224 ;  even  though  the  partner  may 
have  authority  to  settle  the  partnership  effeets,  Abel  v.  Sutton,  3  Esp.  108, 
per  Lord  Kenyan;  Humphries  t).  Chastain,  5  Ga.  166;  Foltz  v.  Pourie,  2  De- 
saussure,  Eq.  40.     See  Parker  v.  Macomber,  18  Pick.  505, 

But  the  contrary  is  held,  if  the  dissolution  was  unknown  to  the  indorsee, 
Conyr.  Wheelock,  33  Maine,  366.  See  Lewis  v.  Reilly,  1  Q.  B.  349.  So  if 
the  firm  note  was  made  payable  to  the  partner  who,  after  dissolution,  indorsed 
it.     Temple  i\  Seaver,  11  Cush.  314. 

"  It  is  well  settled  that  a  note  made  by  a  partnership  to  one  of  its  own  mem- 
bers, or  his  order,  when  indorsed  will  enable  the  indorsee  to  maintain  an  action 
upon  it.  It  is  the  promise  of  all  to  the  order  or  appointee  of  one ;  and  when 
the  appointment  is  made  by  an  indorsement,  it  is  a  valid  contract  with  tlie  in- 
dorsee." Per  Shaw,  C.  J.,  in  Thayer  v.  BulTum,  11  Met.  398,  citing  Pitcher  v. 
Barrows,  17  Pick.  361 ;  Smith  v.  Lusher,  5  Cow.  688 ;  Blake  v.  Wheadon, 
2  Hay.  109.  See  also  Sherwood  v.  Barton,  36  Barb,  284 ;  Fulton  v.  Williams, 
11  Cush.  108;  Temple  v.  Seaver,  supra. 


Daniel  B.  Stevens  v.  William  Beals. 

(10  Cushing,  291.     Supreme  Court  of  Massachusetts,  October,  1852.) 

Indorsement  hy  wife  with  consent  of  her  husband.  —  A  wife,  with  the  consent  of  iier  hus- 
band, may  indorse  in  her  own  name  a  promissory  note  made  payable  to  her 
during  coverture,  and  pass  a  good  title  to  the  indorsee. 

Assumpsit  by  the  indorsee  against  the  maker  of  the  following 
promissory  note  :  "  Lowell,  June  <S,  1848.  For  value  received,  I 
promise  to  pay  Lydia  H.  McFarland,  or  order,  $150  on  demand 
with  interest.     Williaiu  locals.'' 

At  the  trial  in  the  Court  of  Common  Pleas,  it  appeared  tliat  at 
the  dale  of  the  note  the  payee  was  a  married  woman,  living  in 
this  Commonwealth  with  her  husband  ;  that  her  husband  wrote  the 

11 


162  INDORSEMENT. 

note,  and  always  permitted  his  wife  afterwards  to  retain  possession 
of  it.  There  was  evidence  tending  to  show  that  the  defendant 
had  promised,  in  presence  of  the  payee's  husband,  to  pay  this 
note  to  the  wife,  whenever  she  wanted  the  money  ;  and  that  the 
money  loaned  to  the  defendant  at  the  time  of  giving  the  note,  was 
given  to  tlic  wife  by  the  husband,  at  the  time  of  tlicir  marriage, 
and  liad  been  used  and  loaned  by  her  ever  since.  Tiie  note  was 
indorsed  by  tlie  wife  in  her  own  name,  and  she  testified  that  her 
husband  had  given  her  tlie  fullest  assent  to  do  as  she  pleased  with 
the  note,  and  that  she  was  to  have  the  note  as  her  own  ;  that  the 
defendant  had  promised  her  repeatedly  to  pay  the  note. 

Tlie  defendant  objected  that,  by  the  indorsement  of  the  wife  no 
legal  title  passed  to  the  indorsee,  and  that  this  action  could  not  be 
maintained.  But  the  presiding  judge,  Mellen,  J.,  ruled  that  the 
wife,  with  the  assent  of  the  husband,  could  indorse  the  note  so  as 
to  pass  the  property  in  it  to  the  indorsee. 

BiGELOW,  J.  Two  objections  only  have  been  insisted  on  by  the 
defendant  in  support  of  the  exceptions  in  this  case.  The  first 
relates  to  the  authority  of  the  wife,  upon  the  facts  reported,  to 
indorse  the  note  in  suit  in  her  own  name,  and  thereby  vest  a  good 
title  thereto  in  the  plaintiff.  There  can  be  no  doubt,  that  the  note, 
having  been  given  after  marriage  and  during  coverture,  although 
payable  to  the  wife,  was  tlie  absolute  property  of  the  husband, 
and  he  could  pass  the  title  thereto  by  his  own  sole  indorsement. 
The  authorities  in  this  country  are  concurrent  to  this  point. 
Bingham  on  Inf.  &  Cov.  213,  note.  We  think  it  is  equally  clear, 
that  a  note  made  payable  to  the  wife  during  coverture,  when  in- 
dorsed by  tlie  wife  in  her  own  name,  with  the  assent  and  author- 
ity of  the  husband,  passes  by  a  good  title  to  an  indorsee  ;  but  that 
without  such  assent  and  authority  no  title  passes  by  her  indorse- 
ment. The  cases  all  turn  upon  this  distinction.  In  the  leading 
case  of  Barlow  v.  Bishop,  1  East,  433,  which  decides  that  a  mar- 
ried woman  cannot  indorse  a  note  made  payable  to  her  in  her  own 
name,  so  as  to  pass  a  valid  title  thereto,  proof  of  the  authority  or 
assent  of  the  husband  was  wanting.  Subsequent  decisions  have 
fully  recognized  this  distinction ;  and  it  is  now  the  well-settled 
rule  of  law  that  the  assent  or  authority  of  the  husband  gives 
validity  to  the  wife's  indorsement,  and  enables  her  to  pass  a  good 
title  to  choses  in  action  made  payable  to  her  during  coverture. 


STEVENS   V.    DEALS.  1C3 

The  principle  upon  wliicli  this  distinction  rests  is  this  :  The  C(nor- 
ture  of  the  wife  creates  an  incapacity  and  disability  in  her  to 
make  a  valid  contract.  The  assent  of  the  husband  removes  this 
disability  or  supplies  the  want  of  capacity.  She  then  becomes  to 
a  certain  extent  tlie  agent  of  the  husband,  who  is  bound  by  jier 
acts  when  done  in  pursuance  of  the  authority  conferred  by  him. 
Chitty,  Bills,  21,  200,  201  ;  2  Bright,  Husband  and  Wife,  42 ; 
Cotes  V.  Davis,  1  Camp.  485  ;  Prestwick  v.  Marshall,  7  Bing.  SO-O, 
and  4  Car.  &  P.  5U4  ;  Prince  v.  Brunatte,  1  Bing.  ^.  C.  435  ; 
Miller  v.  Delamater,  12  Wend.  433. 

The  case  of  Savage  v.  King,  5  Rhep.  301,  which  was  cited  and 
relied  on  by  the  defendant,  is  in  conllict  with  the  other  authorities 
upon  this  point.  The  Court  put  their  decision  in  that  case  mainly 
upon  the  authority  bf  Barlow  v.  Bishop,  without  adverting  to  the 
distinction  created  by  proof  of  the  assent  of  the  husband  to  the 
indorsement,  which  seems  to  have  escaped  the  attention  both  of 
the  counsel  and  the  Court.  We  cannot,  therefore,  yield  our  assent 
to  the  authority  of  that  case. 

It  was  urged  by  the  counsel  for  the  defendant  as  a  strong  argu- 
ment against  the  recognition  of  the  rule  of  law  giving  effect  to 
the  wife's  indorsement,  when  assented  to  and  authorized  by  the 
husband,  that  it  might  in  some  cases  operate  very  greatly  to  the 
prejudice  of  the  rights  of  a  promisor.  The  argument  was  this  : 
The  note  being  given  to  the  wife  during  coverture,  the  property 
in  it  vests  absolutely  in  the  husband,  and  he  can  sue  in  his  own 
name  upon  it ;  the  indorsement  of  the  note  by  the  wife  in  her  name 
ex  proprio  vlgore,  would  pass  no  title  to  it ;  and  therefore  the 
recovery  by  the  indorsee  of  the  wife  would  be  no  bar  to  another 
recovery  by  the  husband,  unless  the  promisor  could  show  the 
assent  of  the  husband  to  her  indorsement,  which  he  might  not  be 
able  to  do,  because  the  wife  in  an  action  by  the  husband  on  the  note, 
could  not  be  called  by  the  promisor  as  a  witness  to  prove  it.  But 
it  seems  to  us,  that  tliis  argument  entirely  overlooks  the  effect  of 
a  recovery  on  the  note  by  the  indorsee  of  the  wife.  The  rule  of 
law  being  that  such  indorsement  is  inoi)crative  without  the  hus- 
band's assent,  and  passes  no  title  to  the  indorsee,  a  recovery  by 
such  indorsee  necessarily  implies  the  husband's  assent  and  author- 
ity, without  which  no  recovery  on  it  could  have  been  had.  The 
indorsement,  therefore,  of  the  wife,  under  sucli  circumstances,  is 
equivalent  to  that  of  the  husband.     Her  act  becomes  in  law  his 


164  INDORSEMENT. 

act.  The  person  recovering  a  judgment  as  indorsee  on  such  a 
note,  must  claim  through  her  husband  by  a  title  derived  from  him 
and  in  privity  with  him.  He  thereby  becomes  bound  by  the 
judgment  recovered  against  the  promisor,  who  can  well  plead  it  in 
bar,  in  a  suit  brought  on  the  same  note  against  him  by  the  hus- 
band. 

In  the  case  at  bar,  the  authority  and  assent  of  the  husband  of 
the  payee  to  the  wife's  indorsement  were  abundantly  proved,  and 
the  instructions  of  the  Court  upon  this  part  of  the  case,  were  en- 
tirely correct  and  in  conformity  with  the  authorities  above  cited. 

Upon  the  other  point  in  this  case  —  that  the  allegation  in  the  writ  that  the 
note  was  indorsed  to  the  plaintiff  before  the  commencement  of  suit,  is  not  legal 
evidence  of  its  truth  —  the  exceptions  of  the  defendant  were  sustained,  and  a 
new  trial  granted. 

The  question  decided  in  the  principal  case  respecting  indorsements  by  married 
women  arose  again  in  Maine,  in  1856,  in  the  case  of  Hancock  Bank  v.  Joy,  41 
Maine,  568.  That  was  an  action  upon  a  bill  of  exchange  payable  to  the  order 
of  the  defendant's  wife,  and  by  her  indorsed  by  authority  of  her  husband.  He 
was  held  liable  by  a  unanimous  court.  The  principal  case  is  cited  as  authority 
for  the  decision. 

In  Savage  v.  King,  17  Maine,  801,  disapproved  by  Chief  Justice  Bigelow,  supra^ 
it  was  not  proved  that  the  wife  acted  for  her  husband  at  the  time  of  her  indorse- 
ment.    It  is  cited  to  this  effect  in  Hancock  Bank  v.  Joy,  supra. 

The  rule  in  the  principal  case  is  also  the  law  in  Pennsylvania.  See  Reakert  v. 
Sanford,  .j  Watts  &  S.  161;  Leeds  v.  Vail,  15  Penn.  State  (3  Harris),  185. 
Also  probably  in  Delaware.  See  Fredd  v.  Eves,  4  Harr.  385.  The  same  is 
held  again  in  England  in  Lindus  v.  Bradwell,  5  Com.  B.  583,  and  may  be  cou- 
sidered  as  established  beyond  question. 


DAY   V.    COUDINGTON.  1G5 


IIOLDEK   FOR   VALUE. 


Bay  v.  Coddington  et  al. 

(5  Johnson's  Ch.  54.     ('curt  of  ( "liancery  of  New  York,  1821.) 

Note  delivered  as  security  for  contingent  liability.  —  A,  the  agent  of  B,  received  negotiable 
notes  to  be  delivered  to  B,  but  delivered  them  to  C,  as  security  for  responsibilities 
incurred  by  C  in  indorsing  accommodation  paper  for  himself,  A.  C  liad  not  then 
become  chargeable  on  his  said  indorsements.  Held,  that  C  was  not  a  bona  fide 
holder  for  value,  though  he  did  not  know  tiiat  the  delivery  of  the  notes  to  himself 
by  A,  was  fraudulent,  but  believed  A  to  be  tlie  real  owner  of  them. 

The  plaintiff  being  owner  of  a  vessel,  employed  Randolph  and 
Savage,  defendants,  who  were  carpenters,  to  sell  her  on  a  credit, 
and  take  good  notes  in  payment,  and  transmit  the  same  to  him, 
with  an  account  of  their  charges,  which  he  would  pay.  R.  and  S. 
sold  the  vessel  for  $3870,  and  on  the  third  of  June,  1819,  received 
the  notes  of  the  purchasers,  payable  in  two,  three,  and  four 
months  ;  some  of  them  being  made  payable  to,  and  indorsed  by,  P. 
Ay  mar  &  Co.,  and  tlie  others  by  J.  R.  Stewari.  On  the  twelfth  of 
June,  1810,  R.  and  S.  delivered  the  notes  so  indorsed,  to  tlie  de- 
fendants, J.  and  C.  Coddington,  who,  were,  at  that  time,  as  they 
stated  in  their  answer,  under  heavy  responsibilities  for  R.  and  S., 
as  indorsers  of  notes  for  their  accommodation,  payable  at  different 
times,  but  all  subsequent  to  the  twelfth  of  June,  1819,  and  wiiich 
they  were  afterwards  obliged  to  take  up,  as  they  fell  due,  amount- 
ing to  above  $17,000.  The  answers  admitted  that  R.  and  S.  had 
stopped  payment,  when  the  notes  so  held  by  them  were  to  be 
delivered  to  J.  and  C.  Coddington. 

The  defendants,  J.  and  C.  Coddington,  denied  all  knowledge  of 
the  manner  in  which  the  notes  had  come  to  the  hands  of  R.  and 
S.,  and  alleged  that  they  believed  that  they  were  the  bona  fide  and 
exclusive  property  of  R.  and  S. ;  that  they  received  these  notes 


166  HOLDER    FOR    VALUE. 

with  others,  as  a  guaranty  and  indemnity,  as  far  as  they  would 
avail,  for  their  responsibilities ;  and  three  days  after,  disposed  of 
some  of  the  notes  for  cash,  and  did  not  know,  until  several  days 
afterwards,  that  the  notes  belonged  to  the  plaintiffs,  as  stated  in 
the  bill.  They  admitted  that  when  they  so  received  the  notes,  R. 
and  S.  were  not,'  in  a  strict  legal  sense,  indebted  to  them  ;  but 
that  they  were  under  large  gratuitous  responsibilities  for  them. 

No  proofs  were  taken,  and  the  cause  came  on  to  be  heard  on 
the  pleadings  only. 

Kent,  Chancellor.  It  is  admitted  that  Randolph  and  Savage 
held  the  notes  belonging  to  the  plaintiff,  and  which  they  trans- 
ferred to  the  defendants,  J.  and  C.  Coddington,  on  tlie  twelfth  of 
June,  1819,  as  agents  or  trustees  for  the  plaintiff,  and  that  they 
had  no  authority  to  pass  them  away.  It  was  a  gross  and  fraudu- 
lent abuse  of  trust,  on  the  part  of  R.  and  S.  The  only  question 
now  is  whether  J.  and  C.  C.  are  entitled,  under  the  circumstances 
disclosed,  to  hold  the  notes,  and  retain  the  amount  of  them  as 
against  the  plaintiff. 

Negotiable  paper  can  be  assigned  or  transferred  by  an  agent  or 
factor,  or  by  any  other  person,  fraudulently,  so  as  to  bind  the  true 
owner  as  against  the  holder,  provided  it  be  taken  in  the  usual 
course  of  trade,  and  for  a  fair  and  valuable  consideration,  without 
notice  of  the  fraud.  But  the  defendants,  J.  and  C.  C,  have  not 
entitled  themselves  to  the  protection  of  holders  of  that  description. 
Tlie  notes  were  not  negotiated  to  them  in  the  usual  course  of 
business  or  trade,  npr  in  payment  of  any  antecedent  and  existing 
debt,  nor  for  cash,  or  property  advanced,  debt  created  or  respon- 
sibility incurred,  on  the  strength  and  credit  of  the  notes.  They 
were  received  from  R.  and  S.,  and  after  they  had  stopped  payment 
and  had  become  insolvent  within  the  knowledge  of  J.  and  C.  C, 
and  were  seized  iipon  by  the  Coddingtons,  as  tabula  in  navfragio^ 
to  secure  themselves,  against  contingent  engagements  previously 
made  for  R.  and  S.,  and  on  whicli  they  had  not  then  become  charge- 
able. There  is  no  case  that  entitles  such  a  holder  to  the  paper,  in 
opposition  to  the  title  of  the  true  owner.  They  were  not  holders 
for  a  valuable  consideration  within  the  meaning  or  within  the 
policy  of  the  law. 

Ii>  Miller  v.  Race,  1  Burr.  452,  a  bank-note  was  stolen,  and  came 
to  the  hands  of  the  plaintifif,  and  he  was  held  entitled  to  it.     But 


BAY    V.    CODDINGTON.  167 

the  Court  of  King's  Bench  considered  ))ank-notes  as  cash,  which 
passed  as  money  iu  the  way  of  business;  and  the  holder,  in  tiiat 
case,  came  by  the  note,  for  a  full  and  valualilc  consideration,  by 
giving  money  in  exchange  for  it,  in  the  usual  course  of  his  busi- 
ness, and  without  notice  of  the  robbery,  and  on  those  considerar 
tions  he  was  entitled  to  the  amount  of  the  note.  So,  in  Grant  v. 
Vaughan,  3  Burr.  lolO  ;  1  W.  Black.  785,  a  bill  of  exchange  payable 
to  bearer,  was  lost,  and  the  finder  paid  it  to  a  grocer  for  teas,  and 
took  the  change.  There  the  Court  laid  stress  on  the  facts  that 
the  holder  came  by  the  l)ill  bona  fide,  and  in  the  course  of  trade, 
and  for  a  full  and  fair  consideration,  and  that  though  he,  and  the 
real  owner  were  equally  innocent,  yet  he  was  to  be  preferred,  for 
the  sake  of  commerce  and  confidence  in  negotiable  paper.  Again, 
in  Peacock  v.  Rhodes,  1  Doug.  633,  a  bill  of  exchange,  with  a 
blank  indorsement,  was  stolen  and  negotiated  to  a  person  who 
took  it  in  the  way  of  his  trade,  for  cloth  sold  and  cash  for  the  bal- 
ance, and  he  was  held  entitled  to  hold  it.  Lord  Mansfield  placed 
reliance  on  the  circumstance  that  it  was  received  in  the  course  of 
trade.  It  was  "  by  reason  of  the  course  of  trade,  which  creates  a 
property  in  the  assignee  or  bearer,"  that  Holt,  C.  J.,  1  Salk.  126, 
Anon.,  held,  that  the  owner  of  a  bank-l)ill  which  was  lost  and 
transferred  by  the  finder  to  C,  for  a  valuable  consideration,  could 
not  maintain  an  action  against  C.  It  will  not  be  necessary  to  go 
further  in  support  of  the  principle  which  uniformly  pervades  the 
cases  upon  this  point,  and  I  shall  conclude  with  the  case  of  Collins 
V.  Martin,  1  Bos.  <fe  Pul.  648,  in  which  it  was  decided,  that  if 
bills  of  exchange,  indorsed  in  blank,  be  deposited  with  a  banker, 
to  be  received  when  due,  and  the  banker  laises  money  on  them,  by 
pledging  them  to  C,  and  then  becomes  bankrupt,  C  could  not  be 
sued  by  the  real  owner,  as  he  took  them  innocently,  without 
knowledge  of  the  previous  circumstances.  But  it  is  to  be  observed 
that  C  there  advanced  money  to  the  banker,  on  the  credit  of  the 
bills,  and,  as  C.  J.  Eyre,  observed  in  that  case,  "If  it  can  be 
proved  that  the  holder  gave  no  value  for  the  bill,  then,  indeed,  he 
is  in  privity  with  the  first  holder,  and  affected  by  all  that  will 
alfect  him." 

In  shor/,  I  have  not  been  able  to  discover  a  case  in  wiiioh  the 
holder  of  negotiable  paper,  fraudulently  transferred  to  him,  was 
deemed  to  have  as  good  a  title,  in  law  or  equity,  as  the  true  owner, 
unless  he  received  it  not  only  without  notice,  but  in  the  course  of 


168  HOLDER  FOR   VALUE. 

business,  and  for  a  fair  and  valuable  consideration  given  or  allowed 
on  his  part,  on  the  strength  of  that  identical  paper.  It  is  the 
credit  given  to  the  paper,  and  the  consideration  bona  fide  paid  on 
receiving  it,  that  entitles  the  holder,  on  grounds  of  commercial 
policy,  to  such  extraordinary  protection,  even  in  cases  of  the  most 
pali)able  fraud.  It  is  an  exception  to  the  general  rule  of  law,  and 
ought  not  to  be  carried  beyond  the  necessity  that  created  it. 

I  shall  accordingly  declare,  that  the  defendants,  J.  and  C.  Cod- 
dington,  are  not  entitled  to  the  notes  or  the  proceeds  thereof,  as 
against  the  plaintiff,  who  was  the  lawful  owner  of  them  when  they 
were  transferred  to  those  defendants,  inasmuch  as  they  did  not 
receive  the  notes  in  the  course  of  business,  nor  in  payment,  in 
whole  or  in  part,  of  any  then  existing  debt,  nor  for  cash  or  prop- 
erty advanced,  or  debt  created,  or  responsibility  incurred  on  the 
credit  of  the  notes.  And  I  shall  direct  that  it  be  referred  to  a 
master  to  compute  the  amount  of  the  said  notes,  with  interest 
thereon  from  the  times  they  were  respectively  payable,  to  the  time 
of  making  the  report ;  and  that  all  the  defendants  in  the  amended 
bill,  or  some  or  one  of  them,  pay  to  the  plaintiff  the  sum  that  shall 
be  reported  as  the  amount  of  the  said  notes,  with  interest,  as 
aforesaid,  within  thirty  days  after  tlie  master  shall  have  made  and 
filed  his  report,  and  notice  thereof,  and  of  this  decree,  or  that  the 
plaintiff  may  have  execution  therefor,  against  all  or  either  of 
the  said  defendants,  according  to  the  course  and  practice  of  the 
Court. 

And  it  is  further  ordered,  that  the  defendants,  R.  and  S.,  pay  to 
the  plaintiff  his  entire  costs  of  this  suit,  to  be  taxed,  including  the 
costs  of  the  original  bill,  and  that  the  plaintiff  give  credit  upon 
the  costs  so  to  be  taxed,  the  charges  and  commissions  due  from 
him  to  the  said  defendants,  R.  and  S.,  upon  the  sale  of  the  vessel 
in  the  pleadings  mentioned,  and  amounting  to  #96.87  ;  and  that 
he  have  execution  for  the  balance  of  costs,  after  such  deduction, 
against  them,  the  said  R.  and  S.  according  to  the  course  and  prac- 
tice of  the  Court.  And  it  is  further  ordered  that  no  costs  be 
taxed  or  allowed  to  the  plaintiff,  or  to  the  defendants,  J.  and  C.  C, 
as  against  each  other. 

Decree  accardingly. 

This  case  was  affirmed  in  the  Court  of  Errors,  in  1822,  20  Johns.  637.  See 
post,  note  to  Swift  v.  Tyson,  195. 


STALKRlt    V.    m'DONALD.  169 

Stalker  v.  M'Donald  et  al. 

(G  Hill,  93.     Court  of  Krrors  of  New  York,  December,  18i:3.) 

Paper  taken  as  security  fur  anteadnit  debt.  —  One  who  takes  a  note  merely  as  collateral 
security  for  an  antcceilent  debt,  without  advancing  any  tiling  upon  it,  or  relinquish- 
ing any  security,  is  not  a  holder  in  the  due  course  of  trade. 

Trover  for  the  alleged  conversion  of  two  promissory  notes  by 
Stalker.  He  came  by  the  notes  in  this  way :  The  firm  of  Gil- 
lespie and  Edwards,  who  were  in  debt  to  Stalker  on  a  certain  note 
which  they  found  they  could  not  pay,  prevailed  upon  Stalker  to 
withdraw  it  by  delivering  to  him  the  notes  in  question  as  security, 
for  a  promise  which  they  then  made  to  pay  their  note  in  a  short 
time.  This  firm  stopped  payment  and  failed,  without  paying  their 
indebtedness  to  Stalker.  The  two  notes  in  controversy  were  paid 
to  Stalker. 

Walworth,  Chancellor.  The  object  of  this  writ  of  error  ap- 
pears to  be  to  induce  this  Court  to  overrule  its  decision  in  th3  case 
of  Coddington  v.  Bay,  20  Johns.  637,  and  to  make  our  decision 
conform  to  the  opinion  of  Mr.  Justice  Stori/  in  the  recent  case  of 
Swift  V.  Tyson,  16  Peters,  1,^  decided  by  the  Supreme  Court  of 
the  United  States.  Upon  questions  arising  under  the  Constitu- 
tion and  laws  of  the  United  States,  and  upon  the  construction  of 
treaties,  the  decisions  of  that  high  tribunal  are  binding  upon  the 
State  courts ;  and  we  are  bound  to  conform  our  decisions  to  them. 
But  in  questions  of  local  law,  and  in  the  construction  of  the  Con- 
stitution and  statutes  of  the  State,  the  decisions  of  the  highest 
Court  of  judicature  of  the  State  are  the  evidence  of  what  the 
law  of  the  State  is  ;  and  are  to  be  followed  in  preference  to  those 
of  any  other  State  or  country,  or  even  of  the  United  States.  On 
a  question  of  commercial  law,  however,  it  is  (Ksiral)le  that  there 
should  be,  as  far  as  practicable,  uniformity  of  decision,  not  only 
between  the  courts  of  the  several  States  and  of  the  United  States, 
but  also  between  our  courts  and  those  of  England,  from  whence 
our  commercial  law  is  principally  derived,  and  with  whicii  country 
our  commercial  intercourse  is  so  extensive.     1  have,  therefore, 

1  Post,  186 


170  HOLDER    FOR    VALUE. 

thought  it  my  duty  to  re-examhie  the  principles  upon  which  the 
decision  of  this  Court  in  Coddington  v.  Bay  was  founded,  not- 
witlistanding  it  was  deliberately  made,  with  the  concurrence  of  at 
least  one  of  the  ablest  judges  who  has  ever  adorned  the  bench  of 
this  State,  and  has  been  acquiesced  in  and  followed  by  all  the 
courts  of  the  State  for  more  than  twenty  years.  And  I  have  done 
it  not  only  out  of  respect  to  the  decision  actually  made  by  the 
Supreme  Court  of  the  United  States  in  the  case  alluded  to,  but 
also  because  the  opinion  of  the  distinguished  judge  who  pro- 
nounced its  decision,  is  of  itself  entitled  to  very  great  weight  upon 
a  question  of  commercial  law  ;  although  what  he  said  in  that  case 
respecting  the  transfer  of  a  negotiable  note  as  a  mere  security  for 
the  payment  of  an  antecedent  debt  was  not  material  to  .the  de- 
cision of  any  question  then  before  the  Coiirt,  and  is  therefore  not 
to  be  taken  as  a  part  of  its  judgment  in  that  case. 

In  Coddington  v.  Bay,  this  Court  did  not,  so  far  as  I  have  been 
able  to  discover,  run  counter  to  any  decision  which  had  ever  been 
made  in  this  State  or  in  England,  previous  to  that  time.  For  the 
decision  admits  that  the  bona  fide  holder  of  negotiable  paper,  who 
has  received  it  for  a  valuable  consideration,  without  notice  or  rea- 
sonable ground  to  suspect  a  defect  in  the  title  of  the  person  from 
whom  it  was  taken  in  the  usual  course  of  business  or  trade,  is 
entitled  to  full  protection.  But  that  where  he  has  received  it  for 
an  antecedent  debt,  either  as  a  nominal  payment  or  as  a  security 
for  payment,  without  giving  up  any  security  for  such  debt  which 
he  previously  had,  or  paying  any  money  or  giving  any  new  consid- 
eration, he  is  not  a  holder  of  the  note  for  a  valuable  consideration, 
so  as  to  give  him  any  equitable  right  to  detain  it  from  its  lawful 
owner.  This  principle,  of  protecting  the  bona  fide  holder  of  nego- 
tiable paper,  who  has  paid  value  for  it,  or  who  has  relinquished 
some  available  security  or  valuable  right  on  the  credit  thereof, 
is  derived  from  the  doctrines  of  the  courts  of  equity  in  other 
cases  where  a  purchaser  has  obtained  the  legal  title  without 
notice  of  the  equitable  right  of  a  third  person  to  the  property.  It 
has  been  uniformly  held  by  the  courts  of  equity  in  such  cases  that 
the  purchaser  who  has  obtained  the  legal  title  as  a  mere  secu- 
rity or  payment  of  a  pre-existing  debt,  without  parting  with 
any  thing  of  value,  is  not  entitled  to  hold  the  property  as  against 
the  prior  equitable  owner.  And  if  he  has  paid  but  a  part  of  the 
consideration,  or  value  of  the  property,  he  is  only  entitled  to  be 


STALKER   V.    m'DONALD.  171 

considered  as  a  bona  fide  purchaser  pro  tanto.  Tliis  last  principle 
was  applied  l)y  one  of  the  courts  in  England  to.  the  purchaser  of 
a  negotiable  note,  where  the  indorser  of  a  note  for  £100,  l)y  hia 
re[)lication  to  the  plea  that  it  was  indorsed  to  him  without  consid- 
eration, stated  that  it  was  indorsed  to  him  for  the  consideration  of 
£49  ;  and  he  was  only  permitted  to  recover  that  amount  against 
the  defendant,  from  whom  the  note  had  been  oljtained  by  the  in- 
dorser without  consideration.  Edwards  v.  Jones,  7  Car.  &  Payne, 
688. 

It  is  somewhat  singular  that  Mr.  Justice  Story  should  rely  upon 
the  opinion  of  Chancellor  Kent  in  the  case  of  Bay  v.  Coddington,  5 
Johns.  Ch.  54,  as  evidence  that  the  decision  of  this  Court  sustaining 
his  opinion,  and  affirming  his  decree  in  the  same  case,  was  a  de- 
parture from  the  law  of  this  State  as  previously  settled.  And  the 
previous  case  of  Warren  v.  Lynch,  5  Johns.  2o'J,  is  not  in  conflict 
with  the  decision  of  tliis  Court ;  nor  does  it  decide  that  a  pre- 
existing deljt  is  a  sufficient  consideration  to  protect  the  holder  of 
a  .negotiable  note  wliich  was  not  valid  as  between  the  original 
parties,  against  the  equitable  rights  of  the  maker  of  the  note,  or 
against  the  rights  of  a  previous  owner.  For  the  note  in  that  case 
was  given  by  Lynch  for  a  valid  and  subsisting  debt  by  the  one  to 
whom  the  debt  originally  belonged.  Although  it  was  taken  in  the 
name  of  another  person,  that  person  indorsed  it  in  blank  for  the 
purpose  of  enabling  the  person  to  whom  the  debt  belonged  to 
negotiate  it ;  and  it  was  then  transferred  to  the  plaintifl",  imme- 
diately for  aught  that  appears,  partly  in  payment  or  security  of  a 
pre-existing  debt.  The  question  then  arose  whether  other  cred- 
itors of  the  former  owner  of  the  note  were  not  entitled  to  it,  as 
being  still  the  property  of  Rose,  the  original  owner,  or  of  Robert- 
son, the  indorser.  What  is  said,  therefore,  as  to  the  pre-existing 
debt,  is  merely  as  to  its  being  a  sufficient  consideration  as  between 
the  plaintiff  and  Rose,  from  whom  the  plaintiff  received  the  note. 
For  if  the  transfer  was  valid  as  between  them,  the  creditors  of 
Rose,  who  were  also  endeavoring  to  obtain  payment  of  a  pre- 
existing debt  merely,  acquired  no  right  to  the  money  due  on  the 
note,  by  their  subsequent  suit  in  the  nature  of  a  foreign  attachment 
in  the  State  of  Virginia.  The  case  of  Birdscye  r.  Ray,  4  Hill, 
loO,  cited  by  the  {)laintiff's  counsel  on  the  argument,  is  a  case  of 
the  same  character.  For  both  claimants  in  that  case  were  en- 
deavoring to  obtain  preference  in  pa'yment  of  pre-existing  debts. 


172  HOLDER   FOR   VALUE, 

And  the  Court  decided  tliat  one  of  them  who  had  secured  a  specific 
lion  upon  tlie  property  by  purchase  from  tlie  owner,  before  the 
other  creditor's  execution  was  actually  levied  thereon,  was  entitled 
to  hold  it  as  against  the  execution,  under  the  provision  of  the 
statute  on  that  subject.  In  other  words,  that,  as  between  cred- 
itors having  equal  equities,  the  debtor  may  lawfully  prefer  one  to 
the  other,  before  an  actual  levy  upon  his  property  has  been  made. 

There  is  no  doubt  that  the  cases  of  Wardell  v.  Howell,  9  Wend. 
170  ;  Rosa  v.  Brotherson,  10  id.  85  ;  Ontario  Bank  v.  Worthing- 
ton,  12  id.  593  ;  and  Payne  v.  Cutler,  13  id.  605,  in  the  Supreme 
Court  of  this  State,  and  of  Francia  v.  Joseph,  3  Edw.  Ch.  182,  before 
the  Vice-Chancellor  of  the  first  circuit,  follow  the  decision  of  this 
Court  in  the  case  of  Coddington  v.  Bay.  And  they  fully  estab- 
lish the  principle  that  to  protect  the  holder  of  a  negotiable  secu- 
rity which  has  been  improperly  transferred  to  him  in  fraud  of  the 
prior  legal  or  equitable  rights  of  others,  it  is  not  sufficient  that  it 
has  been  received  by  him  merely  as  a  security  or  nominally  in 
payment  of  a  pre-existing  debt,  where  he  has  parted  with  nothing 
of  value,  nor  relinquished  any  security  upon  the  faith  of  the 
paper  thus  improperly  transferred  to  him  without  any  fault  on  his 
part.  I  may  also  add  that  many  other  decisions  to  the  same  effect 
have  been  made  in  this  State,  in  the  different  courts  of  law  and 
equity,  within  the  last  twenty  years ;  although  most  of  them  have 
not  been  reported. 

It  is  supposed,  however,  by  the  learned  judge  who  delivered  the 
opinion  of  the  Supreme  Court  of  the  United  States  in  the  case 
before  alluded  to,  that  this  strong  column  of  decisions,  supported 
as  it  is  by  the  decree  of  Chancellor  Ke^it  in  the  case  of  Bay  v. 
Coddington,  by  the  opinions  of  Chief  Justice  Spencer  and  Justices 
Woodworth  and  Piatt  in  that  case,  and  by  every  judge  who  has 
occupied  a  seat  upon  the  bench  of  the  Supreme  Court  since  1822, 
has  been  greatly  shaken,  if  not  entirely  overturned,  by  two  recent 
decisions  of  the  Supreme  Court.  That  the  judges  who  made 
those  two  decisions  do  not  themselves  so  understand  them,  how- 
ever, is  evidenced  by  the  fact  that  they  have  given  judgment  in 
the  case  now  under  consideration,  in  conformity  with  the  principle 
of  the  decisions  which  they  are  supposed  to  have  overruled.  And 
1  have  not  been  able  to  discover  any  thing  in  the  opiniojis  of  the 
Court,  as  reported  in  the  cases  of  The  Bank  of  Salina  v.  Babcock, 
21   Wend.  499,  and  the  Bank  of    Sandusky   v.  Scoville,  24  id. 


8TALKBR   V.    m'dONALD.  173 

115,  wliich  necessarily  conlllcts  with  any  previous  decision  of  tlie 
Supreme  Court  upon  the  (juestion  now  under  consideration.  In 
the  first  case,  the  note  was  discounted  at  the  bank  in  the  ordinary 
way.  And  the  proceeds  thereof  were  applied,  by  the  authority  of 
the  persons  for  whom  it  was  discounted,  to  pay  up  and  cancel 
three  other  notes  which  were  then  due  to  the  bank  ;  upon  two  of 
which  notes,  amounting  to  nearly  the  whole  of  sucii  proceeds, 
there  was  a  responsil)le  indorser.  The  Court  held  that  the  effect  of 
the  transaction  was  the  same  as  if  the  parties  for  whose  benefit  the 
note  was  discounted  had  actually  received  the  money  therefor,  and 
had  afterwards  applied  it  to  pay  and  discharge  the  notes  then  due ; 
and  that  the  indorser  upon  those  notes  was  discharged  from  his 
liability.  In  the  second  case,  the  question  arose  under  the  usury 
law  as  contained  in  the  revised  statutes,  which  protects  usurious 
notes  in  the  hands  of  an  indorsee  or  holder  who  shall  have  re- 
ceived the  same  in  good  faith,  and  for  a  valuable  consideration. 
1  R.  S.  172,  §  o.  And  the  Court  considered  the  transaction  the 
same  as  though  the  money  had  been  actually  paid  to  the  person 
for  whose  benefit  tlie  usurious  note  was  discounted,  and  he  had 
then  applied  it  in  payment  of  the  former  note  ;  so  that  the  original 
indebtedness  was  extinguished,  and  the  bank  had  no  other  remedy 
to  recover  their  money  except  upon  the  note  which  was  alleged  to 
have  been  originally  tainted  with  usury.  The  question  in  that 
case  was,  whether  the  transaction  was  equivalent  to  an  actual 
payment  of  the  money  for  the  usurious  note,  so  as  to  make  the 
bank  a  bona  fide  holder  for  a  valuable  consideration  ;  and  not 
whether  giving  the  note  for  a  pre-existing  debt  was  a  payment  of 
value.  Under  a  similar  provision  in  the  English  statute  it  has 
been  decided  that  a  negotiable  note  tainted  with  usury  was  invalid 
in  the  hands  of  an  innocent  party,  who  had  merely  taken- it  in 
payment  of  an  antecedent  debt.  Vallance  v.  Siddel,  2  Nev.  <fe 
Per.  7<S.  There  is  nothing  in  the  reports  of  our  own  State  theii, 
which  is  in  conflict  with  the  principle  established  in  Coddingtoii  v. 
Bay  in  this  Court,  that,  to  protect  the  holder  of  a  negotiable  secu- 
rity which  has  been  passed  to  him  in  fraud  of  the  rights  of  others, 
he  must  not  only  have  taken  it  without  notice,  but  must  also  have 
parted  with  something  of  actual  value,  upon  the  credit  or  faith 
thereof  ;  and  that  merely  receiving  it  in  security  or  payment  of 
an  antecedent  debt,  where  by  the  settled  rules  of  equity  he  would 
not  be  protected  as  a  bona  fide  purchaser  of  property  in  other 
cases,  is  not  sufficient. 


174  HOLDER   FOR   VALUE. 

Nor  have  I  been  able  to  find  an  actual  decision  in  the  English 
reports  whicli  is  in  conflict  with  the  uniform  course  of  decisions  on 
this  subject  in  this  State.  On  the  contrary,  tlie  English  judges, 
when  speaking  on  this  subject,  generally  use  the  words  valuable 
consideration.,  in  contradistinction  from  a  mere  valid  or  sufficient 
consideration  as  between  indorser  and  indorsee.  And  that  receiv- 
ing the  note  in  payment  or  security  of  a  pre-existing  debt  merely, 
is  not  understood  as  receiving  it  for  a  valuable  consideration,  in 
legal  language,  is  evident  from  the  decision  of  the  case  of  Vallance 
V.  Siddell,  to  which  I  have  just  referred. 

I  think  the  learned  judge  was  under  a  mistake  in  supposing 
that  this  question  arose  in  England,  and  was  decided  in  tlie  case 
of  Rose  V.  Van  Mierop,  3  Burr.  1663.  That  was  a  suit  brought 
against  defendants  who  had  actually  agreed  with  the  plaintiffs  to 
honor  their  drafts  for  money  previously  advanced  by  them  to  a 
third  person.  And  the  only  question  was,  whether  the  indebted- 
ness of  a  third  person  was  a  sufficient  consideration  for  the  writ- 
ten promise  of  the  defendants  to  accept  the  bills  on  his  account. 
One  of  the  earliest  English  cases  upon  the  question  which  we  are 
considering,  is  the  anonymous  case  before  Chief  Justice  Holt.^  in 
1698  ;  where  a  bank-note  payable  to  bearer  was  lost,  and  the  finder 
passed  it  for  a  valuable  consideration.  In  an  action  of  trover 
brought  by  the  loser  against  the  person  to  whom  it  was  thus 
passed,  his  lordship  decided  that  the  action  did  not  lie  against  the 
defendant,  because  he  had  the  note  for  a  valuable  consideration. 

1  Ld.  Raym.  738 ;  1  Salk.  126,  S.  C.  The  next  in  order  of  time 
was  the  case  of  Tlie  Ex'rs  of  Devallar  v.  Herring,  in  1727,  9 
Mod.  45 ;  where  an  annuity  ticket  was  lost  or  stolen,  and,  after 
passing  through  several  hands,  came  to  Herring,  the  defendant, 
wlio  purchased  it  for  a  valuable  consideration.  And  it  was  decided 
that  he  was  entitled  to  it,  upon  the  ground  that  it  had  come  to  his 
hands  bona  jide^  and  for  a  valuable  consideration.     In  Haly  v.  Lane, 

2  Atk.  181,  which  came  before  Lord  Hardwiche  in  1741,  he 
thus  lays  down  the  rule :  "  Where  there  is  a  negotiable  note,  if 
it  comes  into  the  hands  of  a  third  or  fourth  indorsee,  though  some 
of  the  former  indorsees  might  not  pay  a  valuable  consideration,  yet 
if  the  last  indorsee  gave  money  for  it,  it  is  a  good  note  as  to  him ; 
unless  there  should  be  some  fraud  or  equity  against  him  appearing 
in  the  case."  The  same  principle  of  protecting  the  holder  of  a 
negotiable  instrument,  if  received  by  him  in  the  course  of  trade, 


STALKER   V.    m'DONALD.  175 

and  for  a  vnhmhle  consideration,  was  recogiii/.od  in  the  opinion  of  the 
Court  of  King's  li^nch,  in  1753,  while  Chief  Justice  Lee  i>resided 
in  that  Court.  Maclish  v.  Ekins,  Say.  73.  Then  followed  the 
case  of  Miller  v.  Race,  1  Burr.  452,  hefore  Lord  Manafield  and 
his  associates  in  175M,  where  a  bank-note  was  stolen  from  the 
mail  and  came  into  the  hands  of  the  plaintiff,  as  the  report  states, 
for  a  full  and  valuable  consideration,  in  the  usual  course  and  way 
of  his  Inisiness,  and  without  any  notice  or  knowledge  that  it  had 
been  taken  from  the  mail  ;  but  upon  presenting  it  at  the  bank 
for  payment,  it  was  detained  by  the  defendant,  who  was  a  clerk 
therein.  And  the  decision  of  the  Court  was  in  conformity  with 
what  is  now  understood  to  be  the  settled  law  both  in  that  country 
and  in  this.  But  that  Lord  Mansfield  understood  the  holder  must 
have  given  a  valuable  consideration  for  the  note  to  entitle  him  to 
protection,  is  evident  from  what  is  said  in  his  opinion  in  answer  to 
a  case  cited  by  the  defendant's  counsel  as  having  been  decided  by 
Lord  Holt  in  1700.  Li  reference  to  that  case,  he  says :  "  But  Lord 
Chief  Justice  H<jlt  could  never  say  that  an  action  would  lie  against 
a  person  who, /or  a  valuable  consideration,  had  received  a  bank-note 
whicii  had  been  stolen  or  lost,  and  bona  fide  paid  to  1dm,  even 
though  an  action  was  brought  by  the  true  owner  ;  because  he  had 
determined  otherwise  but  two  years  before  ;  and  because  bank- 
notes are  not  like  lottery  tickets,  but  money."  And  the  words 
"  for  a  valuable  consideration,"  as  well  as  "  bona  fide  paid  to  liim," 
arc  italicized  in  the  opinion  of  Lord  Mansfield,  to  sliow  that  l)oth 
are  material  and  necessary  to  protect  the  holder  of  a  note  against 
the  claim  of  the  former  owner  thereof.  This  is  also  in  accordance 
with  wliat  he  actually  did  in  the  case  of  Grant  v.  Vaughan,  1 
W.  Black.  485  ;  3  Burr.  151(3,  S.  C,  which  was  tried  before  him 
six  years  afterwards.  There  a  bill  of  exchange  payable  to  bearer 
was  lost,  and  was  found  by  a  stranger  to  the  plaintiff,  who  gave  it 
to  the  plaintill'upon  the  purchase  of  a  parcel  of  teas,  and  received  the 
change,  after  the  plaintiff  had  made  in(piiry  and  ascertained  that  the 
drawer  of  the  l)ill  was  a  responsible  person.  And  Lord  Mansfield  sub- 
mitted it  to  the  jury  to  decide,  1st.  Whether  the  plaintiff  came  by 
the  bill  bona  fide  for  a  valuable  consideration  ;  and  2d.  Whether  such 
bills  payable  to  bearer  were  negotiable.  The  jury  having  found  a 
verdict  for  the  defendant,  a  new  trial  was  granted  ;  not  upon  the 
ground  that  the  first  direction  was  wrong,  but  because  his  lordship 
had  erred  iu  submitting  thS  question  as  to  the  negotiability  of  such 


176  HOLDER   FOR   VALUE. 

a  bill  to  the  jury,  as  a  question  of  fact.  And  in  answering. the 
objection  raised  by  counsel  to  the  negotiability  of  drafts  payable  to 
bearer,  that  it  would  be  dangerous,  because  npon  a  casual  loss  the 
finder  might  maintain  an  action  upon  them  as  bearer,  he  again 
says  :  "  but  the  bearer  must  show  it  came  to  him  bona  fide  and  upon 
valuable  consideration."  The  next  case  was  that  of  Peacock  v. 
Rhodes,  2  Doug.  633,  which  came  before  the  same  Court  in 
1781,  while  Lord  Mannfield  still  presided  there.  In  that  case  ^ 
suit  was  brought  against  the  drawers  of  a  bill  which  had  been 
indorsed  in  blank  and  was  stolen,  and  had  been  passed  to  the 
plaintiff  by  a  stranger  professing  to  be  the  owner  thereof,  for  its 
value,  in  payment  of  cloth  and  other  articles  in  the  way  of  the 
plaintiffs  ti-ade  as  a  mercer,  and  partly  for  cash.  And  the  case 
was  decided  in  conformity  with  the  previous  decisions.  But  I  do 
not  find  an  intimation  in  this,  or  in  either  of  the  previous  cases, 
that  if  the  person  who  received  the  note  or  bill  had  merely  taken  it 
in  payment  or  security  of  an  antecedent  debt,  without  having 
parted  with  any  thing  of  value  on  the  credit  or  faith  thereof,  he 
would  have  been  entitled  to  hold  the  note  or  bill  against  the  former 
rightful  owner.  On  the  contrary,  we  may  infer  what  Lord  Mans- 
field's opinion  would  have  been  upon  the  question  of  applying  it  in 
payment  of  a  precedent  debt,  from  what  he  actually  decided  in  1777, 
in  the  case  of  BuUer  v.  Harrison,  2  Cowp.  565.  There,  money  had 
been  paid  to  an  agent  under  a  misapprehension  of  facts,  and  had 
been  passed  by  him  to  the  credit  of  his  principal,  in  satisfaction 
of  a  previous  indebtedness,  before  he  had  any  notice  or  suspicion 
that  the  money  was  not  justly  and  equitably  due  to  such  principal. 
And  his  lordship  decided  that  the  agent  must  refund  the  money, 
and  resort  to  his  principal  to  recover  what  was  due  to  him  before 
the  money  was  so  applied ;  that,  as  no  new  credit  was  given,  he 
had  not  been  legally  prejudiced  ;  and  that  applying  the  money  to 
pay  the  precedent  debt,  was  not  equivalent  to  paying  it  over  to  his 
principal  before  he  had  notice  of  the  plaintiff's  equital)le  rights. 

In  the  case  of  Collins  v.  Martin,  1  Bos.  &  Pul.  648,  which  came 
before  the  Court  of  Common  Pleas  in  England,  in  1797,  the  bills 
had  been  pledged  by  the  plaintiff's  bankers  with  the  defendants 
upon  an  advance  of  money  thereon.  The  only  question  there  was, 
wheiher  a  banker  with  whom  a  negotiable  security  had  been  depos- 
ited for  collection,  could  pledge  it  to  a  bona  fide  holder,  for  money 
advanced  to  him  on  the  credit  thereof.  *  And  it  was  decided  he 


STALKER   V.    m'DONALD.  177 

could.  But  in  that  case  the  principle  is  again  recognized,  that  to 
protect  the  holdei^of  a  negotiable  instrument  against  the  former 
owner,  where  it  lias  been  fraudulently  transferred,  he  must  be  a 
holder  thereof  for  value.  For  C.  J.  Fi/re  says,  "  if  it  can  be 
proved  that  the  holder  gave  no  value  for  the  bill,  then  indeed  he  is 
in  privity  with  the  first  holder,  and  will  be  affected  by  every  thing 
which  would  atfect  the  first  holder."  And  in  the  case  of  Lowndes 
V.  Anderson,  13  East,  180,  which  was  decided  in  1810,  the  ques- 
tion was,  wiiether  the  defendants,  who  gave  up  a  valid  security 
which  had  been  remitted  to  them  in  payment  of  a  balance  and  to 
meet  acceptances  for  a  liankrupt,  were  answerable  to  his  assignees 
fer  money  and  bills  which  they  had  received  from  a  stranger  in 
payment  of  such  security,  although  it  turned  out  afterwards  that 
such  money  and  l)ills  ))elonged  to  the  bankrupt ;  but  which  fact 
was  concealed  from  their  knowledge  by  the  secret  agent  employed 
by  him  to  transact  the  business.  In  that  case  again,  the  necessity 
of  a  valuable  consideration  is  recognized  by  C.  J.  Ellenburoiigh. 
For  in  delivering  the  opinion  of  the  Court,  he  says,  "  it  would  be  a 
grievous  inconvenience  if  bank-notes  could  be  followed,  in  the  man- 
ner now  attempted,  through  the  hands  of  bona  fide  holders  for  a 
valuable  consideration  without  notice." 

I  have  carefully  examined  the  several  subsequent  cases,  relied 
upon  in  the  opinion  of  Mr.  Justice  Story  in  Swift  v.  Tyson,  to  show 
that  the  decisions  of  the  courts  in  England  are  in  conflict  with  the  set- 
tled law  of  this  State  upon  the  question  now  under  consideration  ; 
and  as  I  understand  those  cases,  only  two  of  them,  and  these  by  im- 
plication merely,  conflict  in  any  degree  with  our  decisions.  I  believe 
1  have  also  examined  every  reported  decision  on  the  subject,  down  to 
the  present  time,  in  the  English  reports  which  have  reached  this  coun- 
try ;  though  it  is  possible  that  some  have  escaped  my  researches. 
And  I  do  not  find  another  case,  or  dictum^  in  hostility  to  the  prin- 
ciple as  settled  by  this  Court  in  the  case  of  Coddington  v.  Bay. 
The  English  cases  subsequent  to  1810,  referred  to  by  Mr.  Justice 
Story  as  containing  a  contrary  doctrine,  are  the  cases  of  Bosanquet 
V.  Dudman,  1  Stark.  1  ;  Ex  parte  Bloxham,  8  Ves.  531 ;  Hey- 
wood  V.  Watson,  4  Bing.  49G  ;  Bramah  v.  Roberts,  1  Bing. 
N.  C.  469;  and  Percival  v.  Frampton,  2  Cromp.,  Mees.  A:  Roscoe, 
180.  In  the  first  case  it  is  evident  there  is  a  typographical  error 
in  substituting  the  word  but  ft)r  icho^  in  the  fifth  line  of  the  state- 
ment of  the  case  by  the  reporter.     The  suit  was  brought  by  the 

12 


178  HOLDER    FOR    VALUE. 

indorsees  of  a  bill  drawn  by  Rains  upon  the  defendant,  payable  to 
his  own  order,  and  indorsed  by  him,  and  which  ^ad  been  accepted 
by  the  defendant.     Clarkson  &  Co.,  who  were  the  owners  of  the 
bill,  and  who  kept  an  account  with  the  plaintiff's  bankers  in  London, 
deposited  the  bill  with  them  as  collateral  security  for  such  accept- 
ances as  they  might  make.     And  at  the  time  the  bill  became  pay- 
able, on  the  fifth  of  February,  1812,  the  plaintiffs  were  the  holders 
of  it,  and  had  at  that  time  accepted  bills  to  a  much  larger  amount 
than    the    cash   balance   in   their  hands.      They   were   therefore 
undoubtedly  entitled  to  hold  it  as  against  Clarkson  &  Co.,  for  the 
excess  of  such  acceptances  beyond  the  cash  balance.     But  as  they 
held  other  collateral  securities  to  a  considerable  amount,  when  tlrts 
bill  was  dishonored  they  returned  it  to  Clarkson  &  Co.     They  sub- 
sequently remitted  it  again  to  the  plaintiffs,  requesting  them  to  hold 
it  for  Clarkson  &  Co.,  and  to  place  the  same  to  their  account  when 
paid  ;  and  the  plaintiffs  continued  to  hold  the  bill  until  Clarkson  & 
Co.  became  bankrupts.     Upon  the  trial  of  the  cause,  the  defendant's 
counsel    was  proceeding  to  cross-examine  the  witness  as  to  the 
comparative  amount  of  the  cash  balance  and  collateral  securities, 
and  the  amount  of  the  acceptances  on  account  of  Clarkson  &  Co.  at 
the  time  the  bill  fell  due  ;  with  a  view,  I  presume,  to  show  that  the 
cash  and  other  collateral  securities  were  more  than  enough  to  meet 
all  their  acceptances,  and  that  they  had  no  lien  upon  this  particular 
bill  at  that  time,  but  that  it  belonged  to  Clarkson  &  Co.     And  it 
was  in  reference  to  that  cross-examination,  as  I  understand  the  case, 
that  Lord  Ellenhorough  said  he  should  hold  that  where  collateral 
securities  were  placed  in  the  hands  of  a  banker,  under  such  circum- 
stances all  the  collateral  securities  were  held  for  value,  whenever 
acceptances  should  be  made  from  time  to  time,  upon  the  credit  and 
faith  of  such  collateral  securities,  beyond  the  cash  balance  in  the 
hands  of  the  bankers.     In  other  words,  that  it  was  immaterial  how 
much  the  collateral  securities  amounted  to.     For  if  the  acceptances 
which  had  thus  been  made  on  the  faith  of  them,  exceeded  at  any 
time  the  cash  in  hand  to  meet  such  acceptances,  the  bankers  were 
holders  of  all  the  collateral  securities  for  value,  to  secure  the  pay- 
ment  of  the   deficiency  ;   and   neither   the   depositors   nor   their 
assignees  in  bankruptcy  could  claim  a  return  of  any  part  of  such 
securities,  or  prevent  the  bankers  from  collecting  the  money  on 
them,  to  meet  such  deficiency.     This  was  unquestionably  good  law, 
and  is  not  a  decision  that,  where  a  bill  is  fraudulently  deposited 


STALKER   V.    M'DONALD.  179 

with  a  banker  in  payment  or  security  of  a  pre-existing  debt,  be  is  a 
bona  fide  bolder  tbcreof  for  value,  as  against  the  party  d(;frauded. 
And  if  tbc  remark  of  bis  lordsbij)  in  tbat  case  meant  any  tbing  elae, 
it  is  inif)Ossible  to  tell  from  tbe  report  wbat  be  did  mean.  For  tbero 
was  no  claim  or  pretence  tbat  tbe  bill  in  question  did  not  belong  to 
Clarkson  <fe  Co.  at  tbe  time  it  was  deposited  witb  tbe  plaintififs,  and 
when  it  fell  due  ;  although  as  between  Rains,  tbe  drawer  and 
indorser,  and  tbe  defendant,  the  acceptor,  it  was  a  mere  accommo- 
dation bill.  Whether  his  lordship  was  right  in  holding  tbat  tbe 
return  of  tbe  bill  to  the  plaintiffs,  after  it  was  dishonored  and  had 
been  paid  to  Clarkson  &  Co.  by  tbe  drawer,  who  was  in  equity 
bound  to  piiy  it,  restored  the  plaintiffs  to  all  their  former  rights  as 
against  the  accommodation  acceptor,  is  an  entirely  different  ques- 
tion. And  if  tbc  reporter  is  right  in  his  statement  of  tbe  facts,  I 
think  I  should  have  decided,  in  such  a  case,  tbat  the  jjlaintifis 
could  not  recover  against  the  accommodation  acceptor,  or  against 
Rains  tbc  drawer,  even  if  they  bad  paid  the  whole  amount  of  the 
dishonored  bill,  in  money,  to  Clarkson  <fe  Co.,  upon  the  return 
thereof.  Nothing  further,  however,  is  necessary  to  Ije  said,  in 
reference  to  this  very  imperfectly  reported  case,  than  that  it  decides 
nothing  upon  tbe  question  now  under  consideration. 

In  Ex  parte  Bloxbam,  Lord  Eldon  merely  decided  that  where 
bills  and  securities  are  remitted  to  a  banker  by  his  customer,  to 
meet  acceptances  which  the  banker  may  make  from  time  to  time 
for  his  customer,  such  banker,  as  between  him  and  his  customer, 
has  a  general  lieu  thereon  for  the  amount  of  his  acceptances  for 
the  customer.  And  that  though  some  of  the  acceptances  had  not 
become  due  at  the  time  tbe  customer  became  a  Ijankrupt,  tlie 
banker  was  entitled  to  prove,  under  the  commission,  the  amount 
for  which  he  was  liable  upon  the  acceptances  for  tbe  bankrupt. 
But  that  in  making  such  proof  to  cover  the  acceptances,  the  proof 
must  be  made  on  the  securities  upon  which  the  bankrupt's  name 
appeared,  and  not  upon  a  cash  balance  against  the  bankrupt  which 
did  not  exist  until  after  tbe  bankruptcy.  If  there  is  any  thing  in 
that  decision  which  has  the  least  bearing  upon  tbe  question  now 
under  consideration,  I  am  not  al)le  to  discover  it. 

In  Heywood  v.  Watson,  the  defendant  and  Morrall  were  cojiart- 
ners,  and  obtained  permission  to  overdraw  their  account  with  the 
plaintiffs,  their  bankers,  from  time  to  time,  to  the  extent  of  £2000  ; 
for  which  amount  Morrall  gave  his  promissory  note  to  the  plaintiffs 


180  .         HOLDER    FOR   VALUE. 

as  collateral  security.  The  next  day  he  received  from  the  defend- 
ant, his  partner,  a  note  payable  to  himself  or  order,  for  one-half 
of  that  amount,  to  meet  his  note  as  collateral  security  to  the 
plaintiffs  for  their  advances,  and  to  secure  to  him  the  repayment 
of  the  defendant's  moiety  of  such  advances,  or  so  much  as  he 
should  individually  have  to  pay  the  plaintiffs  on  account  of  the 
firm.  The  partnership  was  dissolved  about  a  year  afterwards ;  at 
which  time  the  plaintiffs  had  made  advances  for  the  firm  to  the 
amount  of  X1300,  which  neither  of  the  partners  had  paid.  Mor- 
rall  had  afterward's  transferred  the  defendant's  note  to  the  bankers. 
But  there  was  no  evidence  that  he  had  done  so  without  considera- 
tion, or  that  the  plaintiffs  knew  for  what  the  note  was  given.  ,  And 
the  Court  held  that  the  plaintiffs  were  entitled  to  recover,  whether 
they  did  or  did  not  know  for  what  the  defendant's  note  was  given. 
It  is  true,  C.  J.  Best  says,  if  there  was  a  good  consideration  be- 
tween Morrall  and  the  plaintiffs,  who  were  ignorant  of  the  circum- 
stances under  which  Morrall  took  the  note,  they  were  entitled  to 
recover.  But  it  is  evident  he  said  this  in  reference  to  the  legal 
rule  that  the  indorsee  of  a  negotiable  instrument  is  presumed  to 
have  paid  value  for  it,  until  the  contrary  is  shown  ;  the  onus  of 
disproving  which,  according  to  the  decisions  of  the  English  courts, 
is  thrown  upon  the  party  contesting  the  right  of  the  holder,  except 
where  the  note  or  bill  is  proved  to  have  been  lost  or  stolen,  or  to 
have  been  obtained  or  put  in  circulation  by  fraud.  What  the 
Chief  Justice  said  in  that  case  is  not  even  a  dictum,  much  less  a 
decision,  in  opposition  to  the  principle  of  law  as  settled  in  this 
State.  For  there  was  not  a  particle  of  equity  in  favor  of  the  de- 
fendant in  that  case  ;  as  he  was  legally  liable  to  the  plaintiffs  as  a 
partner,  for  the  whole  amount  of  their  advances,  even  if  his  note 
had  been  turned  out  by  Morrall  on  account  thereof.  And  all  he 
had  to  do  was  to  pay  up  the  amount  of  his  note,  and  the  other 
£300,  if  they  required  it,  and  then  sue  Morrall  for  what  he  had 
paid  beyond  his  share. 

The  case  of  Bramah  v.  Roberts  came  before  the  Court  upon 
questions  arising  upon  the  pleadings.  The  plaintiffs  were  the  in- 
dorsees of  a  bill  of  exchange  drawn  and  indorsed  by  W.  Clare  for 
£500,  at  three  months,  and  accepted  by  the  defendants.  To  the 
declaration  on  this  bill  the  defendants  pleaded  first,  the  general 
issue ;  secondly,  that  it  was  accepted  by  them  without  value,  was 
delivered  by  one  of  them  to  T.  Hunt  for  a  special  purpose,  and 


STALKER    V.    m'DONALD.       •  181 

that  lie  fraudulently  transferred  the  same  to  the  plaintifTs,  with 
notice  of  his  want  of  authority,  and  tliat  there  was  not  any  consider- 
ation or  vahic  given  in  jrood  faith  for  the  indorsement  of  tlie  l>ill  to 
them  ;  and  ///m////,  that  one  of  tlic  defendants  fraudulently  ac- 
cepted the  l)ill,  under  a  power  to  acccj)t  it  for  all  the  defendants 
for  a  special  ])urpose,  for  a  different  purpose  from  what  was  in- 
tended, and  that  the  other  defendants  I'eceived  no  consideration  or 
value  for  such  acceptance.  To  the  second  plea  the  plaintiffs  re- 
plied, in  substance,  that  Ijefore  the  bill  became  due  it  was  indorsed 
and  delivered  to  them  fairly  and  bona  fide  for  a  good  and  valuable 
consideration,  that  is  to  say,  for  moneys  advanced  by  and  due  and 
owing  to  them,  the  plaintiffs;  and  without  notice  of  the  matters 
stated  in  the  second  j)lea,  or  of  the  want  of  power  on  the  part  of 
Hunt  to  transfer  the  bill  on  his  own  account.  To  the  third  plea 
they  rci)lied  substantially  in  the  same  manner,  after  denying  the 
want  of  authority  of  one  of  tlie  defendants  to  accept  the  bill  for 
all  of  them.  The  defendants  demurred  specially  to  these  replica- 
tions, assigning  as  causes  of  demurrer  that  the  plaintiffs  had  not 
stated  with  suOicient  certainty  what  consideration  or  value  was 
given  for  the  bill,  nor  when  or  to  whom  the  moneys  were  ad- 
vanced, nor  whether  they  were  advanced  at  the  time  or  had  been 
previously  advanced,  nor  whether  the  moneys  advanced  were  suffi- 
cient to  authorize  them  to  recover  the  whole  amount  of  the  bill. 
The  Court  decided  that  the  third  plea  was  bad,  as  it  only  alleged 
that  the  defendants  were  defrauded  of  the  bill,  and  that  their  ac- 
ceptance was  without  consideration  ;  but  set  up  no  want  of  con- 
sideration in  the  negotiation  of  the  bill  to  the  plaintiffs,  or  notice 
of  the  alleged  fraud,  at  the  time  they  received  the  bill.  No  ques- 
tion was  therefore  decided  upon  the  sufficiency  of  the  replication 
to  that  plea.  As  to  the  replication  to  the  second  plea,  C.  J.  Tin- 
dal  thought  it  was  snifficient ;  that  it  was  only  necessary  for  the 
plaintiffs  to  deny  notice  of  the  want  of  authority  of  the  person 
from  whom  they  received  the  bill,  and  aver  that  it  was  given  to 
them  for  a  full  and  valual)le  consideration  ;  and  that  the  replica- 
tion was  sufficient  to  show  there  was  a  good  consideration.  He 
says,  "  if  money  passed  from  the  present  indorsees,  it  appears  to  mo 
sufficient,  as  against  the  acceptors  of  a  bill  of  exchange,  to  allege 
that  the  bill  was  received  for  money  advanced  by  and  due  and 
owing  to  them,"  &c.  And  after  referring  to  the  case  of  a  replica- 
tion in  which  an  averment  that  the  plaintiff  was  parson,  and  took 


182  HOLDER   FOR   VALUE. 

for  tithes,  was  construed  in  reference  to  the  time  of  severance,  he 
again  says,  "  a  person  of  plain  understanding  will  interpret  this  in 
the  same  way,  that  there  has  been  a  money  consideration  passing 
from  the  plaintiffs."  But  the  Chief  Justice  went  further,  and 
declared  his  opinion  to  be  that  if  the  replication  had  contained  a 
simple  denial  of  the  allegation  of  a  want  of  consideration,  it  would 
be  sufficient.  From  his  language  in  this  case  I  should  infer  that 
he  understood  the  law  to  be  that  the  holders  of  the  bill  must  have 
received  the  same  for  a  valuable  consideration  at  the  time  of  the 
transfer.  But  I  admit  that  Mr.  Justice  Park  uses  the  words  valid 
consideration  in  his  opinion.  He  says,  "  If  the  bill  of  exchange 
was  indorsed  and  delivered  to  the  plaintiffs  for  a  good  and  valid 
consideration,  that  is  to  say,  for  money  advanced  by  and  due  and 
owing  to  the  plaintiffs,  and  they  say  that  at  the  time  it  was  in- 
dorsed to  them  they  had  no  notice  whatever  of  the  fraud,  it  must 
be  taken  that  the  bill  was  taken  for  some  antecedent  debt."  From 
this  it  may  perhaps  be  fairly  inferred  that  he  thought  that  was 
sufficient  to  enable  the  holder  of  the  note  to  recover  thereon,  al- 
though no  other  available  security  for  such  antecedent  debt  was 
given  up  or  discharged  upon  the  faith  and  credit  of  the  bill,  at  the 
time  it  was  so  received  by  the  plaintiffs  ;  but  he  does  not  say  so. 
And  Justice  Bosanquet  says,  "  I  am  disposed  to  think  that  the 
replication  would  have  been  quite  sufficient  if  it  had  not  added  the 
words  '  for  money  advanced  by  and  due  and  owing  to  the  plain- 
tiffs,' thereby  setting  out  the  nature  of  the  consideration  ;  but  that 
it  was  sufficient  to  say  '  tliat  after  the  bill  was  made,  and  before  it 
became  due  and  payable,  on  a  specified  day,  the  bill  was  indorsed 
and  delivered  to  the  plaintiffs  fairly  and  hojia  fide,  and  for  a  full 
and  valuable  consideration."  But  whatever  may  have  been  the 
opinion  of  the  judges  who  decided  that  case,  under  the  new  rules 
of  pleading  in  England,  and  in  reference  to  the  fact  that  under 
any  form  of  replication  which  did  not  admit  a  want  of  a  sufficient 
consideration,  the  onus  of  proving  that  the  bill  was  not  passed  to 
the  plaintiffs  for  a  good  and  sufficient  consideration  would  be  upon 
the  defendants,  I  think  it  is  not  entitled  to  the  weight  of  a  judicial 
decision  upon  the  question  now  under  consideration. 

In  the  other  case,  Percival  v.  Frampton,  the  defendant  had  in- 
dorsed the  note  for  the  accommodation  of  tlie  maker  thereof,  to 
enable  liim  to  obtain  money  thereon  generally.  And  he  got  it 
discounted  by  his  banker,  who  placed  the  proceeds  to  his  credit, 


STALKER   V.    M'DONALD.  183 

on  which  he  afterwards  drew  out  X198,  and  the  residue  was 
applied  to  tlic  balance  of  his  account.  The  Court  lield  that  this 
was  equivalent  to  an  advance  of  the  money  to  him.  So  far  the 
decision  was  in  accordance  with  the  case  of  The  Bank  of  Rut- 
land V.  Buck,  5  Wend.  G(!,  and  other  cases  decided  in  this  State. 
For,  the  object  of  the  indorsement  being  to  enable  the  maker  of 
the  note  to  raise  money  generally,  and  not  for  any  specific  oliject 
in  which  the  indorser  had  an  interest,  it  was  wholly  immaterial  to 
him  whether  the  note  was  passed  to  the  credit  of  the  maker  with 
his  banker,  or  the  banker  advanced  him  the  money  on  the  note 
and  then  received  it  l)ack  to  make  good  his  account,  or  the  maker 
received  the  money  from  any  other  person  upon  the  note,  and  then 
paid  it  to' the  plaintilfs  for  their  debt.  But  in  that  case  Mr.  Baron 
Parke  expresses  the  opinion  that  if  the  note  had  been  given  to  the 
plaintiffs  as  security  for  a  previous  debt,  and  they  held  it  as  such, 
they  might  be  properly  stated  to  be  holders  for  valuul)le  considera- 
tion. Prom  which  I  infer  that  his  opinion  corresponds  with  that 
of  the  Supreme  Court  of  the  United  States  upon  the  question  now 
under  consideration. 

The  question  was  raised  by  the  counsel  for  the  defendant  in  a 
subsequent  case,  Bartrum  v.  Caddy,  0  Adol.  &  Ellis,  275,  that  a 
by  gone  debt  is  not  a  sufficient  consideration  to  give  a  fraudulent 
assignee  a  title  to  recover.  But  as  the  judgment  was  given  for 
the  defendant  upon  other  grounds,  no  opinion  was  expressed  by 
the  Court  of  Queen's  Bench  upon  that  point.  And  I  do  not  think 
there  is  any  decision  in  any  court  of  England  directly  upon  the 
question. 

I  have  not  had  leisure  to  examine  the  reports  of  most  of  our  sister 
States  in  reference  to  this  subject.  But  in  addition  to  the  case 
from  Connecticut  referred  to  in  the  opinion  of  the  Court  in  Swift  v. 
Tyson,  there  are  two  decisions  in  the  State  of  Maine,  Homes  v. 
Smyth,  4  Shepl.  [16  Maine]  177,  and  Norton  v.  Waite,2  Appl.  [20 
Maine]  17'),  in  which  it  was  held  that  the  holder  of  a  negotiable 
security  who  had  received  it  in  absolute  payment  of  a  pro-existing 
debt,  without  notice,  was  entitled  to  recover  thereon,  notwithstand- 
ing any  failure  or  want  of  consideration,  or  other  equities  previously 
existing  between  other  parties.  But  as  I  understand  the  opinion 
of  Judge  Sheplcy  in  the  first  of  those  cases,  a  party  who  takes  a 
note  or  bill  as  collateral  security  for  the  payment  of  such  a  debt, 
and  not  in  absolute  payment  and  discharge  of  the  same,  will  not 
be  entitled  to  protection  in  that  State  against  the  rightful  owner. 


184  HOLDER   FOR   VALUE. 

The  decision  of  the  Supreme  Court  of  Pennsylvania  in  Petrie  v. 
Clark,  11  Serg.  &  Rawlc,  377,  appears  to  be  in  accordance  with  the 
decision  of  Judge  Slieplcy  in  Homes  v.  Smyth.  For  Judge  Gibson, 
who  delivered  the  opinion  of  the  Court,  says,  if  the  note  had  been 
delivered  in  discharge  of  the  debt,  there  would  be  no  difficulty  in 
saying,  in  the  absence  of  collusion,  that  taking  it  in  the  usual  course 
of  business,  as  an  equivalent  for  a  debt  which  is  given  up,  would  be 
a  purchase  of  it  for  a  valuable  consideration.  But  as  it  was  given 
in  pledge  for  securing  an  antecedent  debt  which  was  not  dis- 
charged, but  suffered  to  remain,  and  as  it  does  not  appear  that 
money  was  advanced,  or  any  act  done  that  would  in  law  be  a  pres- 
ent consideration,  the  case  presented  was  against  the  plaintiff. 

In  the  case  under  consideration,  the  notes  wliich  were  improperly 
transferred  by  Gillespie  in  fraud  of  the  rights  of  the  owners,  were 
not  received  by  the  plaintiff  in  error  in  payment  or  discharge  of  his 
debt,  but  as  mere  collateral  securities  for  the  payment  thereof.  He 
therefore  would  not  be  entitled  to  protection  as  a  bona  fide  holder,  for 
a  valufible  consideration,  according  to  these  decisions  in  the  courts 
of  our  sister  States.  Nor  do  I  think  that  the  settled  law  of  this 
State  is  so  manifestly  wrong  as  to  authorize  this  Court  to  overturn 
its  former  decision  for  the  purpose  of  conforming  it  to' that  of  any 
other  tribunal,  whose  decisions  are  not  of  paramount  authority. 

I  must  therefore  vote  to  affirm  the  judgment  of  the  Court 
below. 

Lott,  Senator.  As  a  general  rule,  the  true  and  rightful  owner 
of  property  is  entitled  to  recover  it  from  any  person  in  whose 
possession  it  may  be,  whether  obtained  by  the  latter  under  color 
of  a  purchase  or  otherwise.  An  exception,  however,  founded  on 
principles  of  commercial  policy,  has  been  made  in  favor  of  the 
holder  of  negotiable  paper,  received  in  the  usual  course  of  trade, 
for  a  valuable  consideration,  though  from  a  person  having  no  right 
to  make  the  transfer,  and  without  notice  of  the  fraud.  Under  such 
circumstances  the  right  of  the  holder  is  allowed  to  prevail  against 
the  claim  of  the  previous  owner. 

To  bring  a  case  within  the  exception,  it  is  not  enough  to  show 
that  there  was  a  consideration  for  the  transfer,  sufficient  as  between 
the  holder  and  the  party  transferring,  but  the  consideration  must 
be  such  as  the  law  denominates  a  valuable  one.  Ill  Coddington  v. 
Bay,  20  Johns.  637,  a  case  decided  by  this  Court,  in  which  the 


STALKER   V.    M'dONALD.  185 

principle  of  the  exception  was  fully  discussed,  Mr.  Justice  Wood- 
worth  said,  "  somctliinii:  must  have  ))ccn  paid  in  money  or  property, 
or  some  existhig  deljt  satisfied,  or  some  new  responsibility  incurred 
in  consequence  of  the  transfer ;  this  would  be  paying  value,  and 
making  out  a  consideration  within  the  reason  and  meaning  of  the 
rule."  lb.  646.  Chief  Justice  Spencer  there  remarked  :  "1  under- 
stand, by  the  usual  course  of  trade,  not  that  the  holder  shall 
receive  the  bills  or  notes  thus  obtained,  as  securities  for  antecedent 
debts,  but  that  he  shall  take  them  in  his  business,  and  as  payment 
for  a  debt  contracted  at  the  time."  lb.  651.  Mr.  Senator  Vldie 
observed  that,  "though  indemnity  for  responsibilities  is  undoubt- 
edly a  good  consideration  for  the  sale  or  transfer  of  goods  or  nego- 
tiable paper,  as  against  the  party  making  it  or  his  representatives, 
yet  in  none  of  the  cases  cited  on  the  argument,  and  in  no  one  that 
I  have  been  a1)lc  to  find,  has  it  ever  been  held  to  l)ar  the  true 
owner,  upon  a  fraudulent  transfer."  lb.  ()53.  He  added  :  "  The 
true  test  I  take  to  be,  that  when  the  holder  is  left  in  as  good  a 
condition,  after  a  retransfer,  as  he  would  have  l)een  had  no  transfer 
taken  place,  there  the  title  of  the  owner  shall  prevail.  This  allows 
the  rule,  so  far  as  it  is  dictated  by  commercial  policy,  to  have  its 
full  effect,  while  it  protects  the  owner  of  negotiable  paper,  neces- 
sarily intrusted  in  the  course  of  business  to  the  care  of  agents,  from 
an  injury  revolting  to  every  principle  of  moral  equity."     lb.  657. 

If  these  doctrines  are  applicable  to  the  case  under  consideration, 
and  are  to  guide  our  decision,  it  appears  to  me  the  right  of  the 
defendants  in  error  to  the  notes  in  question  cannot  be  impeached. 

It  was  contended  on  the  argument,  however,  that  the  withdraw- 
ing of  the  note  of  Gillespie  and  Edwards  from  the  bank,  where  it  had 
been  deposited  for  collection,  caused  a  loss  or  prcjudrce  to  the  plain- 
tiff in  error,  which  formed  a  sufficient  consideration  to  entitle  him 
to  protection.  It  might  be  enough  to  say,  in  answer  to  this  position, 
that  the  whole  force  of  it  is  rebutted  by  the  verdict  of  the  jury  ;  for 
under  the  charge  of  the  Court,  the  verdict  must  be  understood  as 
having  found  that  no  consideration  was  parted  ivith  by  the  plaintiff 
in  error ^  on  the  credit  of  the  notes  in  question.  But  apart  from  this 
view  of  the  case,  it  appears  that  the  note  of  Gillespie  and  Edwards 
was  merely  lodged  in  the  bank  for  collection,  and  that  there  were 
no  Jndorsers  to  be  charged.  A  protest  was  therefore  unnecessary, 
and  no  injury  or  prejudice  in  that  respect  could  have  resulted  from 
the  act  of  withdrawing  it.     True,  it  is  said  in  the  testimony  that, 


186  HOLDER   FOR   VALUE. 

after  the  note  of  Gillespie  and  Edwards  was  withdrawn,  and  before 
tlieir  failure,  they  paid  "  one  or  more  notes  in  bank,  in  the  regular 
course  of  business  ; "  but  the  amount  of  these  notes  was  not  shown, 
nor  did  it  in  any  manner  appear  that  the  note  of  the  plaintiff  in 
error  would  have  been  paid,  had  he  suffered  it  to  remain  in  the 
bank,  altliough  one  of  the  firm  of  Gillespie  and  Edwards  was  exam- 
ined as  a  witncfffe  upon  the  trial. 

It  should  be  remarked  also  that  there  was  no  stipulation  or 
agreement  by  the  plaintiff  in  error,  on  withdrawing  his  note  from 
the  bank,  that  he  would  not  enforce  payment  of  it.  On  the  con- 
trary, he  ]iad  still  a  perfect  right  to  demand  its  immediate  payment, 
and  to  enforce  his  demand  by  action. 

In  every  view  which  can  be  taken  of  this  case,  it  appears  to  me 
the  title  of  the  defendants  in  error  to  the  notes  in  question  has  not 
been  divested,  and  that  the  judgment  of  the  Court  below  ought  to 
be  affirmed. 

On  the  question  being  put,  "  Shall  this  judgment  be  reversed  ?  " 
all  the  members  of  the  Court  present,  who  heard  the  argument, 
except  Strong,  Senator,  voted  for  affirming. 


See  following  case  and  note. 


Judgment  affirmed. 


John  Swift  v.  George  W.  Tyson. 

(16  Peters,  1.     Supreme  Court  of  the  United  States,  January,  1842.) 

Paper  taken  in  paynient  of  pre-existing  debt.  —  The  honajide  holder  of  a  bill  of  exchange, 
who  has  taken  it  before  maturity,  in  payment  of  a  pre-existing  debt,  without 
notice  of  any  equities  between  the  drawer  and  acceptor  thereof,  will  not  be 
affected  by  such  equities. 

Authority  of  the  decisions  of  State  courts.  —  The  34th  section  of  the  Judiciary  Act  (1  St. 
at  Large,  92),  is  limited  to  the  laws  of  a  State  strictly  local :  that  is,  to  the  positive 
statutes  of  the  State  and  their  interpretation  by  the  local  tribunals,  and  tlie  rights 
and  titles  to  things  having  a  permanent  locality,  such  as  real  estate.  It  does  not 
apply  to  questions  of  general  commercial  law,  such  as  bills  of  exchange  and  prom- 
issory notes. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Story,  J.  This  cause  comes  before  us  from  the  Circuit  Court 
of  the  Southern  District  of  New  York,  upon  a  certificate  of  division 
of  the  judges  of  that  Court. 


SWIFT    V.    TYSON.  187 

The  action  was  brought  by  the  plaintiff,  Swift,  as  indorsee, 
against  the  defendant,  Tyson,  as  accc))tor,  upon  a  bill  of  exchange 
dated  at  Portland,  Maine,  on  the  first  day  of  May,  1830,  for  the 
sum  of  $1540.30,  payable  six  months  after  date  and  grace,  drawn 
by  one  Nathaniel  Norton  and  one  Jairus  S.  Keith  upon  and  ac- 
cej)ted  by  Tyson,  at  the  city  of  New  York,  in  favor  of  the  order  of 
Nathaniel  Norton,  and  by  Norton  indorsed  to  the  plaintiff.  The 
bill  was  dishonored  at  maturity. 

At  the  trial,  the  acceptance  and  indorsement  of  the  bill  were 
admitted,  and  the  plaintiff  there  rested  his  case.  The  defendant 
then  introduced  in  evidence  the  answer  of  Swift  to  a  bjll  of  dis- 
covery, by  which  it  appeared  that  Swift  took  the  bill  before  it 
became  due,  in  payment  of  a  promissory  note  due  to  him  by  Norton 
and  Keith  ;  that  he  understood  that  the  bill  was  accepted  in  part- 
payment  of  some  lands  sold  by  Norton  to  a  company  in  New 
Yoi-k  ;  that  Swift  was  a  bona  fide  holder  of  the  bill,  not  liaving  any 
notice  of  any  thing  in  the  sale  or  title  to  the  lands,  or  otherwise, 
impeaching  the  transaction,  and  with  liie  full  belief  that  the  bill 
was  justly  due.  The  j)articular  circumstances  are  fully  set  forth 
in  the  answer  in  the  record  ;  but  it  'does  not  seem  necessary  fur- 
ther to  state'  them.  The  defendant  then  offered  to  prove  that  the 
bill  was  accepted  by  the  defendant  as  part  consideration  for  the 
purchase  of  certain  lands  in  the  State  of  Maine,  which  Norton  and 
Keitii  represented  themselves  to  be  the  owners  of,  and  also  repre- 
sented to  be  of  great  value,  and  contracted  to  convey  a  good  title 
thereto ;  and  that  the  representations  were  in  every  respect  fraud- 
ulent and  false,  and  Norton  and  Keith  had  no  title  to  the  lands, 
and  that  the  same  were  of  little  or  no  value.  The  plaintiff  object- 
ed to  the  admission  of  such  testimony,  or  of  any  testimony,  as 
against  him,  impcai-hing  or  showing  a  failure  of  the  consideration 
on  which  the  bill  was  accepted,  under  the  facts  admitted  by  the 
defendant,  and  those  proved  l)y  him,  by  reading  the  answer  of  the 
plaintiff  to  the  bill  of  discovery.  The  judges  of  the  Circuit  Court 
thcreuj)on  divided  in  opinion  upon  the  following  point  or  question 
of  law :  Whether,  under  the  facts  last  mentioned,  the  defendant 
was  entitled  to  the  same  defence  to  the  action,  as  if  the  suit  was 
between  the  original  parties  to  the  bill,  that  is  to  say,  Norton,  or 
Norton  and  Keitli,  and  the  defendant;  and  whether  the  evidence 
so  offered  was  admissible  as  against  the  plaintiff  in  the  action. 
And  this  is  the  question  certified  to  us  for  our  decision. 


188  HOLDER   FOR   VALUE. 

There  is  no  doubt  that  a  bona  fide  holder  of  a  negotiable  instru- 
ment for  a  valuable  consideration,  without  any  notice  of  facts 
which  impeacli  its  validity  as  between  the  antecedent  parties,  if  he 
takes  it  under  an  indorsement  made  before  the  same  becomes  due, 
holds  the  title  unaffected  by  these  facts,  and  may  recover  thereon, 
although,  as  between  the  antecedent  parties,  the  transaction  may 
be  withoiit  any  legal  validity.  This  is  a  doctrine  so  long  and  so 
well  established,  and  so  essential  to  the  security  of  negotiable 
paper,  that  it  is  laid  up  among  the  fundamentals  of  the  law,  and 
requires  no  authority  or  reasoning,  to  be  now  brought  in  its  sup- 
port. As  little  doubt  is  there,  that  the  holder  of  any  negotiable 
paper,  before  it  is  due,  is  not  bound  to  prove  that  he  is  a  bona  fide 
holder  for  a  valuable  consideration,  without  notice  ;  for  the  law  j 
will  presume  that,  in  the  absence  of  all  rebutting  proofs,  and 
therefore  it  is  incumbent  upon  the  defendant  to  establish  by  way 
of  defence,  satisfactory  proofs  of  the  contrary,  and  thus  to  over- 
come the  prima  facie  title  of  the  plaintiff. 

In  the  present  case,  the  plaintiff  is  a  bona  fide  holder  without 
notice  for  what  the  law  deems  a  good  and  valid  consideration,  that 
is,  for  a  pre-existing  debt ;  anfl  the  only  real  question  in  tlie  cause 
is,  whether,  under  the  circumstances  of  the  present  case,  such  a 
pre-existing  debt  constitutes  a  valuable  consideration  in  the  sense 
of  the  general  rule  applicable  to  negotiable  instruments.  We  say, 
under  the  circumstances  of  the  present  case,  for  the  acceptance 
having  been  made  jn  New  York,  the  argument  on  behalf  of  the 
defendant  is,  that  the  contract  is  to  be  treated  as  a  New  York  con- 
tract, and  therefore  to  be  governed  by  the  laws  of  New  York,  as 
expounded  by  its  courts,  as  well  upon  general  principles,  as  by 
the  express  provisions  of  the  34th  section  of  the  Judiciary  Act  of 
1789,  c.  20.  And  then  it  is  further  contended  that,  by  the  law  of 
New  York,  as  thus  expounded  by  its  courts,  a  pre-existing  debt 
does  not  constitute,  in  the  sense  of  the  general  rule,  a  valuable 
consideration  applicable  to  negotiable  instruments. 

In  the  first  place,  then,  let  us  examine  into  the  decisions  of  the 
courts  of  New  York  upon  this  subject.  In  the  earliest  case,  War- 
ren V.  Lynch,  5  Johns.  239,  the  Supreme  Court  of  New  York 
appear  to  have  held,  that  a  pre-existing  debt  was  a  sufficient  con- 
sideration to  entitle  a  bona  fide  holder  without  notice  to  recover 
the  amount  of  a  note  indorsed  to  him,  which  might  not,  as  between 
the  original  parties,  be  valid.     The  same  doctrine  was  affirmed  by 


SWIFT   V.    TYSON.  189 

Mr.  Chancellor  Kent,  in  Bay  v'.  Coddiiigton,  5  Johns.  Ch.  .04.^ 
Upon  that  occasion  he  said  that  negotiable  i)aj)cr  can  be  assigned 
or  transferred  by  an  agent  or  factor,  or  by  any  other  person,  fraud- 
ulently, so  as  to  bind  the  true  owner  as  against  the  holder,  pro- 
vided it  be  taken  in  the  usual  course  of  trade,  and  for  a  fair  and 
valuable  consideration,  without  notice  of  the  fraud.  But  he 
added,  that  the  holders  in  that  case  were  not  entitled  to  the  benefit 
of  the  rule,  because  it  was  not  negotiated  to*  them  in  the  usual 
course  of  business  or  trade,  nor  in  payment  of  any  antecedent 
and  existing  debt,  nor  for  cash,  or  property  advanced,  debt  created, 
or  responsibility  incurred,  on  the  strength  and  credit  of  the  notes  ; 
thus  directly  allirming,  that  a  pre-existing  debt  was  a  fair  and  val- 
uable consideration  within  the  [jrotcction  of  the  general  rule. 
And  he  has  since  alTirmed  the  same  doctrine,  upon  a  full  review 
of  it,  in  his  commentaries.  8  Kent,  Com.  §  44,  p.  81.  The  de- 
cision in  the  case  of  Bay  v.  Coddington  was  afterwards  affirmed 
in  the  Court  of  Errors,  20  Johns.  (>37,  and  the  general  reasoning 
of  the  Chancellor  was  fully  sustained.  There  were,  indeed,  pecul- 
iar circumstances  in  that  case'which  the  Court  seem  to  have  con- 
sidered as  entitling  it  to  be  treated  as  an  exception  to  the  general 
rule,  upon  the  ground,  either  because  the  receipt  of  the  notes  was 
under  suspicious  circumstances,  the  transfer  having  been  made 
after  the  known  insolvency  of  the  indorser,  or  because  the  holder 
had  received  it  as  a  mere  security  for  contingent  responsibilities, 
with  which  the  holders  had  not  then  become  charged.  There  was, 
however,  a  considerable  diversity  of  opinion  among  the  members 
of  the  Court  upon  that  occasion,  several  of  them  holdifig  that  the 
decree  ought  to  be  reversed,  otliers  affirming  that  a  pre-existing 
debt  was  a  valuable  consideration,  sufficient  to  protect  the  holders, 
and  otliers  again  insisting  that  a  pre-existent  debt  was  not  suffi- 
cient. From  that  period,  however,  for  a  series  of  years,  it  seems 
to  have  been  held,  by  the  Supreme  Court  of  the  State,  that  a  pre- 
existing debt  was  not  a  sufficient  consideration  to  shut  out  the 
equities  of  the  original  parties  in  favor  of  the  holders.  But  no 
case  to  that  effect  has  ever  been  decided  in  the  Court  of  Eiy-ors. 
The  cases  cited  at  the  l)ar.  and  especially  Rosa  v.  Brotherson,  10 
Wend.  85  ;  The  Ontario  Bank  r.  Worthington,  12  id.  593  ;  and 
Payne  v.  Cutler,  18  id.  005,  are  directly  in  point.  But  the  more 
recent  cases.  The  Bank  of  Salina  v.  Babcock,  21  Wend.  499 ;  and 
The  Bank  of  Sandusky  v.  Scoville,  24  id.  115,  have  greatly  shaken, 

1  Ante,  172. 


190  HOLDER   FOR    VALUE. 

if  they  have  not  entirely  overthrown,  those  decisions,  and  seem  to 
have  brought  back  the  doctrine  to  that  promulgated  in  the  earliest 
cases.  So  that,  to  say  the  least  of  it,  it  admits  of  serious  doubt, 
whether  any  doctrine  upon  this  question  can  at  the  present  time 
be  treated  as  finally  established  ;  and  it  is  certain  that  the  Court 
of  Errors  have  not  pronounced  any  positive  opinion  upon  it. 

But,  admitting  the  doctrine  to  be  fully  settled  in  New  York,  it 
remains  to  be  considered  whether  it  is  obligatory  upon  this  Court, 
if  it  differs  from  the  principles  established  in  the  general  commer- 
cial law.  It  is  observable  that  the  courts  of  New  York  do  not 
found  their  decisions  upon  this  point  upon  any  local  statute,  or 
positive,  fixed,  or  ancient  local  usage ;  but  they  deduce  the  doc- 
trine from  the  general  principles  of  commercial  law.  It  is,  how- 
ever, contended  that  the  34th  section  of  the  Judiciary  Act  of  1789, 
c.  20,  furnishes  a  rule  obligatory  upon  this  Court  to  follow  the 
decisions  of  the  State  tribunals  in  all  cases  to  which  they  apply. 
That  section  provides  "  that  the  laws  of  the  several  States,  except 
where  the  Constitution,  treaties,  or  statutes  of  the  United  States 
shall  otherwise  require  or  provide,  shall  be  regarded  as  rules  of 
decision  in  trials  at  common  law  in  the  courts  of  the  United 
States,  in  cases  where  they  apply."  In  order  to  maintain  the 
argument,  it  is  essential,  therefore,  to  hold  that  the  word  "  laws," 
in  this  section,  includes  within  the  scope  of  its  meaning  tlie  deci- 
sions of  the  local  tribunals.  In  the  ordinary  use  of  language,  it 
will  hardly  be  contended  that  the  decisions  of  courts  constitute 
laws.  Tiiey  are,  at  most,  only  evidence  of  what  the  laws  are,  and 
are  not  of  themselves  laws.  They  are  often  re-examined,  reversed, 
and  qualified  by  the  courts  themselves,  whenever  they  are  found 
to  be  either  defective,  or  ill-founded,  or  otherwise  incorrect.  Tlie 
laws  of  a  State  are  more  usually  understood  to  mean  the  rules 
and  enactments  promulgated  by  the  legislative  authority  thereof, 
or  long- established  local  customs  having  the  force  of  laws.  In  all 
the  various  cases,  which  have  hitherto  come  before  us  for  decision, 
this  Court  have  uniformly  supposed  that  the  true  interpretation  of 
the  34th  section  limited  its  application  to  State  laws  strictly  local, 
that  is  to  say,  to  the  positive  statutes  of  the  State,  and  the  con- 
struction thereof  adopted  by  the  local  tribunals,  and  to  rights  and 
titles  to  things  liaving  a  permanent  locality,  such  as  the  rights  and 
titles  to  real  estate,  and  other  matters  immovable  and  intraterri- 
torial  in  their  nature  and  character.     It  never  has  been  supposed 


SWIFT   V.    TYSON.  191 

by  us  that  the  section  did  apply,  or  was  designed  to  apply,  to  ques- 
tions of  a  more  general  nature,  not  at  all  dependent  upon  local 
statutes  or  local  usages  of  a  fixed  and  permanent  operation  ;  as,  for 
example,  to  the  constrnction  of  ordinary  contracts  or  other  written 
instruments,  and  especially  to  questions  of  general  commercial 
law,  where  the  State  tribunals  are  called  upon  to  perform  the  like 
functions  as  ourselves,  that  is,  to  ascertain,  upon  general  reasoning 
and  legal  analogies,  what  is  the  true  exposition  of  the  contract  or 
iilstrument,  or  what  is  the  just  rule  furnished  by  the  principles  of 
commercial  law  to  govern  the  case.  And  we  have  not  now  the 
slightest  difficulty  in  holding  that  this  section,  upon  its  true  intend- 
ment and  construction,  is  strictly  limited  to  local  statutes  and  local 
usages  of  the  character  before  stated,  and  does  not  extend  to  con- 
tracts and  other  instruments  of  a  commercial  nature,  the  true 
interpretation  and  elTcct  whereof  are  to  be  sought,  not  in  the  deci- 
sions of  the  local  tribunals,  l)ut  in  the  general  principles  and  doc- 
trines of  commercial  jurisprudence.  Undoubtedly,  the  decisions 
of  the  local  tribunals  upon  such  subjects  are  entitled  to,  and  will 
receive,  the  most  deliberate  attention  and  respect  of  this  Court ; 
but  they  cannot  furnish  positive  rules,  or  conclusive  authority,  by 
which  our  own  judgments  are  to  be  bound  up  and  governed.  The 
law  respecting  negotiable  instruments  may  be  truly  declared,  in 
the  language  of  Cicero,  adopted  by  Lord  Mansfield  in  Luke  v. 
Lyde,  2  Burr.  882,  887,  to  be  in  a  great  measure,  not  the  law  of  a 
single  country  only,  but  of  the  commercial  world.  "  Non  erit  alia 
lex  Roraae,  alia  Athenis,  alia  nunc,  alia  posthac,  sed  et  apud  omnes 
gentes,  et  omni  tempore,  una  eademque  lex  obtinebit." 

It  becomes  necessary  for  us,  thcrelbre,  upon  the  present  occa- 
sion, to  express  our  own  opinion  of  tlie  true  result  of  the  commer- 
cial law  upon  the  question  now  before  us.  And  we  have  no 
hesitation  in  saying,  that  a  pre-existing  debt  does  constitute  a 
valuable  consideration  in  the  sense  of  the  general  rule  already 
stated,  as  applical)le  to  negotiable  instruments.  Assuming  it  to 
be  true  (which,  however,  may  well  admit  of  some  doubt  from  the 
generality  of  the  language)  that  the  holder  of  a  negotiable  instru- 
ment is  unaffected  with  the  equities  between  the  antecedent  par- 
ties, of  which  he  has  no  notice,  only  where  he  receives  it  in  the 
usual  course  of  trade  and  business  for  a  valuable  consideration, 
before  it  becomes  due ;  we  are  prepared  to  say,  that  receiving  it  in 
payment  of,  or  as  security  for  a  pre-existing  debt,  is  according  to 


192  HOLDER    FOR    VALUE. 

the  known  usual  course  of  trade  and  business.  And  why,  upon 
principle,  sliould  not  a  pre-existing  debt  be  deemed  such  a  valuable 
consideration?  It  is  for  the  benefit  and  convenience  of  the  com- 
mercial world  to  give  as  wide  an  extent  as  practicable  to  the  credit 
and  circulation  of  negotiable  paper,  that  it  may  pass  not  only  as 
security  for  new  purchases  and  advances,  made  upon  the  transfer 
thereof,  but  also  in  payment  of  and  as  security  for  pre-existing 
debts.  The  creditor  is  thereby  enabled  to  realize  or  to  secure  his 
debt,  and  thus  may  safely  give  a  prolonged  credit,  or  forbear  from 
taking  any  legal  steps  to  enforce  his  rights.  The  debtor  also  has 
the  advantage  of  making  his  negotiable, securities  of  equivalent 
value  to  casii.  But  establish  the  opposite  conclusion,  that  nego- 
tiable paper  cannot  be  applied  in  payment  of,  or  as  security  for,  pre- 
existing debts,  without  letting  in  all  the  equities  between  the 
original  and  antecedent  parties,  and  the  value  and  circulation  of 
such  securities  must  be  essentially  diminished,  and  the  debtor 
driven  to  the  embarrassment  of  making  a  sale  thereof,  often  at  a 
ruinous  discount,  to  some  third  person,  and  then  by  circuity  to 
apply  the  proceeds  to  the  payment  of  his  debts.  What,  indeed, 
upon  such  a  doctrine,  would  become  of  that  large  class  of  cases, 
where  new  notes  are  given  by  the  same  or  by  other  parties,  by  way 
of  renewal  or  security  to  banks,  in  lieu  of  old  securities  discounted 
by  them,  which  have  arrived  at  maturity  ?  Probably  more  than 
one-half  of  all  bank  transactions  in  our  country,  as  well  as  those 
of  other  countries,  are  of  this  nature.  The  doctrine  would  strike 
a  fatal  blow  at  all  discounts  of  negotiable  securities  for  pre-existing 
debts. 

This  question  has  been  several  times  before  this  Court,  and  it 
has  been  uniformly  held,  that  it  makes  no  difference  whatsoever 
as  to  the  rights  of  the  holder,  whether  the  debt,  for  which  the 
negotiable  instrument  is  transferred  to  him,  is  a  pre-existing  debt, 
or  is  contracted  at  the  time  of  the  transfer.  In  each  case,  he  equally 
gives  credit  to  the  instrument.  The  cases  of  Coolidge  v.  Payson, 
2  Wheat.  QQ,  70,  73,i  and  Townsley  v.  Sumrall,  2  Pet.  170,  182,- 
are  directly  in  point. 

In  England,  the  same  doctrine  has  been  uniformly  acted  upon. 
As  long  ago  as  the  case  of  Pillans  and  Rose  v.  Van  Mierop  and 
Hopkins,  3  Burr.  1668,  the  very  point  was  made,  and  the  objection 
was  overruled.  That,  indeed,  was  a  case  of  far  more  stringency 
than  the  one  now  before  us ;  for  the  bill  of  exchange,  there  drawn 

1  Ante,  43. 


SWIFT    V.    TYSON.  193 

ill  discharge  of  a  pre-existing  debt,  was  held  to  bind  the  party  as 
acceptor,  upon  a  mere  promise  made  by  him  to  accept  before  the 
bill  was  actually  drawn.  Upon  tliat  occasion,  Lord  Ulannjield, 
likening  the  case  to  ^hat  of  a  letter  of  credit,  said  that  a  letter  of 
credit  may  be  given  for  money  already  advanced,  as  well  as  for 
money  to  be  advanced  in  future ;  and  the  whole  Court  held  the 
plaintiff  entitled  to  recover.  From  that  period  downward,  there 
is  not  a  single  case  to  i)e  found  in  England,  in  which  it  has  ever 
been  held  by  the  Court,  that  a  pre-existing  debt  was  not  a  valuable 
consideration,  sufficient  to  protect  the  holder,  within  the  meaning 
of  the  general  rule,  although  incidental  dicta  have  been  sometimes 
relied  on  to  establish  the  contrary,  such  as  the  dictum  of  Lord 
Chief  Justice  Alfhutt  in  .Smith  v.  De  Witts,  6  Dowl.  &  Ryl. 
120,  and  De  la  Chaumette  v.  The  Bank  of  England,  9  Barn.  & 
Cress.  208,  where,  however,  the  decision  turned  upon  very  different 
considerations. 

^Ir.  Justice  Baijlci/^  in  his  valuable  work  on  Bills  of  Exchange 
and  Promissory  Notes,  lays  down  the  rule  in  the  most  general 
terms.  "  The  want  of  consideration,"  says  he,  "  m  lata  or  in  part, 
cannot  be  insisted  on,  if  the  plaintiff,  or  any  intermediate  party 
betweeu  him  and  tlie  defendant,  took  the  bill  or  note  bona  fide  and 
upon  a  vali'd  consideration."  Bayley,  Bills,  pp.  499,  500,  5th 
London  edition,  18:i0.  It  is  observable  that  he  here  uses  the 
words  "  valid  consideration,"  obviously  intending  to  make  the  dis- 
tinction, that  it  is  not  intended  to  apply  solely  to  cases  where  a 
present  consideration  for  advances  of  money  on  goods  or  otherwise 
takes  place  at  the  time  of  the  transfer  and  upon  the  credit  thereof. 
And  in  this  he  is  fully  borne  out  by  the  aiithorities.  They  go 
further,  and  establish  that  a  transfer  as  security  for  past  and  even 
for  future  responsibilities,  will,  for  this  purpose,  be  a  sufficient, 
valid,  and  valuable  consideration.  Thus,  in  the  case  of  Bosanquet 
V.  Dudman,  1  Stark.  1,  it  was  held-  by  Lord  Elleiiboroiiyli^  that  if 
a  banker  be  under  acceptances  to  an  amount  beyond  the  cash  l)al- 
ance  in  his  hands,  every  bill  he  iiolds  of  that  customer's,  hoiut  Jide^ 
he  is  to  be  considered  as  holding  for  value  ;  and  it  makes  no  differ- 
ence, though  he  hold  other  collateral  securities,  more  than  suffi- 
cient to  cover  the  excess  of  his  acceptances.  The  same  doctrine 
was  affirmed  by  Lord  Ehhii  in  Ex  j/artc  Bloxham,  8  Yes.  531,  as 
equally  applicable  to  past  and  to  future  acceptances.  The  subse- 
quent cases  of  Heywood  r.  Watson,  4  Bing.  490,  and  Braraah  v. 

13 


194  HOLDER    FOR    VALUE. 

Roberts,  1  Biiig.  N.  C.  469,  and  Percival  v.  Frampton,  2  Cromp., 
Mecs.  &  Rose.  180,  are  to  the  same  effect.  They  directly  establish 
that  a  bona  fide  holder  taking  a  negotiable  note  in  payment  of"  or 
as  security  for  a  pre-existing  debt,  is  a  holder  for  a  valuable  con- 
sideration, entitled  to  protection  against  all  the  equities  between 
the  antecedent  parties.  And  these  are  the  latest  decisions  which 
our  researches  have  enabled  us  to  ascertain  to  have  been  made  in 
the  English  Courts  upon  this  subject. 

In  the  American  Courts,  so  far  as  we  have  been  able  to  trace  the 
decisions,  the  same  doctrine  seems  generally,  but  not  universally, 
to  prevail.  In  Brush  v.  Scribner,  11  Conn.  388,  the  Supreme 
Court  of  Connecticut,  after  an  elaborate  review  of  the  English  and 
Ne\y  York  adjudications,  held,  upon  general  principles  of  commer- 
cial law,  that  a  pre-existing  debt  was  a  valuable  consideration,  suf- 
ficient to  convey  a  valid  title  to  a  bona  fide  liolder  against  all  the 
antecedent  parties  to  a  negotiable  note.  There  is  no  reason  to 
doubt  that  the  same  rule  has  been  adopted  and  constantly  adhered 
to  in  Massachusetts ;  and  certainly  there  is  no  trace  to  be  found  to 
the  contrary.  In  truth,  in  the  silence  of  any  adjudications  upon 
the  subject,  in  a  case  of  such  frequent  and  almost  daily  occurrence 
in  the  commercial  States,  it  may  fairly  be  presumed  that  whatever 
constitutes  a  valid  and  valuable  consideration  in  other  cases  of  con- 
tract, to  support  titles  of  the  most  solemn  nature,  is  held  a  fortiori 
to  be  sufficient  in  cases  of  negotiable  instruments,  as  indispensable 
to  the  security  of  holders,  and  the  facility  and  safety  of  their  cir- 
culatio  i.  Be  this  as  it  may,  we  entertain  no  doubt  that  a  bona 
fide  holder,  for  a  pre-existing  debt  of  a  negotiable  instrument,  is 
not  affected  by  any  equities  between  the  antecedent  parties,  where 
he  has  received  the  same  before  it  became  due,  without  notice  of 
any  such  equities.  We  are  all,  therefore,  of  opinion,  that  the 
question  on  this  point,  propounded  by  the  Circuit  Court  for  our 
consideration,  ought  to  be  answered  in  the  negative ;  and  we  shall 
accordingly  direct  it  so  to  be  certified  to  the  Circuit  Court. 

Catron,  J.,  said:  Upon  the  point  of  difference  between  the 
judges  below,  I  concur,  that  the  extinguishment  of  a  debt,  and  the 
giving  a  pos^  consideration,  such  as  the  record  presents,  will  pro- 
tect the  purchaser  and  assignee  of  a  negotiable  note  from  the  in- 
firmity affecting  the  instrument  before  it  was  negotiated.  But  I 
am  unwilling  to  sanction  the  introduction  of  a  doctrine  into  the 
opinion  of  this  Court,  aside  from  the  case  made  by  the  record,  or 


^      SWIFT   V.   TYSON.  195 

argued  by  the  counsel,  assuming  to  maintain  tliat  a  negotiable  note 
or  bill,  pledged  as  collatoi-al  security  for  a  previous  debt,  is  taken 
l)y  the  creditor  iii  the  due  course  of  trade  ;  and  that  he  stands  on 
the  foot  of  him  who  purchases  in  the  market  for  money,  or  takes 
the  instrument  in  extinguishment  of  a  previous  debt.  State 
courts  of  high  auth^-ity  on  commercial  (juestions  have  held  other- 
wise ;  and  that  they  will  yield  to  a  mere  expression  of  o{)inion  of 
this  Court,  or  change  their  course  of  decision  in  conformity  to  the 
recent  English  cases  referred  to  in  the  [)i:inci})al  oi)inion,is  improb- 
able ;  whereas,  if  the  (piestion  wei'C  ])ormittod  to  I'cst  until  it 
fairly  arose,  the  decision  of  it  cither  way  I)y  this  Court,  i)rol)al)ly 
would,  and  I  think  ought,  to  settle  it.  As  such  a  result  is  not  to 
be  expected  Irom  the  opinion  in  this  cause,  I  am  unwilling  to  em- 
barrass myself  with  so  much  of  it  as  treats  of  negotiable  instru- 
ments taken  as  a  pledge.  I  never  heard  this  question  spoken  of 
as  belonging  to  the  case  until  the  principal  opinion  was  presented 
last  evening  ;  and  therefore  I  am  not  prepared  to  give  any  opinion, 
even  was  it  called  for  by  the  record. 

'J'lic  following  opinion,  delivered  in  1854,  in  Atkinson  v.  Brooks,  26  Vt.  .")74, 
contains  a  snnnnary  of  the  decided  cases  at  that  time,  and  a  statement  of  the 
several  cjuestions  involved. 

Rkdfikld,  C.  J.  This  case,  as  the  defendant's  testimony  tended  to  prove, 
and  as  the  jury  seem  to  have  found,  in  giving  a  verdict  for  defendant,  was  a  bill 
of  exchange,  drawn  by  one  Asa  Low,  at  Bradford,  Vermont,  upon  the  defendant, 
at  Sherbrook,  Canada  East,  payable  to  the  order  of  the  drawer,  at  the  Ijank  in 
Boston,  Mass.,  three  months  from  date,  and  being  accepted  and  indorsed,  was 
de|)Osited  with  a  firm  of  merchants  in  Boston  to  raise  money  for  Low,  and  remit 
to  him  at  Bradford.  But  they,  before  its  maturity,  passed  it  to  one  of  their 
creditors  as  security  for  a  note  of  some  eleven  hundred  dollars,  which  ihey  were 
owing  them  at  the  time,  and  which  was  ovi-rdue.  The  bill  being  dishonored,  was 
duly  protested,  and  is  sued  in  tlu'  plaintilf 's  name  for  the  benefit  of  the  house  to 
whom  it  was  passed',  as  security  (or  their  note.  The  defendant  is  merely  an 
acconnnodatioii  acceptor. 

The  important  question  in  the  case  is,  whether  the  plaintilfs  in  interest  can  be 
regarded  as  holders  for  value.  No  question  was  made  but  that  they  took  the  bill 
in  good  faith,  and  without  knowledge  even  of  the  di'lendant  being  merely  an 
accouunodation  acceptor,  or  of  any  confiiience  between  the  parlies  of  whom  they 
took  the  bill,  and  any  prior  ])arty.  The  impiiry  seems  naturally  to  resolve  itself 
into  two  leading  questions':  — 

1.  Did  the  plaintiff,  in  fact  and  ujion  principle,  give  value  lor  ihe  bill,  and 
can  he,  upon  this  ground  nierely,  l)e  justly  regarded  as  a  Ixnui  Jhlc  holder  for 
value?  It  seems  now  to  be  pretty  generally  conceded,  that  one  who  takes  a 
note  or  bill  indorsed  while  current,   in  payment  and  extinguishment  of  a  pre- 


196  HOLDER  FOR  VALUE. 

existing  debt,  must  be  regarded  as  a  holder  for  value.  This  is  certainly  the 
general  course  of  decision  upon  the  subject,  with  some  exceptions  to  be  sure, 
and  we  do  not  well  see  how  it  can  fairly  be  argued  that  one  who  gives  up  a  debt 
and  accepts  a  note  or  bill  for  the  same,  either  on  time  or  at  sight,  can  be  said  to 
give  no  consideration  for  the  same.  He  certainly  does  forego  the  pursuit  of  his 
own  debt,  and  thus  certainly  puts  himself,  for  the  time,  in  a  different,  and,  in 
law,  a  worse  situation.  And  this  must  be  regarded  a^ prima  facie  a  foregoing 
of  some  advantage  by  the  indorsee  and  also  an  accommodation  to  the  indorser, 
who  may  fairly  be  presumed  to  prefer  this  mode  of  meeting  his  debt.  The  trans- 
action, tlicrefbre,  possesses  both  the  cardinal  ingredients  which  constitute  the 
text-book  (lelinition  of  a  valuable  consideration  ;  it  is  a  detriment  to  the  prom- 
isee, and  an  advantage  to  the  promisor.  And  it  is  no  satisfactory  answer  to  the 
case,  to  say  the  party  who  takes  such  bill  or  note,  which  proves  unproductive,  is 
in  the  same  condition  he  was  before.  This  is  by  no  means  certain.  He  has  for 
the  time  foregone  the  collection  of  his  debt,  and  in  such  matters,  time  is  the  es- 
sence of  the  transaction.  And  the  debtor  thereby  gains  time,  —  it  may  be  more 
or  less,  —  but  of  necessity  some  time  is  thereby  gained  ;  and  in  such  matters  this 
is  always  accounted  an  advantage,  and  is  often  of  the  most  vital  consequence  to 
the  debtor.  How  then  can  it  iiairly  be  said  that  this  mere  suspension  of  the 
debt  during  the  currency  of  the  note  or  bill,  is  no  consideration?  It  seems  to 
me  such  reasoning  upon  other  subjects  —  indeed  upon  any  subject  where  one  is 
not  pressed  to  the  wall  by  the  necessities  of  his  case  —  would  almost  be  regarded 
as  frivolous  ;  surely  it  is  scarcely  specious. 

But  it  has  often  been  claimed  that  there  is  an  essential  difference  in  principle 
between  taking  a  current  note  or  bill  in  payment,  and  as  security  for  a  prior 
debt  then  due.  The  transactions  are  certainly  different  in  form,  at  least.  But  it 
seems  to  me,  the  ordinary  case  of  taking  such  a  securitj^  as  payment,  or  as  col- 
lateral to  the  prior  debt,  is  the  same  in  principle.  One  whose  debt  is  due,  in 
the  conmiercial  world,  must  pay  it  instantly,  or  he  becomes  a  bankrupt.  If,  in- 
stead of  money,  he  gives  a  bill  or  note,  either  on  time  or  at  sight,  whether  this 
is  in  form,  in  payment,  or  collateral  to  his  debt,  he  gains  time,  and  saves  the  dis- 
grace and  ruin  consequent  upon  stopping  payment.  And,  in  either  case,  there 
is  an  implied  undertaking  that  he  shall  wait  upon  his  debtor  till  the  result  of  the 
new  security  can  be  known  ;  and  in  both  cases,  when  that  proves  unproductive, 
the  creditor  may  pursue  his  original  debt,  or  he  may  sue  the  prior  parties  on  the 
new  security,  except  his  immediate  indorser,  and  sue  him  upon  the  original 
debt;  or  he  may  sue  him  as  indorser,  and  also  all  prior  parties.  In  this  State, 
and  some  other  of  the  American  States,  where  a  note  or  bill,  when  taken  as  pay- 
ment, prima  facie  extinguishes  the  debt,  it  is  more  common  to  sue  the  debtor  as 
indorser.  But  according  to  the  English  law,  and  the  general  commercial  law, 
taking  a  current  note  or  bill  for  a  prior  debt  only  suspends  the  right  of  action  till 
the  dishonor  of  the  new  security.  According  to  the  general  commercial  usage, 
there  is,  then,  no  essential  difference  in  principle,  whether  a  current  note  or  bill  is 
taken  in  payment  or  as  collateral  security  for  a  prior  debt,  provided  the  note  is, 
in  both  cases,  truly  and  unqualifiedly  negotiated,  so  as  to  impose  upon  the  holder 
the  obfigation  to  conform  to  the  general  rules  of  the  law  merchant  in  enforcing 
payment.  If,  indeed,  the  note  or  bill  is  not  so  negotiated  as  to  make  the  holder 
a  pai  ty  to  it,  or  so  as  to  require  of  him  to  pursue  the  strict  rules  of  mercantile 


SWIFT   V.   TYSON.  197 

usap;e  in  making  di^mand  of  |)aynu'nt,  and  giving  notii-o  of  dishonor,  so  as  to 
chiiigc  liis  iiidorsor,  witli  all  the  prior  parties,  upon  the  peril  of  making  the  note 
or  bill  his  own  in  payment  of  liis  debt,  then  he  eould  not  bi;  regarded  probably 
as  having  so  taken  the  paper  in  the  due  course  of  business  bona  Ji<1e,  and  for 
vahie,  as  to  shut  out  equitable  defences  existing  between  the  original  parties. 
But,  ordinarily,  we  suppose  it  fair  to  conclude  that  one  who  takes  a  note  or  bill 
negotiated  to  hitn  while  eurrent,  although  merely  as  coll^ral  to  a  prior  debt,  is 
expected  to  pursue  the  same  course  in  enforcing  payment,  as  if  he  paid  money 
for  the  bill.  And  it  is  scarcely  supposable  that  one  so  taking  security  for  a 
debt,  will  not  conduct  diflTcrently  on  account  of  the  security.  It  is  of  necessity 
he  should,  if  he  puts  any  confidence  in  its  ultimate  availability ;  and  one  would 
scarcely  part  with  such  security,  unless  he  expected  more  or  less  indulgence 
on  account  of  it.  And  when  the  prior  debt  is  suffered  to  remain  uncollected,  it 
is,  under  the  circumstances,  fair  to  conclude  such  was  the  stipulation.  And  the 
case  of  one  who  takes  a  note  or  bill  so  negotiated,  whether  in  pni/ment  or  in 
secitritij  of  a  prior  debt,  implicitly  stipulating  to  forego  the  collection  until  the 
maturity  of  the  collateral  paper,  when  such  paper  proves  unproductive,  is  the 
same  in  both  altcrnntives.  In  either  case  he  may  pursue  his  remedy  upon  the 
negotiable  paper  against  all  the  prior  parties,  including  his  immediate  indorser, 
or  omitting  him,  he  may  pursue  the  other  parties  to  the  bill  or  note,  and  sue  his 
original  debt  eipially,  wlicther  he  took  the  paper  in  ptiyiiient  or  as  coll:iter.il 
security  of  such  debt,  so  that  the  dilference  between  the  two  cases  is  merely, 
formal.  And  if,  in  case  of  negotiating  current  paper  as  collateral  security  for  a 
prior  debt,  the  holder  is  not  regarded  as  having  taken  it  upon  a  valuable  con- 
sideration, then  the  indorser  may  recall  it  at  will.  For  if  there  is  no  such  con- 
sideration as  to  make  the  contract  binding,  it  is  revocable  at  will. 

And  if  not  upon  consideration  as  to  one  party,  neither  is  it  as  to  the  other. 
And  in  such  case  the  holder  is  merely  the  agent  of  the  indorsee  for  purposes  of 
collection,  and,  as  such  agent,  subject  to  his  control,  and  bound  to  surrender  the 
security  at  will.  This  was  the  view  taken  in  De  La  Chaumette  r.  The  Bank  of 
England,  9  Barn.  &  C  208.  But  that  case  turned  upon  the  peculiar  construction 
given  to  the  facts  of  the  case.  Such  is  certainly  not  the  common  case  of  taking 
negotiable  paper  as  collateral  security  for  a  del)t  already  due.  The  imlorser. 
in  sui'h  case,  can  no  more  recall  or  control  the  pa])er,  than  if  he  had  received 
the  money  or  goods  in  payment  of  the  same.  And  when  one  takes  a  bill  or 
note  negotiated  before  maturity,  in  payment  of  money  advanced  or  goods  sold, 
such  paper  is,  in  fact,  only  collateral  security  for  the  money  or  the  price  of  the 
goods,  and  suspends  such  debts  only  till  the  dishonor  of  the  bill ;  and  is  in  law 
j)recisely  the  same  thing  as  if  the  lender  of  the  money  or  the  vendor  of  the  goods 
took  a  note  for  the  money  or  goods,  and  a  bill  or  note  negotiated  as  collateral  to 
such  note,  with  the  agreement  to  wait  till  such  collateral  was  paid  or  dishonored. 
In  all  these  cases,  it  would  never  be  claimed  that  the  indorser  of  such  bill  or 
note  could  take  it  out  of  the  hands  of  the  indorsee  at  will.  But  this  he  clearly 
might  do,  if  such  indorsee  had  not  taken  it  upon  consideration.  If  for  instance, 
one  holds  a  debt  due  six  months  hence,  and  his  debtor,  as  a  mere  volunteer  ser- 
vice, indorses  a  current  note  or  bill  as  collateral  security,  the  collateral  being 
due  in  three  months,  it  could  not  be  made  to  appear  that  such  transaction,  be- 
fore the  indorsee  had  been  at  any  pains  in  the  matter,  was  a  contract  upon  cou- 


198  HOLDER   FOR   VALUE. 

sidenition.  The  prior  debt  not  being  due,  the  creditor  could  forego  nothing,  and 
tlie  debtor  receive  no  iidvantage  frcm  the  transaction.  And  the  agreement  to 
ap[)ly  the  colhiteral  upon  a  debt  not  yet  due — being  without  consideration  — 
wouhi,  prol)aljly,  in  the  first  instance,  be  revocal)le  at  will,  and  so,  also,  as  long 
as  the  parties  remained  in  the  same  situation.  It  seems  needless  to  spend  more 
time  to  show  that,  upon  principle  and  in  fact,  one  who,  having  a  debt  due,  ac- 
cepts of  his  debtor  a  ciMrent  note  or  bill  indorsed  to  himself  as  collateral  security 
for  the  debt,  with  the  understanding  that  indulgence  is  to  be  shown  on  the  prior 
debt,  which  in  fact  follows,  docs  take  such  paper  upon  consideration,  and  gives 
value.  Upon  careful  examination  of  this  matter,  it  seems  strange  that  such  a 
question  should  ever  have  been  raised;  and  it  probably  never  would  have  been, 
but  from  tlie  indefiniteness  of  the  implied  obligations  growing  out  of  such  a 
transaction. 

2.  The  more  important  question  growing  out  of  the  case  is,  perhaps,  what  is 
the  true  commercial  rule  establi.-ihed  upon  this  subject?  And  it  is  of  vital  im- 
portance in  regard  to  commercial  usages,  that  they  should,  as  far  as  practicable, 
be  uniform  throughout  the  world.  And  such  is  necessarily  the  ultimate  desidera- 
tum, and  will  inevitably  be  the  final  result.  It  is,  therefore,  always  a  question 
of  time  as  to  uniformity  in  such  usages.  The  basis  of  such  uniformity  is  con- 
venience and  justice  combined ;  and  until  such  rules  become  measurably  settled 
by  practice,  they  have  to  be  treated  as  matters  of  fact,  to  be  passed  upon  by 
juries  ;  and  when  the  rule  acquires  the  quality  of  uniformity  and  the  character 
of  general  acceptance,  it  is  then  regarded  as  matter  of  law.  It  is  thus  that  most 
of  the  commercial  law  has,  from  time  to  time,  grown  up.  In  the  case  of  Foster  v. 
Pearson,  1  Cromp.  M.  &  R.  849,  Lord  Lyndhurst,  while  Chief  Baron  of  the  Court 
of  Exchequer,  left  it  to  the  jury  to  determine,  upon  the  evidence,  as  to  general 
commercial  usage  in  the  city  of  London,  whether  the  plaintiff  had  taken  the  bill 
in  the  due  course  of  business,  and  the  full  Court  h(dd  that  the  question  was  prop- 
erly submitted  .to  the  jury.  But  in  this  case  it  seems  to  be  recognized  as  settled 
law,  that  one  who  fakes  an  indorsed  note  or  bill  still  current  as  collateral  securi- 
ty (or  a  prior  debt,  is  a  bona  fide  holder  for  value.  So,  too,  as  early  as  1814,  in 
Bosanquet  v.  Dudman,  1  Stark.  1,  Lord  Ellenborough  said,  "  that  whenever  the 
acceptances  exceed  the  cash  balance,  the  plaintiff  held  all  the  collateral  bills  for 
value  ;  "  and  the  Court  of  Exchequer,  in  Percival  v.  Frampton,  2  Cromp.  M.  &  R. 
180,  decide  the  same  point.  Parke,  B.,  says:  "If  the  note  were  given  to  the 
plaintiffs  as  a  security  for  a  previous  debt,  and  they  held  it  as  such,  they  might 
be  properly  stated  to  be  holders  for  valuable  consideration."  This  is  in  1835. 
And  the  same  rule  is  certainly  recognized  in  Heywood  v.  Watson,  4  Bing,  496. 
So  also  in  Bosanquet  v.  Forster,  9  Car.  &  P.  659,  and  Same  v.  Corser,  ib.  664. 
Palmer  v.  Richard  is  a  full  authority  to  show  that  it  is  not  material  whether  the 
note  or  hill  be  deposited  as  security  for  an  advance,  or  in  payment,  as  some  of 
the  American  cas^s  seem  to  siq)pose.  (1851),  1  Eng.  Law  &  Eq.  529;  s.  c, 
16  Jur.  51. 

In  Smith  v.  Braine,  3  Eng.  Law  &  Eq.  379;  s.  c,  15  Jur.  41,  the  proper 
distinction  between  accommodation  paper  and  paper  fraudulently  or  illegally 
obtained  or  put  in  circulation  is  discussed,  and  placed  upon  the  sensible  and  true 
ground  no  doubt,  viz.,  that  in  the  former  case  it  is  incumbent  upon  the  maker 
or  acceptor  to  show  that  the  holder  took  it  without  consideration,  the  law  mak- 


•  SWIFT   V.    TYSON.  199 

ing  the  ordinary  presumption  in  favor  of  the  holder  of  accommodation  paper, 
which  is,  in  fact,  made  for  the  purpose  of  being  put  in  circulation ;  and  it  being, 
therefore,  fair  to  {jresunu!  the  holder  took  it  for  value,  and  bona  Jide.  But  in 
case  of  a  note  or  bill,  il!e;,ral  in  its  inception,  or  fraudulently  put  in  circulation, 
if  these  facts  be  proved  in  defence,  it  has  sometimes  been  held  that  it  imposes 
upon  the  holder  the   necessity  of  proving  in  answer   that  he  gave  value  for  the 


sire 


ago  declared  by  Lord  Abiiujer,  that  the  courts  in  VVesTminster  Hall  had,. upon 
consultation,  determined  so  to  decide  the  law.  The  same  distinction  between 
accounnodation  paper  and  paper  fraudulently  put  in  circulation,  obtains  in  many 
of  the  American  States.  Hut  this  distinction  is  not,  perhaps,  very  important 
here,  inasmuch  as  the  defendant  claims  both  want  of  consideration  for  iiis  ac- 
ceptance, and  fraud  in  putting  the  paper  in  circulation.  Harvey  v.  Towers,  4 
Law  &  Eq.  531 ;  8.  c,  15  Jur.  544. 

But  that  the  English  law  is  fully  settled  in  favor  of  the  indorsee  of  current 
negotiable  paper,  who  takes  it  as  collateral  security  for  a  prior  debt,  there  can, 
I  think,  be  no  doubt,  since  the  decision  of  Poirier  r.  Morris,  20  Law  &  Eq.  103; 
s.  c,  22  Law  Journal  (x.  .s.),  Q.  B.  :5i;3;  2  El.  &  Bl.  89,  May,  18.^^5,  long 
since  the  present  action  was  pending.  This  was  an  action  upon  a  foreign  bill 
which  was  negotiated  to  j)laintiffs  as  security  for  a  previous  debt,  and  at  the  time 
of  receipt  passed  to  the  credit  of  the  debtor.  It  being  dishonored  was  protested, 
and  therefore  charged  in  account  against  the  debtor  to  balance  the  former  cre<lit, 
with  the  addition  of  expenses.  This  would  seem  to  be  the  usual  course  of  doing 
business  in  Europe,  and  prol)abIy  olitained  to  a  consid(!rable  extent  in  the  Amer- 
ican cities,  —  bills  and  notes  being  credited  on  receipt  and  charged  upon  dishonor, 
and  all  the  collaterals  being  thus  holden  for  the  ultimate  balance.  This  case  was 
decided  upon  the  general  ground  of  the  plaintiff's  title  at  the  time  he  took  the 
bill  as  security  for  the  balance  of  his  account.  Lord  Campbell,  C.  J.,  in  giving 
judgment,  says:  "There  is  nothing  to  make  a  difference  between  this  and  a 
common  case  where  a  bill  is  taken  as  security  for  a  debt,  and  in  that  case  an  an- 
teccilent  debt  is  a  sufficient  consideration^  Crompton,  J.,  says:  '■'■Whether  the 
hill  was  a  collateral  security,  or  whether  it  had  the  effect  of  suspending  the  pay- 
ment of  the  antecedent  debt,  is  quite  immaterial.  The  plaintiffs  had  a  perfect 
right  to  keep  it."  We  think,  therefore,  it  must  be  regarded  as  settled  law  in 
England  at  the  present  day,  that  such  a  bill  or  note  taken  as  collateral  security 
for  a  prior  debt,  is  taken  in  the  due  course  of  business  and  for  value.  Such 
being  the  settled  rule  of  the  English  law,  which  is  confessedly  of  great  and  para- 
mount force  upon  a  question  of  this  kind,  it  is  certainly  desirable  that,  in  regard 
to  conunercial  law  of  such  extensive  application  in  the  every-day  transactions  of 
business,  the  law  of  the  American  States  should  also  be  uniform,  and,  as  far  as 
reasonable  and  practicable,  correspond  with  the  acknowledged  rule  in  other 
States  and  countries.  The  case  of  Swifr  r.  Tyson,  1(5  l\t.  1,  upon  the 
most  elaborate  examination  an<l  debate,  adopts  the  English  rule,  and  upon 
general  grounds  of  settled  commercial  law.  The  decisions  of  the  national  tri- 
bunal are  not  indeed  of  any  liiiuling  authority  upon  the  general  rules  of  the  law 
merchant  in  a  State  Court,  further  than  they  commend  themselves  to  our  sense 
of  reason  and  justice.  But  such  a  decision  as  that  of  Swift  v.  Tyson,  upon  such 
a  subject,  could  scarcely  fail  to  be  regarded  as  of  very  considerable  force,  and. 


200  HOLDER   FOR   VALUE. 

if  sound  in  principle,  would,  almost  of  necessity,  ultimately  form  the  basis  of  that 
uniformity  of  commercial  law  in  these  States  wliicli,  sooner  or  later,  must,  from 
its  very  great  convenience,  ultimately  prevail.  If  not  sound  in  principle,  it 
would  with  difliculty  be  maintained  even  by  that  Court. 

Aside  from  our  former  remarks,  going,  as  we  think,  to  show  the  soundness  of 
the  rule  laid  down  in  Swift  v.  Tyson,  the  course  of  decision  in  the  several  States 
since  the  date  of  that  decision,  show  a  general  disposition  to  adopt  it.  Indeed, 
in  many  of  the  States,  a  similar  rule  prevailed  before  that.  In  Pennsylvania, 
Petrie  v.  Clark,  11  Serg.  &  R.  377  (1824),  recognizes  fully  the  sufficiency  of  the 
consideration  for  the  indorsement  of  a  note  or  bill  where  it  is  taken  in  payment 
of  a  prior  debt,  and  even  as  collateral  security,  if  there  is  any  agreement  to  wait 
on  the  prior  debt,  or  any  other  damage  is  sustained  in  consequence,  or  the  in- 
dorsee waives  or  temporarily  foregoes  any  of  his  other  rights.  This  ground, 
assumed  by  Oilmm,  J.,  at  that  early  day,  is  certainly  a  very  near  approacli  to 
the  rule  of  Swift  v.  Tyson,  and  the  present  English  rule  upon  the  subject.  The 
ouIt  diiference  seems  to  be  in  not  holding  that  one  who  takes  such  paper  as  col- 
lateral security,  is  presumed  to  conduct  differently  on  account  of  it.  Walker  v. 
Geisse,  4  Wharton,  252,  maintains  very  much  the  same  ground. 

In   Maine,  Holmes  v.  Smith,  16  Maine,   177,  decides   that,  if  such  paper  be 
taken  in  payment  of  a  pre-existing  debt,  it  defeats  all  equitable  defences  between 
the  original  parties.     So  also  in  New  Hampshire,  Williams  v.  Little,  11  N.  Hamp. 
66.     The  decision  in  this  case,  that  such  paper  being  indorsed  as  collateral  secu- 
rity for  a  loan  made  at  the  time,  is  not  held  for  value,  is  certainly  not  justified 
by  the  decisions  in  any  other  State,  so  far  as  I  can  find.     The  New  York  courts, 
who  have  resisted  this  rule  with  the  most  unflinching  pertinacity,  do  not  so  hold, 
but  the  contrary.     Williams  v.  Smith,  2   Hill,   301 ;   Watson   v.  Cabot  Bank,  5 
Sandford,  423;  Carlisle  v.  Wishart,  11  Ohio,  172,  adopts  the  view  of  Holmes  v. 
Smith.     Blanchard  v.  Stevens,  3  Cush.  162,  holds  tlie  same.     So  also  Norton  v. 
Walte,  20  Maine,  175.     So  too,  Bostwick  v.  Dodge,  1  Douglass  (Michigan),  413. 
Bush  V.  Peckard,  3  Harrington  (Delaware),  385,  goes  to  the  same  extent.  '  So 
also  the  case  of  Brush  v.  Scribner,  11   Conn.  388.     In  none  of  these  cases  ex- 
cept Williams  v.  Little,   did  the  question  arise,  whether  taking  a  note  or  bill 
indorsed  as  collateral  security  for  a  prior  debt,  is  the  same  as  taking  it  in  pay- 
ment.    There  is,  therefore,  every  reason  to  suppose  that  no  such  distinction  will 
be  attempted  in  any  of  those  States,  unless  it  be  the  latter  State.     The  case  of 
Barney  v.  Earle,  13  Alabama,  106,  is  to  the  same  extent.     In  Reddick  v.  Jones, 
6  Iredell  (North  Carolina),  107,  all  distinction  between  taking  negotiable  paper 
in  payment  and  as  collateral  security  is  repudiated,  and  both  held  to  be  valuable 
and  sufficient  considerations.     In  this  case  the  paper  was  taken  in  payment,  to 
be  sure.     So  also  in  Georgia,  Gibson  v.  Connor,  3  Kelly,  47,  expressly  decides 
that  taking  such  paper  as  collateral  security  for  a  prior  debt,  is  sufficient  to  shut 
out  e(|uitable   defences.      So  also  in  Indiana,  Valette   v.  Mason,  1   Smith,   89. 
And  the  same  is  held  in   New  Jersey,  Allaire  v.    Hartshorn,  1   Zabriskie,  665 ; 
and  in  Chicopee  Bank  v.  Chapin,  8  Met.  40,  the  same  rule  is  recognized,  although 
there  the  debt  was  created  at  the  time  the  paper  was  negotiated  as  collateral 
security.     Thus,  we  think,  most  of  the  States  may  be  regarded  as  virtually  hav- 
ing adopted  the  rule  laid  down  in  Swift  v.  Tyson.    Chancellor  Kent,  too,  3  Com. 
96  and  note,  adopts  the  same  rule,  "  as  the  plainer  and  better  doctrine;  "  and 


SWIFT   V,   TYSON.  201 

Allen  V.  Kinfj,  4  McLean,  C.  C.  128.  It  is  to  be  borne  in  mind  that,  upon  the 
othiT  side.  New  York  contends  strenuously  that  such  paper,  taken  either  in  pay- 
ment or  as  security  for  a  prior  debt,  is  not  held  upon  any  suflicient  considerati<jn 
to  shut  out  equitable  defences.  I  think  the  N<'\v  York  courts  are  con.si>ti'nt 
and  sound,  in  denying  all  distinction  between  taking  such  pai)er  in  payment,  and 
as  security  for  a  prior  debt.  There  obviously  is  no  difference  in  regard  to  the 
consideration.  Hut,  even  in  New  York,  they  have  felt  compelled  to  decide  that, 
if  such  paper*is  taken  in  payment  of  a  prior  debt,  being  indorsed  irithout 
rcrour.sc,  the  holder  acijuires  perfect  title,  and  may  shut  out  equitable  defences 
between  the  original  parties.  Bank  of  St.  Albans  r.  Gilliland,  2.'!  Wend.  oil. 
And  if  one  gives  his  own  note  for  such  paper,  it  makes  him  a  holder  for  value 
even  in  New  York.  4  Barb.  S.  C.  304.  These  two  eases  seem  very  much  like 
an  abandonment  of  the  principle  of  the  rule  even  there.  In  Kentucky,  too,  a 
similar  rule  to  that  in  New  York  has  prevailed.  Breckinridge  v.  Moore,  8  B. 
Monroe,  629.  It  is  claimed,  too,  tliat  Virginia  adopts  the  same  ground  inTPren- 
tice  V.  Zane,  2  Grattan,  2(J2  ;  liut  that  case  does  not  decide  the  point,  a  new  trhl 
being  awarded  for  defect  in  the  special  verdict.  Similar  decisions  have  been 
made  in  Tennessee.  In  Wormley  v.  Lowry,  1  Humphrey,  468,  Greene,  J., .says: 
"  Where  one  receives  a  note  for  a  pre-existing  debt,  he  parts  with  nothing.  He 
is  in  the  same  situation  after  a  successful  defence  by  the  maker,  that  he  was  be- 
fore he  took  the  note."  This  is  certaiidy  a  remarkable  instance  of  the  iton  sequi- 
tur.  to  have  imposed  any  delusion  upon  the  mind  of  an  experienced  judge. 
He  is  in  tlie  same  situation.  But  how  can  that  be  made  to  appear?  He  has  let 
the  collection  of  his  debt  or  its  security  surcease  for  the  time,  and  time  is  often 
fatal  in  such  matters,  and  has  incurred  the  expense  and  vexation  of  litigation ; 
and  is  still  in  the  same  situation.  Surely  he  is  in  one  respect;  his  debt  is  still 
unpaid  ;  and  in  another  also,  which  is  somewhat  important,  he  is  again  out  of 
court.  And  it  seems  to  me  that  all  refinements  upon  such  absurd  premises  are 
always  liable  to  involve  one  in  similar  contradictions  and  incomprehensible  con- 
clusions. I  certaiidy  feel  no  disposition  to  deal  lightly  or  in  a  vainglorious 
spirit,  with  the  general  argument  upon  which  this  view  is  attempted  to  be  main- 
tained. It  will  be  found  ably  stated  by  Walworth,  Cliancellor,  in  Stalker  v.  Mc- 
Donal.l.  6  Hill,  93.' 

Tliis  euil>races  most  of  the  decisions  upon  the  subject  both  in  this  country 
and  in  England.  And  we  could  scarcely  (juestion  that  the  decided  and  increas- 
ing preponderance  is  in  favor  of  the  plaintiff's  claim  to  hold  the  bill  free  fi-om  all 
efjuities  of  the  acceptor ;  and,  coinciding  as  it  does  with  our  views  of  the  reason 
and  justice  of  the  case,  we  could  not  hesitate  to  adopt  it.  We  might  probably 
have  decideil  the  case  upon  the  Massachusetts  law,  as  the  contract  seems,  upon 
its  face,  to  have  been  made  with  reference  to  that  i)lace.  But  as  this  (juestion 
was  not  made  in  the  Court  below,  it  does  not  properly  arise  here,  prc)l)aiily. 
Anel  we  have  chosen  to  put  the  case  upon  the  general  rule  of  tiie  law  merchant, 
the  ordinary  presumption  being  that  the  law  of  any  particular  place,  in  regard  to 
commercial  contracts,  conforms  to  tlie  general  law,  unless  the  contrary  be  shown. 
The  party  who  claims  the  benefit  of  the  law  of  a  particular  place,  on  the  ground 
of  its  lieing  different  from  the  general  rule  of  law  on  that  sul)ject,  must  prove  the 
law  of  that  place  to  be  difl'crent.  as  he  would  prove  any  other  fact  in  the  case. 
This  leaves  that  question  open. 

1  Ante,  169. 


202  HOLDER  FOR   VALUE. 

We  do  not  understand  the  plaintiff  to  claim  seriously  that  he  can  recover  the 
balance  of  this  bill  above  the  amount  of  the  note  which  was  due  at  the  time  of 
the  negotiation  of  the  bill,  and  as  security  for  which  it  was  negotiated.  We 
do  not  see  how  he  could  claim  that.  The  valuable  consideration  must  be  lim- 
ited to  the  amount  of  the  prior  debt,  due  at  the  time  of  the  negotiation  of  the 
bill. 

1.  A  note  or  bill  q^gotiated  in  security  for  a  debt  not  yet  due,  is  not  upon 
sufficient  consideration  ordinarily,  unless  the  creditor  wait  in  faith  of  the  col- 
lateral after  his  debt  becomes  due. 

2.  If  the  debtor  is  notoriously  insolvent  before  the  note  or  bill  is  negotiated 
as  collateral  security,  it  is  said  the  creditor  can  only  stand  upon  the  rights  of  his 
debtor. 

3.  If  a  note  or  bill  is  taken  merely  to  collect  for  the  debtor,  to  apply  when 
collected,  the  creditor  not  becoming  a  party  by  indorsement  so  as  to  be  bound 
to  pursue  the  rules  of  the  law  merchant  in  making  demand  of  payment  and  giv- 
ing notice  back,  the  holder  is  merely  the  agent  of  the  owner.  De  La  Chaumette 
V.  Bank  of  England,  supra.     Allen  v.  King,  4  McLean,  C.  C.  128. 

4.  So  too  probably,  if  it  were  shown  positively  that  the  holder  gave  no 
credit  to  the  indorsed  bill,  and  did,  in  no  sense,  conduct  differently  on  that  ac- 
count, he  could  not  be  regarded  as  a  holder  for  value. 

These  four  exceptions  are  probably  based  upon  good  sense,  and  may  be 
found  sustained  by  authority,  but  we  have  no  occasion  to  say  more  in  regard  to 
them  here.  This  case  stands  upon  the  general  broad  ground  of  paper  taken  in 
the  due  course  of  business  as  collateral  security  for  a  debt  due,  and,  prima 
facie,  the  holder  is  under  such  circumstances  to  be  regarded  as  holding  the  paper 
for  a  valuable  consideration,  and  so  entitled  to  recover  against  an  accommodation 
acceptor. 

Judgment  reversed. 

The  following  note,  prepared  for  the  "  American  Law  Register,"  in  1861, 
1862,  Vol.  I.  N.  s.  35,  by  one  of  its  present  editors  is  now  adopted  as  the  best  view 
we  could  give  of  the  law  upon  the  questions  discussed  up  to  that  date.  Le 
Breton  v.  Peirce,  2  Allen,  8 ;  s.  c,  9  Am.  Law  Reg. 

One  of  the  questions  involved  in  this  case  is  of  great  interest  with  business 
men ;  and  it  seems  almost  incomprehensible  how  there  should  have  been  so  much 
conflict  in  the  decisions  of  the  courts  in  this  country  in  regard  to  it.  It  probably 
may  have  arisen  from  not  clearly  discriminating  the  precise  state  of  facts  upon 
which  the  different  views  found  themselves.  This  will  readily  be  perceived  by 
carefully  examining  the  opinions  of  the  different  judges.  But  we  think  something 
of  this  embarrajisment  may  be  got  rid  of  by  careful  classification. 

I.  Where  the  negotiation  of  the  note  or  bill,  as  between  debtor  and  creditor, 
is  understood  to  operate  either  as  conditional  payment,  or  to  create  an  ex[)ecta- 
tion  between  the  parties  that  the  collection  of  the  principal  debt  shall  be  delayed 
until  the  time  of  payment  of  the  collateral  security,  there  can  be  no  question 
that,  upon  principle  and  authority,  the  creditor  must  be  said  to  take  the  paper 
upon  full  consideration,  and  in  tlie  due  course  of  business.  The  conflict  in  the 
cases  seems  to  arise  upon  the  question,  what  is  implied  by  accepting  a  note  or 
bill,  on  time,  fur  a  pre-existing  debt  then  due? 


SWIFT   V.    TYSON.  ■  203 

1.  This  will  (Icpond,  to  some  extent,  u[)on  eoinmercial  usage,  and  the  ordi- 
nary counse  of  doing  business,  and  tlie  natural  implications,  from  the  mere  ait  of 
accepting  the  note  or  bill,  and  is,  therefore,  matter  of  fact,  in  part,  at  leafct. 
The  implication,  as  matter  of  flact,  is  different  in  some  respects,  whether  the 
new  note  or  bill  is  for  the  precise  amount  of  the  existing  debt,  as  in  Michigan 
St;iti!  Hank  v.  The  Estate  of  Leavenworth,  28  Vt.  2U9 ;  or  for  a  different  sura, 
either  more  or  less,  and  es|)ecially  when  it  is  for  a  less  sum.  Where  the  new 
security  is  for'  the  [irecise  sum  of  the  debt,  and  is  payable  on  time,  there  is,  in 
fact,  a  very  strong  inii)li<ation  that  the  creditor  will  wait  until  the  maturity  of 
the  new  security.  And  in  that  view  the  cases  all  agree  that  the  new  security  is 
taken  for  value,  and  tliat  all  ecpiities  in  favor  of  other  parties  will  be  excluded. 
And  a  similar  imj)lication  results  where  the  new  security  is  for  a  larger  sum  than 
the  existing  debt,  as  in  Atkinson  v.  Brooks,  26  Vt.  569,  supra. 

2.  But  where  the  security  is  of  a  different  character  from  the  original  debt, 
as  where  the  creditor  takes  a  mortgage  from  the  debtor  for  the  payment  of  the 
sum  due  in  six  months,  it  is  not  understood  there  is  any  implication  of  a  contract 
to  delay  the  collection  of  the  debt  of  other  parties.  United  States  v.  Hodge,  6 
How.  U.  S.  279. 

3.  And  where  the  new  security  is  not  given  in  lieu,  or  on  account  of  tlie  ex- 
isting debt,  but  as  a  mere  pledge,  the  title  of  the  new  security  remaining  in  the 
del»tor,  and  not  passing  to  the  creditor,  thus  making  the  creditor  the  mere  trus- 
tee or  agent  of  the  debtor  for  the  collection  of  the  new  security,  to  be  applied 
wlien  collected,  upon  the  existing  debt,  between  them,  as  was  hehl  in  the  case  of 
Austin  t'.  Curtis,  31  Vt.  64;  the  cases  all  agree  that  there  is  no  implied  under- 
taking not  to  collect  the  existing  debt  in  the  mean  time. 

The  following  cases  may  therefore  be  regarded  free  of  doubt,  both  upon  prin- 
ciple and  autiiority  :  — 

1.  If  the  collateral  is  given  in  security  at  the  time  the  debt  is  created,  and  as 
an  inducement  for  the  credit,  and  is  a  negotiable  instrument  and  still  current, 
and  is,  in  fact,  negotiated  to  the  creditor  so  as  to  make  him  a  party  to  the  paper 
and  impose  upon  him  the  duty  of  demand  and  notice,  according  to  strict  com- 
mercial usage,  the  cases  all  agree,  so  far  as  they  have  comprehended  the  ques- 
tions involved,  that  all  ccpiities  of  third  parties  are  excluded.  Chicopee  Bank  v. 
("iiajiin,  8  Met.  40;  (h-iswolil  v.  Davis,  Ml  Vt.  :)90 ;  Palmer  v.  Richards,  1  Eng. 
L.  »t  E(|.  529.  The  declaration  in  Williams  r.  Little,  11  N.  Hamp.  6().  and  many 
other  cases  to  the  contrary,  is  certainly  not  maintainable  upon  any  fair  view  of 
the  (piestion  in  that  precise  form  of  it. 

2.  If  the  ( ollateral  is  not  so  negotiated  as  to  make  the  creditor  a  party  to 
the  paper,  and  thus  impose  upon  him  the  iluly  of  making  demand  and  giving 
notice,  but  making  the  creditor  the  mere  agent  of  the  debtor  for  the  collection 
of  the  new  bill  or  note,  there  is  no  ground  of  excluding  equities  in  other  parties, 
unless  the  creditor  negotiates  the  security  thus  left  in  his  hand  to  some  third 
party  for  value  and  while  current.  Palmer  v.  Richards,  1  Eng.  L.  &  E(j.  529; 
Atkinson  v.  Brooks,  26  Vt.  569;  I)e  La  C'haumette  v.  Bank  of  England,  9  B.  & 
C.  208;  Allen  v.  King,  4  McLean,  128. 

In  such  case,  the  debtor,  it  would  seem,  may  recall  his  collaterals,  as  the 
creditor,  being  his  agent,  is  under  his  control.  But  this  is  certainly  not  the 
ordinary  case  of  collateral  security. 


204  •  HOLDER -FOR    VALUE. 

3.  Whore  there  is  either  an  express  contract  with  the  creditor,  that  he  shall, 
in  consideration  of  the  indorsement  of  the  new  bill  or  note,  as  collateral,  delay 
the  collection  of  the  existing  debt  until  the  maturity  of  the  new  security;  or 
where  such  an  understanding  is  reasonably  to  be  presumed  from  the  facts  and 
circumstances  attending  the  transaction,  and  the  delay  is  thereby  obtained,  there 
is  no  ground  of  question,  since  they  stand  upon  the  same  footing  in  point  of  prin- 
ciple, as  if  an  ailvance  were  made  upon  the  credit  of  the  new  security.  Okie  v. 
Spencer,  2  Whart.  253;  s.  c,  2  Am.  Lead.  Cas.  232,  and  numerous  cases  there 
cited.  These  cases  are  so  obvious  upon  principle,  to  the  mind  of  all  lawyers,  that  it 
would  be  a  useless  labor  to  attempt  to  render  them  more  perspicuous.  "What  is 
self-evident  thereby  becomes  incapable  of  simplification,  since  there  is  nothing 
more  obvious  by  which  it  can  be  illustrated. 

II.  In  coming  to  the  inquiry,  what  is  the  precise  legal  implication,  from  the 
mere  fact  of  receiving  a  negotiable  security  without  surrendering  any  of  the 
former  securities  for  an  existing  debt,  we  encounter  more  perplexity. 

1.  This  will  depend,  undoubtedly,  to  a  great  extent  upon  the  course  of  doing 
business,  and  the  commercial  usages  of  the  place.  From  all  we  can  learn  of 
this  commercial  usage  in  England,  judging  both  from  the  reported  cases  and  the 
elementary  works,  we  infer  that  each  new  security  is  there  credited  as  so  much 
cash  at  the  time  it  is  received,  and  is  charged  to  the  debtor,  in  case  of  dishonor, 
with  the  addition  of  expenses  attending  the  protest.  Poirier  v.  Morris,  20  Eng. 
L.  &  Eq.  103;  Bosanquet  v.  Dudman,  1  Stark.  1.  In  this  last  case  Lord  Ellen- 
horougli  said,  "  that  whenever  the  acceptances  exceed  the  cash  balance,  the  plain- 
tiff holds  all  the  collateral  bills  for  value."  Ex  parte  Pease,  19  Vesey,  25.  In 
this  mode  of  transacting  business,  the  new  notes  or  bills,  from  time  to  time 
remitted  to  the  creditor  by  his  debtor,'  are  upon  receipt,  passed  to  his  credit, 
and  thus  virtually  discounted.  This,  we  apprehend,  is  the  usual  course  of  doing 
business  in  this  country,  where  one  has  an  open  account  with  banks  or  bankers, 
and  not  unfrequently  with  brokers.  How  far  it  obtains  with  merchants  it  is  not 
very  certain,  depending  upon  the  nature  and  the  amount  of  the  dealings.  But 
whenever  the  business  is  conducted  in  this  form,  there  would  be  no  difference 
as  to  the  right  of  the  creditor  to  hold  the  collaterals,  whether  they  were  taken  in 
payment,  or  as  security,  or  whether  any  advances  in  money  were  made  at  the 
precise  time  the  colkiterals  were  negotiated,  since  passing  thet!i  to  the  credit  of 
the  debtor  as  so  much  money,  is  strictly  advancing  the  money  upon  them.  This, 
we  apprehend,  is  the  true  explanation  of  the  reason  why  we  find  so  little  said, 
in  the  English  cases,  or  treatises  on  bills  and  notes  in  regard  to  these  distinc- 
tions, which  occupy  so  much  space  in  our  own  reports.  The  case  of  the  Bank 
of  the  Metropolis  r.  The  New  England  Bank,  1  How.  U.  S.  234,  is  precisely  of 
this  character,  and  the  creditor  was  allowed  to  hold  the  collaterals  free  from  all 
equities. 

2.  But  in  whatever  mode  the  business  is  transacted,  if  we  look  carefully  into 
the  true  principles  involved,  we  shall  come  much  to  the  same  result.  It  has 
always  seemed  to  us  that  most  of  the  controvei'sy  upon  this  subject  has  grown 
out  of  the  different  sense  in  which  the  terms  used  are  understood.  If  the  terra 
•'  collateral "  is  understood  to  import  that  the  bills  thus  held  are  not  taken  on 
account  of  the  existing  debt,  but  only  to  be  held  until  due,  and  if  paid,  the 
amount  to  be  applied,  and  in  the  mean   time  the  creditor  assumes  no  respon- 


SWIFT   V.    TYSON.  •  205 

siliility  in  regard  to  them,  exti-pt  as  the  mere  af^cnt  of  the  debtor  for  cullertion, 
tlieie  eonld  be  no  <;rouiid  uf  claim  that  any  property  passed,  or  tliat  exi.sting 
ecpntit  s  in  former  parties  were  extinguished.  The  En<;lisli  eases  in  bankruptcy 
show  very  ek'arly  that,  in  such  eases,  the  title  in  tlie  bills  does  not  pass  to  the 
assignee,  but  may  be  retained  by  the  correspondent.  Ex  parte  Pease,  19  Vesey, 
2o  ;   I)e  la  Chaumette  r.  The  Bank  of  England,  supra. 

.  o.  fJut  we  apineliend  this  is  not  the  ordinary  aeeeptanec  of  the  term  collateral, 
or  collateral  security  ;  for  it  is  no  security  at  all.  J'lie  etymology  of  collateral 
security  indicates  that  it  is  something  running  along  with,  and,  as  it  were,  par- 
allel to,  something  else,  of  a  similar  character.  It  is  collateral  to  the  original 
indebtedness.  It  is,  of  course,  a  security,  but  it  need  not  be  in  the  precise 
form  of  the  original.  A  bond  may  be  secured  by  a  collateral  indebtedness  in 
the  form  of  a  bill  or  note,  and  vice  i-ersa,  and  the  collateral  will  always  include 
otlier  p  irties.  lUit  as  far  as  the  debtor  is  concerned,  they  are  holden  for  the 
jiayment  of  the  debt,  and  tlie  creditor  is  equally  at  liberty  to  pursue  all  in  all 
legal  modes,  unless  there  is  some  express  or  implied  restriction  upon  the  title  of 
the  collaterals. 

In  this  sense  the  title  passes,  by  the  negotiation  of  a  bill  or  note,  as  collat- 
eral, the  same  as  if  the  money  were  advanced.  The  only  dilference  is,  that  this 
form  is  (lispeuscd  with,  and  the  creditor  retains  his  original  security.  Ordinarily, 
tlie  collateral  may  not  l)ind  the  same  parties  as  the  original  security,  or  not  all  of 
thciii.  In  such  cases  the  creditor  will  wish  to  retain  the  original,  so  as  to  lose 
none  ot  his  security.  All  that  the  word  collateral  imports  is,  that  there  is  a 
prior  or  existing  debt,  and  the  collateral  depends  upon  that,  stands  or  falls  with 
it,  so  far  as  the  creditor  is  concerned. 

4.  Hut  if  the  party  takes  the  indorsement  of  a  bill  of  lading,  or  of  a  bill  of 
exchange,  or  note,  he  acquires  no  different  rights  as  to  the  parties  to  these  new 
instruments,  whether  he  takes  them  in  payment,  or  as  collateral  to  an  existing 
debt.  In  either  case  he  becomes  a  party  to  the  transaction  or  contract  to  the 
fullest  extent,  and,  in  the  case  of  negotiable  instruments  is  bound  to  pursue  the 
law  merchant  in  making  demand  and  giving  notice,  at  the  peril  of  making  them 
his  own,  in  actual  exoneration  of  the  party  negotiating  them. 

;').  In  such  cases  it  can  be  of  little  importance  whether  the  original  debt  is 
treated  as  extin<?iiished  or  not,  since,  if  the  debtor  negotiate  the  note  or  bill  by 
his  own  indorsement,  which  is  the  nsual  course,  he  is  bound  by  such  indorse- 
ment, and  the  double  bond  is  of  no  essential  importance.  And  if  the  creditor 
do  not  take  steps  to  charge  his  debtor  as  indorser,  he  makes  the  collateral  his 
own  in  payment  of  his  debt,  and  the  result  is  the  same,  whether  he  is  bound 
doubly  or  singly,  since  the  release  extinguishes  both  or  one,  as  the  case  may  be. 

G.  The  mere  giving  of  a  negotiable  note  or  bill  for  an  existing  debt,  is  only 
conditional  payment  in  any  case,  by  the  general  law  merchant,  unless  there  is  an 
express  agreement  that  it  shall  extinguish  the  original  debt.  Upon  the  dis- 
honor of  the  new  note  or  bill  the  creditor  may  sue  the  original  debt,  or  the  in- 
dorser of  the  new  bill  or  note,  at  his  election,  so  that  the  note  or  bill  is  but  a  ^ 
collateral  in  any  case,  unless  there  is  some  special  contract,  or  some  special 
usage,  as  in  the  New  England  States,  that  the  acceptance  of  the  new  note  or 
bill  shall,  j)rima  facie,  extinguish  the  debt.  These  propositions  are  familiar, 
and  scarcely  require  specific  authority  for  tlieir  sup|)ort.  The  cases  are  carefully 
collated,  in  2  Am.  Lead.  Cas.  241-273. 


206  HOLDF]R   FOR    VALUE. 

III.  Most  of  the  conflicts  in  the  American  cases,  and  in  all  the  English  cases, 
•will  be  readily  reconciled  by  reference  to  the  foregoing  distinctions.  And  those 
anomalous  cases  in  the  American  States,  which  will  not  cdbie  into  these  distinc- 
tions harmoniously,  have  been  decided  without  properly  apprehending  the  true 
principles  involved,  and  must  be  left  in  their  appropriate  solitude  until  they  are 
either  abandoned,  or  else  the  course  of  business,  or  the  principles  of  natural 
justice  bcfome  so  far  modified  that  they  can  be  adopted  by  others. 

1.  In  the  case  of  Poirier  v.  Morris,  supra,  Crompton,  J.,  said  :  "  Whether  the 
bill  was  a  collateral  security,  or  whether  it  had  the  effect  of  suspending  the  pay- 
ment of  the  antecedent  debt,  is  quite  immaterial."  And  Lord  Campbell  said: 
"  There  is  nothing  to  make  a  difTerence  between  this  and  the  common  case, 
where  a  bill  is  taken  as  security  for  a  debt,  and  in  that  case  an  antecedent  debt  is 
a  sufficient  consideration."  And  in  Percival  r.  Frampton,  2  Cromp.  M.  &R.  180, 
Farkc,  B.,  said:  "  If  the  note  were  given  to  the  plaintiffs  as  security  for  a  pre- 
vious debt,  and  they  held  it  as  such,  they  might  be  properly  stated  to  be  holders 
for  valuable  consideration."  The  same  rule  is  recognized  in  numerous  other 
English  cases.  Heywood  v.  Watson,  4  Bing.  496  ;  Bosanquet  v.  Forster,  9  Car. 
&  P.  659;  Same  v.  Corser,  ib.  664;  2  Am.  Lead.  Cas.  250,  251.  The  rule  is 
thus  stated  in  the  work  last  quoted,  which  has  almost  become  a  book  of  author- 
ity in  the  American  courts.  "  The  result  of  the  English  cases  would  seem  to  be, 
that  accepting  a  note  or  bill  payable  at  a  future  day,  on  account  of  a  pre-exist- 
ing debt,  will  suspend  the  debt  until  the  note  reaches  maturity.  Byles,  Bills,  6th 
ed.  304."  "  The  law  is  clear,"  said  Lord  Kenyan,  in  Steadman  v.  Gooch,  1  Esp. 
4,  "  that  if  in  payment  of  a  debt  the  creditor  is  content  to  take  a  bill  or  note 
payable  at  a  future  day,  he  cannot  legally  commence  an  action  for  his  original 
debt  until  such  note  or  bill  becomes  payable  and  default  is  made  in  the  pay- 
ment." And  the  cases  all  agree  that  no  recovery  can  be  had  in  any  case,  upon 
the  original  debt,  where  the  collateral,  given  in  security,  was  indorsed  while 
current,  and  is  still  outstanding.  Price  v.  Price,  16  Mees.  &  W.  232,  243.  And 
in  every  case  where  the  party  accepts  a  collateral  as  security  for  a  previous  debt 
then  due,  there  is  no  implied  obligation  not  to  negotiate  the  collateral  before 
maturity.  In  nine  cases  out  of  ten  that  is  done  among  business  men  immedi- 
ately, for  the  purpose  of  raising  the  money  which  should  have  been  paid  when 
the  debt  matured ;  so  that  the  collateral  is  always  received  for  the  ease  of  the 
debtor,  and  it  is  not  ordinarily  received  as  a  mere  pledge,  so  that  nogotiating  it 
would  be  a  breach  of  good  faith.  On  the  contrary,  the  security  being  negotiable, 
passes  as  money,  and  operates  as  payment  conditionally,  and  it  is  expected  to  be 
passed  into  the  market  at  once. 

All  that  is  implied,  then,  by  its  being  collateral  is,  that  there  is  no  agreement 
or  implication  that  the  original  debt  is  extinguished.  The  creditor  intends  to 
hold  on  to  his  original  debt  and  all  other  securities.  The  new  security,  then,  is 
collateral  to  the  previous  debt :  but  the  new  security,  as  between  the  parties  to 
it  and  the  creditor,  is  not  affected  b\'  its  being  collateral  to  the  previous  debt, 
any  differently  from  what  it  would  be  if  it  were  received  in  extinguishment  of  it. 
It  is  negotiated  in  the  fullest  manner,  and  subject  to  the  law  merchant,  and  with 
no  restrictions  upon  its  further  negotiation.  We  think,  therefore,  that  the 
English  courts  have  taken  the  true  view  in  saying  that  such  paper  passes  for 
value,  and  in  the  ordinary  course   of  business,  and   excludes  all  existing  equi- 


SWIFT   V.    TYSON.  207 

ties,  without  regard  to  tlie  understanding,  agreement,  or  implication,  as  matter 
of  fiict,  that  the  creditor  sliouhl  delay  the  enforcement  of  the  existing  fleljt  until 
the  maturity  of  the  ne#  security.     And  that  they  are  also  right  in  saying  that 
it  makes  no  difference  in  principle  or  legal  effect,  whether  the  existing  del)t  is 
extinguished  or  not,  or  wiiether  the  original    evidence   of  debt,  or  the   existing 
securities  are  surrendered  or  not.      Kearslake  v.  Morgan,  .')  T.  R.  ;j14;  liaker  v. 
Walker.  U  Mees.  &  W.  4(5.-) ;  Helsi.aw  v.  Bush,  11  C.  H.  191,  200  ;  Ford  v.  Beech, 
11  Q.  B.  852,  873.     These  transactions,  indorsing  negotiable   securities  on  ac- 
count of  previous  debts,  without  special  agreement  as  to  the  effect,  are  there 
treated  as  "  necessary  exceptions  to  the  general  rules  of  law,  in  favor  of  the 
law   merchant."     This  ride  has  been   adopted  in  this  country  by  the   national 
tribunal  of  last  resort.      Swift  v.  Tyson,   16  Pet.  1.     This  decision  was    made 
upon  the  maturest  consideration,  and  has  prevailed  in  most  of  the  States,  and  is 
expressly   extended   to   collaterals.     Bank  of  the  Metropolis   v.   New   England 
Bank,  supra.     Petrie  v.  Clark,  11  Serg.  &  R.  377,  as  early  as  1824,  adopts  al- 
most precisely  the  same  view,  except  that  it  is  not  assumed  as  matter  of  necessary 
implication  that  one  who  accepts  security  for  a  debt  will,  to  some  extent,  change 
his  conduct  in  consequence.     See  also  Walker  v.   Geisse,  4  Whart.    2.^2.     In 
Holmes  V.  Smyth,  Ki  Maine,   177,  it  is  decided  that  where  negotiable  paper  is 
taken  in  payment  of  a  jjrevious  debt,  it  will  exclude  all  equities  in  other  parties. 
To  the  same  extent  is  Williams  v.  Little,  supra.     The  same  view  is   a<lopted   in 
Carlisle  u.  Wishart.  11  Ohio,  172;  Norton  v.  Waite,  20  Maine,  175;  Bostwick 
V.  Dodge,  1  Doug.  ]\Iich.  413;  Bush  v.   Peckard,  3   Harrington,  385;  Brush  v. 
Scribner,  11  Conn.  388;  Barney  i'.  Earle,  13  Alabama,   106.     In  these  cases, 
except  Williams  v.  Little,  the  question  did  not  arise  in  regard  to   negotiable 
paper   being   taken   as   collateral    security.     But   in   many   of   the    States,    as 
well   as   in   Swift   v.    Tyson,   and   the   Bank    of  the   Metropolis    v.  The    New 
England   Bank,  supra,  all   such  distinction   is  disclaimed,  and  held  to  have  no 
existence  in  principle.     Reddick  v.  Jones,  6  Iredell,  107;   Gibson  v.  Conner, 
:5  Kelley,  47  ;   A^alette  v.  Mason,  1  Smith,  89  (Indiana)  ;  Allaire  v.  Hartshorn, 
1   Zaliriskie,  665;   Blanchard  v.  Stevens,  3  Cush.   162.     The  fallacy  of  suppos- 
ing that  the   creditor  is   in   the   same  condition  after  having  failed   to  enforce 
the  collection  of  his  collaterals,  as  if  he  had  not   received  them,  is  here  placed 
in  the  clearest  light  by  Dewey,  J.  :   "  If  the  party  had  not  received   the  note  as 
collateral  security,  he  might  have  pursued  other  remedies  to  enforce  the  secu- , 
rity  or  payment  of  his   debt.      He  might  have   obtained   other  securities  or, 
l)erhaps,   payment  in   money.      It  is   a  fallacy  to  say  that  if  the  plaintiffs  are 
defeated  in  their  attempt  to  enforce  the   payment  of  these  notes  they  are  in  as 
good  a  situation  as  they  wuuM  have  been  if  the  notes  had  not  been  transferred 
to  them.     That  fact  is  assumed,  not  proved,  and  from  the   very  nature  of  the 
case  is  matter  of  entire  uncertainty.     The  convenience  and  safety  of  those  deal- 
ing in  negotiable,  paper  seem  to  require  and  justify  the  rule  that  when  a  person 
takes  a  negotiable  note  not  overdue  or  ajtparently  dishonored,  and  without  no- 
tice, actual  or  constructive,  of  want  of  consideration  or  other  defence  thereto, 
whether  in  payment  of  a  precedent  debt  or  as  collateral  security  lor  a  debt,  the 
holder  would  have  the  legal  right  to  enlorce  the  same  against  the  parties  thereto, 
notwithstanding  such  defence  might  not  have  been  effectual  as  between  the  orig- 
inal parties."     And  the  Supreme  Court  of  Rhode  Island,  after  very  careful  and 


208  SWIFT   V.    TYSON. 

thorouffh  examination  of  the  cases,  have  recently  come  to  the  same  conchision. 
Bank  of  the  Ri'[)ul)lic  r.  Carrington,  5  11.  I.  fjlS.  See  also  Atkinson  v.  Brooks,  26 
Vt.  biVd,  supra.  It  scarcely  seems  necessary  to  eniinieral#  the  cases  in  New  York 
and  some  other  States  which  have  followed  their  lead,  where  it  has  been  held  that 
paper  negotiated  as  collateral  on  account  of  a  previous  debt  is  not  taken  for  xalue, 
and  is  subject  to  all  equities.  We  think  it  most  imquestionablc  that  the  New 
York  courts  are  right  in  saying  there  is  no  distinction  in  principle  between 
taking  such  paper  in  payment,  and  as  collateral  to  a  pre-existing  debt.  But- 
the  trutii  undoubtedly  is,  that  either  foi'ms  a  good  consideration,  and  the  title 
of  the  creditor  depends  upon  the  character  of  the  paper,  and  is  an  exception  to 
all  rules  attaching  to  the  delivery  of  other  property  as  security  for  a  debt. 

The  main  point  of  the  decision  in  the  very  case  before  us,  that  the  trust  which 
unquestionably  attached  to  the  property  which  formed  the  consideration  of  the  bills 
could  nut  attach  to  the  bills  after  they  had  been  bona  Jide  negotiated  in  the  market, 
althougii  merely  between  debtor  and  creditor,  and  no  new  advance  made  spe- 
cifically on  such  account,  goes  exclusively  upon  the  peculiar  quality  and  character 
of  negotiable  paper  as  to  the  transmission  of  its  title.  It  passes  in  the  market 
as  money.  No  man  is  bound  to  make  any  inquiry  into  the  title  of  the  holder. 
And  even  carelessness,  short  of  bad  faith,  will  not  defeat  one's  title  to  such  pa- 
per, taken  for  value.  Goodman  v.  Harvey,  4  Adol.  &  Ellis,  870,  overruling 
Gill  V.  Cubitt,  3  Barn.  &  C.  466.  See  Goodman  v.  Simonds,  post.  And  whether 
one  advances  money  and  then  takes  the  money  in  payment  of  his  debt,  or  takes 
the  note  or  bill  on  account  of  the  debt  or  as  collateral  security  is  not  material, 
either  in  fact  or  in  law.  And  to  be  consistent,  we  must  either  adopt  the  New 
York  rule  that  in  both  cases  there  is  no  value  given  for  the  new  note  or  bill,  or 
else  insist  that  value  is  given  in  both  cases. 

It  is  impossible,  as  it  seems  to  us,  to  successfully  contend  for  the  contrary, 
unless  where  the  previous  debt  is  not  due,  or  the  new  security  is  such  that  no 
trust  is  reposed  in  it;  and  these  are  exceptional  cases.  In  every  other  case,  the 
creditor  will  conduct  differently  on  account  of  the  new  security,  and  will  delay 
the  collection  of  the  previous  debt  until  the  result  of  the  new  security  is  deter- 
mined. And  then  it  is  impossible  to  restore  the  creditor  to  his  former  position, 
since  time  is  a  very  important  matter  in  commercial  transactions.  AVe  trust 
that,  before  many  years,  all  our  American  courts  will  adopt  the  sensible  views 
of  the  English  <'Ourts  upon  this  question,  and  not  expend  so  much  strength  here- 
after in  determining  the  precise  difference  between  receiving  a  note  or  bill  ' '  on 
account  of,"  "  in  payment  of,"  "  as  collateral  to,"  and  "  as  security  for,"  an  ex- 
isting deljt,  since  no  one  whose  perceptions  were  not  rendered  very  acute  by  the 
study  of  refinements  and  hair-breadth  distinctions,  would  ever  dream  that  there 
could  be  any  essential  difference  in  the  rights  of  the  creditor  to  have  the  full 
benefits  of  the  new  securities,  and  of  "  all  the  collaterals,"  in  the  language  of 
Lord  Kllenborouyh  in  Bosanquet  v.  Dudman,  supra,  until  he  obtained  full  satis- 
faction of  his  debt. 

Smce  the  preparation  of  the  foregoing  note  for  the  Law  Register,  in  1861. 
the  only  important  English  case  bearing  directly  upon  the  question  mainly 
involved,  is  Peacock  v.  Purcell,  10  Jur.  x.  s.  178;  s.  c.  U  C.  B.  N.  s.  728.  It 
is  here  decided  that  where  the  defendant,  being  indebted  to  the  plaintiff, 
indorsed  to  him  a  bill  of  exchange  of  which  he  was  indorsee,  as  collateral  security 


SWIFT    V.    TYSON.  209 

for  the  debt,  ami  the  plaintifT  failed  to  present  it  when  due,  or  to  give  the  defend- 
ant notice  of  its  dishonor  wlien  presented,  ho  eould  not  recover,  either  upon  the 
bill  or  the  original  delft.  This  seems  to  confirm  one  im])ortant  contention  in 
the  preceding  note  and  opinion  ;  viz.,  that  although  the  negotiable  securities  are, 
in  tcxnis,  indorsed  as  eollaleral  to  an  existing  debt,  the  creditor  will  nevertheless 
become  a  party  to  the  securities  indorsed,  with  all  the  rights  and  duties  of  any 
other  boiut  J'ulc  holder,  wliicli  will  of  necessity  cut  off  efpiitalile  defences.  It 
seems  to  have  been  considered  in  some  of  the  American  cases  that  indorsing 
and  passing  negotiable  paper  as  collateral  security  for  a  prior  debt,  does  not  give 
the  creditor  the  rights,  or  impose  upon  him  the  duties,  of  a  bona  Jide  holder 
for  value.     But  the  case  last  cited  is  very  explicit  upon  that  point. 

The  ('art.s  of  this  case  were  that  the  defendant  was  indebted  to  the  plaintiff  in  a 
larger  sum  tlian  the  amount  of  the  bill,  and  first  offered  the  bill  in  part-payment 
of  the  debt,  and  the  lialance  in  cash.  The  j)laintiff  declined  to  accept  the  bill  in 
part-payment,  and  the  defendant  then  consented  to  it  being  retained  as  collateral 
security  for  an  amount  of  the  debt  etiual  to  the  bill,  paying  money  for  the  balance. 
Tiie  judges  were  very  clear  and  explicit  upon  the  point  of  the  creditor  having 
become  a  party  to  the  bill,  with  all  the  rii/hts  and  duties  pertaining  to  that  rela- 
tion. Ili/les,  J.,  said  :  "That  as  depositees  of  the  bill,  as  tliey  had  the  riyJits  [one 
of  which  must  be  to  exclude  e(iuitable  defences],  so  they  had  the  duties  of  hold- 
ers."  The  Court  do  not  seem  here  to  consider  that  the  legal  rights  of  the 
creditor,  as  indorsee,  would  be  materially  affected  by  the  precise  form  of  the  con- 
ditions upon  which  he  accepted  the  paper,  provided  he  took  it  in  the  ordinary 
course  of  business,  and  so  as  to  become  a  legal  and  substantial  party  to  the 
instrument.  WiUes,  J.,  said  :  "  It  may  be  taken  for  and  on  an  account  [of  the 
debt]  but  with  an  understanding  that  the  party  receiving  it  is  to  have  the  option 
of  suing  lor  the  debt  before  the  maturity  of  the  bill."  The  forms  of  expression 
most  in  use  in  the  English  courts,  to  express  the  idea  of  accepting  negotiable 
paper  on  account  of  a  prior  debt  are,  "  for  and  on  account  of;  "  "in  payment 
o( ;  "  "  instead  of  payment ;  "  and  as  "  collateral  security  for  "  the  debt.  And 
i(  we  assume  that  the  new  paper  is  so  received  by  the  creditor,  as  that  he  becomes 
a  valid  party  to  it,  it  does  not  seem  important  either  to  his  rights  or  interests,  in 
which  of  the  preceding  forms  he  receives  it.  If  received  in  j)ayment  of  the  debt, 
the  (lel)t  is  not  thereby  extinguished,  unless  there  is  some  special  agreement  to 
tliat  edect,  as  it  will  be  where  money  or  other  property  is  given  in  payment  of  a 
debt.  In  the  latter  case  the  debt  is  gone,  and  cannot  be  revived  unless  the 
property  is  wholly  worthless,  and  there  was  fraud.  But  in  the  case  of  accepting 
negotiable  paper  in  payment  of  a  debt,  the  only  effect  is  to  suspend  the  debt  until 
the  maturity  of  the  paper.  If  the  latter  is  then  paid,  it  operates  as  absolute  pay- 
ment of  the  debt;  if  not  paid,  the  debt  remains  as  before,  and  the  creditor  may 
sue  upon  It,  or  upon  the  new  security,  or  upon  both,  until  he  obtains  satis- 
faction. 

If  the  new  paper  is  accepted  as  collateral  security,  there  is  no  certain  implica- 
tion tiiat  the  right  of  action  upon  the  prior  debt  is  suspended.  It  may  be,  or  it 
may  not.  If  there  is  a  dear  implication,  as  there  will  be  In  most  eases,  from  the  fact 
that  the  new  security  is  cither  of  the  same  or  greater  amount,  or  If  there  is  an 
express  agreement  to  that  effect,  or  circumstances  from  which  a  jury  may  infer 
one,  then  there  is  no  substantial  dillerence  between  the  creditor  accepting  nego- 

14 


210  HOLDER   FOR   VALUE. 

liable  paper  in  payment,  or  as  collateral  security  for  a  prior  debt.  In  both  cases, 
the  cause  of  action  is  suspended  until  the  maturity  of  the  new  paper ;  in  both,  if 
paid  at  maturity,  it  absolutely  extinguishes  the  debt ;  if  not  so  paid,  in  either  case, 
the  creditor  may  sue  upon  the  debt,  or  upon  the  new  securities,  or  upon  both, 
and  in  both  cases,  if  the  creditor  do  not  pursue  the  rules  of  the  law  merchant  with 
the  new  securities,  he  loses  all  remedy.  In  the  case  of  Peacock  v.  Purcell,  supra, 
Erie,  C.  J.,  said  :  "It  clearly  would  be  payment  if,  at  maturity,  the  money  were 
obtained  for  the  bill."  And  the  learned  judge  further  argued,  that  the  creditor 
having  so  conducted  as  to  defeat  all  remedy  upon  the  bill,  he  makes  it  his  own  in 
payment  of  the  debt,  and  continued  :  "  The  security  is  marred  by  the  plaintiff's 
own  laches."  "  The  legal  effect,"  says  the  learned  judge,  "  of  taking  a  bill  as 
collateral  security,  is  that  if,  when  the  bill  arrives  at  maturity,  the  holder  is  guilty 
of  iaehes,  and  omits  duly  to  present  it  and  to  give  notice  of  its  dishonor,  if  not 
paid  the  bill  becomes  money  in  his  hands,  as  between  him  and  the  person  from 
whom  he  received  it."  This  last  case  affords,  as  we  understand  it,  full  confirma- 
tion of  most  of  the  propositions  attempted  to  be  maintained  in  the  preceding  note 
and  opinion;  viz.,  that  all  which  is  required,  when  current  negotiable  paper  is 
indorsed  on  account  of  an  existing  debt,  in  order  to  exclude  equitable  defences 
is,  that  the  creditor  should  so  receive  the  new  paper  as  to  assume  the  position  of 
a  bona  fide  party  to  it. 

It  does  not  seem  indispensable  that  there  shall  be  any  contract,  either  express 
or  implied,  to  suspend  the  remedy  upon  the  debt,  in  order  to  give  the  creditor  the 
rights  of  a  bona  fide  holder  of  the  new  paper,  although  that  is  a  decisive  circum- 
stance in  favor  of  the  creditor  being  a  bona  fide  holder  when  it  exists,  as  it  more 
commonly  does,  in  all  cases  where  new  paper  is  accepted  "  instead  of  pajTuent" 
of  an  existing  debt.  But  where  there  is  no  evidence  of  such  an  understanding, 
and  even  when  there  is  an  express  reservation  on  the  part  of  the  creditor  of  the 
right  to  pursue  his  remedy  upon  the  debt,  as  will  be  necessary,  in  order  to  avoid 
impairing  the  claim  against  guarantors  and  sureties ;  even  in  such  cases  the 
rights  of  the  creditor  to  be  regarded  as  a  bona  fide  holder,  are  most  unquestion- 
able in  every  instance  where  he  assumes  the  responsibility  of  a  party  to  the 
paper.  That,  of  itself,  is  consideration  sufficient  to  give  him  all  the  rights  of  a 
bona  fide  purchaser,  to  the  extent  of  his  interest ;  that  is,  until  his  debt  is  paid. 
,This,  we  think,  must  now  be  regarded  as  the  unquestionable  state  of  the  English 
law,  since  the  decision  of  Peacock  v.  Purcell,  supra,  and  the  American  law, 
since  the  decision  of  Swift  v.  Tyson,  is  fast  approaching  the  same  quiet  and 
rational  line  of  demarcation  and  rest. 

It  is  clear,  of  course,  that  if  the  new  paper  received  "  instead  of  payment"  of 
a  prior  debt  is  not  negotiable,  in  form,  or  not  in  fact  negotiated  ;  Whistler  v.  Fos- 
ter, 1-i  Com.  B.  N.  s.  248  ;  Boody  v.  Bartlett,  42  N.  Hamp.  558  ;  Franklin  v.  Two- 
good,  18  Iowa,  615  ;  or  if  the  creditor  accepts  the  new  paper  merely  for  collection 
and  "to  be  applied  when  collected,"  and  not  assuming  the  responsibility  of 
a  party ;  in  either  of  the  preceding  cases  he  cannot  claim  the  rights  of  a  party  so 
as  to  exclude  equitable  defences.  See  the  learned  opinion  o£  Bosworth,  C.  J.,  in 
Hoffman  v.  Miliar,  1  Am.  Law  Reg.  n.  s.  676,  681,  and  cases  cited  ;  Warner  v. 
Lee,  6  N.  Y.  (2  Seld.)  144 ;  Scott  v.  Ocean  Bank,  23  N.  Y.  289  ;  s.  c,  5  Bosw.  192. 

It  could  serve  no  useful  purpose  to  discuss  the  numerous  recent  decisions  in  the 
American  States  upon  this  point.     Tiiere  will  be  found  among  them  all  a  constant 


SWIFT    V.    TYSON.  211 

tendency  towards  the  line  indicated  by  the  English  decisions,  and  by  Swift  r. 
Tyson,  in  our  own  national  court  of  last  resort;  whose  authority  may  well  be 
rej^anied  as  of  paramount  wi'ighl  in  regard  to  (juestions  of  general  commercial 
law.  That  rule  is  fully  recognize  I  in  Massachusetts.  Stoddard  v.  Kimball,  G 
Cush.  4t!y  ;  Ives  v.  Fanners'  IJank,  2  Allen,  23G  ;  Fislier  v.  Fisher,  98  Mass.  'M)'.\. 
So  also  in  Connecticut.  Bridgeport  City  Bank  v.  Welch,  2'J  Conn.  475  ;  Osgood 
V.  Thompson  Bank,  30  Conn.  27.  Rhode  Island  seems  to  have  ailupted 
much  the  same  view.  Cobb  v.  Doyle,  7  R.  I.  550.  So  also  in  Calilbrnia. 
Naglcc  r.  Parrott.  14  Calif.  450;  Robinson  r.  Smith,  ib.  94.  New  Hapipshire 
seems  still  tenacious  of  maintaining  some  distinction  between  the  rights  of  the 
creditor,  wlien  he  accepts  current  negotiable  paper  in  payment  of,  and  when  he 
receives  it  merely  as  collateral  security  for  a  prior  debt.  Fletcher  v.  Chase,  Ki 
N.  Hamp.  38  ;  Rice  v.  Riatt,  17  id.  116.  And  Maine  may  be  reckoned  in  the  same 
category.  Nutter  v.  Stover,  48  Me.  163.  And  in  Vermont  the  law  upon  this 
question  has  certainly  been  very  considerably  agitated ;  and,  as  is  not  uncommon 
in  such  cases,  is  not  yet  very  clearly  settled.  Atkinson  v.  Brooks,  supra,  was 
followed  in  Michigan  Bank  v.  Leavenworth,  28  Vt.  209,  without  any  division  of 
tiie  Court ;  wliile  in  Austin  v.  Curtis,  31  Vt.  64,  one  of  the  same  judges,  who 
had  silently  concurred  in  the  two  former  decisions,  delivered  a  labored  and 
learned  opinion,  to  show  that  accepting  negotiable  paper  "instead  of  payment" 
of  a  debt  falling  due,  if  called  "  collateral  security,"  does  not  raise  any  implication 
of  the  suspension  of  the  remedy.  The  majority  of  the  Court,  as  then  constituted, 
concurred  in  tiiis  view.  This  is  by  no  means  fatal  to  the  ground  maintained  in 
the  former  cases  of  Atkinson  v.  Brooks,  &c.,  but  removes  one  ground  of  argu- 
ment upon  wliicli  they  rest.  Since  that,  it  has  been  there  held,  that  where  one 
gives  his  own  note  for  negotiable  paper,  he  is  entitled  to  all  the  rights  of  a  bona 
Jide  holder  for  value,  and  equitable  defences  are  excluded.  Adams  v.  Soule,  33 
Vt.  538 ;  s.  p.,  Meckles  v.  Colvin,  4  Beav.  304.  This  must  be  regarded  as  one 
of  the  most  suspicious  modes  of  shutting  out  equitable  defences ;  far  more  so 
than  where  the  paper  passes,  in  the  ordinary  course  of  business,  "instead  of 
payment"  of  an  existing  debt,  although  called  "collateral  security." 

There  are  some  other  States  where  the  courts  still  ^eem  to  cling  to  the  fallacy 
of  attempting  to  maintain  an  equitable  distinction  between  passing  negotiable 
paper  in  payment  of  or  only  as  collateral  security  for  an  existing  debt.  Ryan 
r.  Chew,  13  Iowa,  589.  And  there  are  others  where  this  distinction  is  not  appar- 
entlv  adlicred  to.  Stevens  v.  Campbell,  13  Wis.  375;  Outhwite  v.  Porter,  13 
Uk-h.  533  ;  Manning  v.  IMcClure,  3i)  111.  490  ;  Stevens  v.  Ileyland,  11  :\Iiun.  198  ; 
Citizens'  Bank  r.  Payne,  18  La.  An.  222.  This  distinction  was  mainly  a  New 
York  invention,  and  from  the  high  judicial  and  commercial  character  of  that 
State,  it  became  nearly  universal  throughout  the  country  at  one  time,  and  until 
the  decision  of  Swift  v.  Tyson.  But  the  New  York  courts,  in  the  full  tide  of 
their  exjieriinent,  were  consistent  in  one  particular  at  least;  they  denied  all  dis- 
tinction between  accepting  negotiable  paper  in  payment  of  and  as  collateral  secu- 
rity for  an  existing  debt.  In  yielding  by  degrees  to  the  tide  of  the  more  recent 
decisions,  they  seem  to  have  yielded  the  former  point  altogether..  Brown  r.  Leav- 
itt,  31  N.  Y.  113 ;  Pratt  v.  Coman,  37  N.  Y.  440.  They  hold,  too,  that  if  such 
paper  is  given  as  collateral  security  for  a  loan  made  at  the  time,  it  will  exclude 
equitable  defences.     Bank  of  New  York  v.  Vanderhorst,  32  N.  Y.  553;  Book- 


212  HOLDER   FOR   VALUE. 

man  v.  Metcalf,  id.  591.  So  also  where  other  collaterals  are  surrendered  at  the 
time.  Park  Bank  v.  Watson,  42  N.  Y.  490.  In  the  case  of  Bookman  v.  Metcalf, 
the  debt  was  upon  an  account  stated  at  the  time  tlie  collaterals  were  received, 
and  the  creditor  had  permission  to  dispose  of  them  for  money  in  the  market. 
This  seems  to  be  coming  so  near  the  rule  of  the  English  courts  that  we  should 
not  expect  to  hear  much  more  of  the  distinction  between  payment  and  collateral 
security  by  way  of  negotiable  paper,  even  in  the  New  York  courts.  They  will 
find  it  much  easier  to  yield  the  whole  distinction,  and  become  consistent  in  truth, 
as  they. formerly  were  in  error,  than  to  struggle  against  yielding  a  fallacy  which 
is  sure  to  escajje  their  grasp,  sooner  or  later. 

There  are  numerous  cases  in  the  different  States  where  the  precise  rule,  or 
ratio  decidendi,  as  some  express  it.  in  Swift  v.  Tyson,  supra,  has  been  adopted. 
Conkling  v.  Vail,  31  111.  166  ;  Foy  v.  Blackstone,  id.  538.  Indeed,  the  rule  that 
where  current  negotiable  paper  is  accepted  as  payment  of  a  pre-existing  debt, 
equitable  defences  will  be  excluded,  has  become  so  nearly  universal  in  the  Amer- 
ican States,  that  it  would  be  a  useless  labor  to  further  enumerate  the  cases. 
There  has  been  a  marked  change  since  the  preparation  of  the  preceding  note  and 
opinion,  from  the  effect  of  Swift  v.  Tyson.  And  since  New  York  has  given  in 
her  adherence  to  the  rule,  there  seems  little  use  in  further  debate  upon  that  pre- 
cise point.  The  recent  case  of  May  v.  Quimby,  3  Bush,  96,  takes  the  same  view, 
when  the  paper  is  received  in  payment  of  a  prior  debt ;  but  the  late  cases,  even 
Swift  V.  Tyson,  are  not  referred  to. 

All  courts  seem  involuntarily  to  yield  the  point  that  the  indorsee  of  negotia- 
ble paper  delivered  at  the  time  of  creating  a  new  debt,  although  expressed  to  be 
as  collateral  security,  must  be  regarded  as  a  bona  fide  holder  for  value.  Stotts 
V.  Byers,  17  Iowa,  303;  Lyon  v.  Ewings,  17  Wis.  61;  Curtis  v.  Mohr,  18  id. 
615.  So  also  where  any  new  credit  or  indulgence  is  given  in  faith  of  the  new 
paper,  all  agree  that  equitable  defences  must  be  excluded.  Housum  v.  Rogers, 
40  Penn.  State,  190;  s.  p..  Trustees  v.  Hill,  12  Iowa,  462;  Wa?:hington  Bank  v. 
Krum,  15  id.  53.  In  some  cases  the  mode  of  doing  the  business,  and  whether 
the  collaterals  or  new  securities  are  passed  to  the  credit  ,of  the  debtor  at  the 
time  they  are  received,  or  only  when  they  are  collected,  seems  by  some  courts, 
to  be  held  decisive  of  the  point  whether  the  holder  can  be  regarded  as  a  holder 
for  value  or  not.  Scott  v.  The  Ocean  Bank,  23  N.  Y.  289.  This  latter  ques- 
tion seems  to  be  the  same  as  that  between  the  creditor  becoming  a  party  to  the 
new  paper,  and  only  receiving  it  as  the  agent  of  the  debtor  for  collection, 
to  be  applied  when  collected.  In  the  latter  case,  of  course,  the  creditor  is  never 
a  holder  for  value.  In  all  cases  where  the  creditor  so  receives  the  new  paper  as 
to  become  a  party  to  it,  he  does  become  for  the  time  a  debtor  for  it,  and  if  he 
keeps  any  account  of  such  paper,  the  proper  mode  is  to  pass  it  to  the  credit  of 
the  debtor,  and  charge  it  off  when  it  proves  unproductive.  We  apprehend 
this  is  the  common  course  of  dealings  among  merchants  and  bankers.  And  in 
such  case,  if  the  creditor  reserve  the  right  to  sue  upon  the  prior  debt,  still  he 
cannot  recover  judgment  upon  the  debt  until  he  return  the  collaterals.  They 
are  payment  until  restored,  or,  at  the  least,  quasi  payment.  The  Court  cannot 
know,  except  by  their  surrender,  that  the  creditor  may  not  have  negotiated 
them  for  value  ;  and,  if  so,  how  is  the  debtor  to  recover  them? 

Enough  has  been  before  said  upon  the  question  how  far  accepting  new  paper 


SWIFT   V.    TYSON.  213 

instead  of  payment  of  an  existing  debt,  will  siispeml  the  remedy  until  the  matu- 
rity of  tiie  new  paper.  It  seems  to  be  considered  on  all  hands  that,  if  the  new 
paper  is  in  terms  accepted  in  payment  of  a  prior  debt,  the  remedy  is  suspended 
until  the  maturity  of  the  new  paper.  Sayer  v.  Wagstaff,  .5  Beav.  415,  4G2,  by 
Lord  Lau(/dalc,  M.  K.  Jle  The  Hank,  «&c,  11  Jur.  n.  s.  316;  National  Savings 
Bank  v.  Tranah,  Law  Kep.  2  (".  P.  556;  The  Kimball,  .'5  Wallace,  'il.  In  all 
other  cases  the  implication  will  depend  u[)on  the  circumstances,  and  may  be 
submitted  to  the  jury  where  there  is  any  ground  of  controversy.  Okie  v.  Spen- 
cer, 2  Wliart.  253;  2  Am.  Lead.  Cas.  232,  and  notes;  Michigan  Bank  v.  Leav- 
enworth, 2!S  Vt.  209;  Austin  v.  Curtis,  31  Vt.  64,  and  cases  cited. 

It  nee<l  hardly  be  said  that,  where  the  collatiirals  are  not  negotiable,  or,  if  so, 
not  so  negotiated  as  to  m.ake  the  creditor  a  valid  party  to  tliem,  but  are  only  de- 
livered for  collection  or  as  a  pledge,  the  eflect  is  the  same  only  as  to  suspending 
the  remedy  upon  the  debt,  as  in  the  case  of  pledging  any  other  property  as  col- 
lateral security  for  a  debt.  The  debt  and  the  collaterals  are  wholly  independent 
of  each  other,  and  the  creditor  is  responsible  only  for  actual  negligence  in  the  col- 
lection of  the  securities.  Van  Wart  v.  Woolley,  3  Barn.  &  C.  439.  And  where 
negotiable  paper  is  tuken  as  security  for  a  debt  without  indorsement,  although 
while  still  current  and  indorsed  after  it  falls  due,  it  will  not  have  the  elfcct  to 
exclude  ccjiiitable  defences.  Lancaster  Nat.  Bank  v.  Taylor,  100  Mass.  .18. 
And  so  if  the  indorsement  is  procured  after  the  holder  knew  thfe  paper  to  be 
fraudulent.     Whistler  v.  Foster,  14  Com.  B.  N.  s.  246,  248. 

There  are  some  other  questions  incidentally  connected  with  the  one  already 
discussed,  which  may  be  here  briefly  adverted  to.  There  is  always  a  presump- 
tion as  to  a  negotiable  note  or  bill,  when  the  name  of  the  pityee  appears  indorsed 
upon  it,  that  it  was  done  while  the  same  was  current,  unless  the  contrary  appear. 
Leland  v.  Farnham,  25  Vt.  553.  And  the  admissions  of  the  payee,  made  after 
he  is  thus  presumed  to  have  parted  with  his  interest,  are  not  competent  evidence 
to  show  the  time  such  paper  was  indorsed.  Ibid.  The  cases  are  too  numerous 
upon  these  points  to  need  citation,  and  all  in  one  direction. 

And  where  negotiable  paper  is  taken  while  current,  it  raises  the  presumption 
that  it  was  taken  hona  fide  and  for  value.  Pettee  v.  Prout,  ;jo.s7,  217.  And  upon 
the  maker  showing  that  the  same  was  given  without  consideration,  or  was  fraud- 
ulently obtained,  as  between  the  original  parties,  the  holder  cannot  be  required 
to  prove  that  he  gave  value  for  it  unless  his  title  is  in  some  way  impeached. 
Woodman  v.  Churchill,  52  Me.  58.  A  different  rule  at  one  time  obtained  in  the 
English  courts.  Bassett  r.  Dodgin,  10  Bing.  40;  s.  c,  25  Eng.  Com.  Law,  25; 
Paterson  r.  Ilardacre,  4  Taunt.  114;  Heath  v.  Sansom,  2  Barn.  &  Adol.  291. 
These  cases  are  reviewed  in  Sanford  r.  Norton,  14  Vt.  228,  and  the  doctrine 
indorsed.  And  there  is  no  doul)t  much  to  be  said  in  favor  of  its  justice  and 
equity,  and  as  a  safeguard  against  dishonest  practices.  But  the  great  incon- 
venience of  the  rule,  and  the  embarrassment  thereby  produced  among  commercial 
men,  has  caused  it  to  be  long  since  abandoned,  and  the  rule  in  Woodman  v. 
Churchill,  sujyra,  to  be  adopted,  which  has  now  become  nearly  or  quite  univer- 
sal ;  too  much  so  to  require  the  further  citation  of  cases. 

What  precise  evidence  will  be  recpiired  to  impeach  the  title  of  the  holder,  must 
depend  largely  upon  the  circumstances  of  each  case.  It  must  be  shown  that 
the  note  was  in  some  way  discredited  when  the  bolder  took  it,  in  order  to  subject 


214  HOLDER   FOR   VALUE. 

hira  to  such  equitable  defences  as  Avould  be  valid  between  the  original  parties, 
or  that  he  knew  of  some  defect  in  it. .  If  the  note  or  bill  were  payable  at  a  time 
certain,  and  that  had  passed  when  the  holder  became  a  party,  the  cases  all  agree 
that  he  holds  it  subject  to  all  equitable  defences.  A  note  or  bill  overdue  can- 
not be  said  to  pass  in  the  ordinary  course  of  business.  Farrington  v.  The  Park 
Bank,  39  Barb.  045.  And  it  has  been  held  that,  where  a  note  is  payable  by 
instalments,  and  one  of  the  instalments  is  overdue,  the  person  who  takes  it  will 
be  subject  to  all  equities,  on  the  ground  that  the  paper  was  discredited  at  the 
time  of  the  transfer.  Vinton  v.  King,  4  Allen,  562.  But  where  more  than  one 
note  is  executed  upon  the  same  consideration,  they  are  not  all  to  be  regarded  as 
dishonored,  when  one  of  them  is  overdue  and  not  paid.  Boss  v.  Hewitt,  15 
Wis.  260.  Nor  will  the  fiict  that  the  interest  had  not  been  paid  annually,  ac- 
cording to  the  terms  of  the  notes,  discredit  them.     Ibid. 

But  there  is  some  conflict  in  the  cases  as  to  the  time  when  paper  payable  on 
demand  may  be  said  to  become  dishonored  or  discredited.  In  one  recent  case 
it  was  held  never  to  be  so  discredited  until  after  demand  and  refusal  of  payment. 
Stewart  v.  Smith,  28  111.  397.  In  another  lite  case  such  paper  was  held  not  dis- 
credited when  transferred  three  months  after  date.  Herrick  v.  Woolverton,  42 
Barb.  50.  In  Tomlinson  Co.  v.  Kinsella,  31  Conn.  208,  it  is  said  that  the  time 
when  a  note  payable  on  demand  will  become  discredited  will  depend  upon  the 
circumstances  of  each  case,  and  the  understanding  of  the  parties,  and  is  a  proper 
question  for  the  jury.  It  has  been  held  that  a  note  payable  on  time  and  trans- 
ferred on  the  last  day  of  grace,  is  discredited.  Pine  v.  Smith,  11  Gray,  38.  The 
fact  that  the  paper  has  been  before  discounted  at  the  bank  and  taken  up  by  the 
party  benefited,  will  not  discredit  the  same  if  it  is  still  current.  Harpham  v. 
Haynes,  30  111.  404.  Slight  discount  from  the  amount  of  the  paper  will  not  ex- 
pose the  holder's  title  to  suspicion  or  defeat.  Eckhert  v.  Cameron,  43  Penn.  State, 
120;  Baily  v.  Smith,  14  Ohio,  N.  s.  396.  But  a  sale  very  much  below  the  fair 
value  might  have  that  effect.  Ibid.  But  see  Brown  v.  Penfield,  36  N.  Y.  473, 
contra . 

It  is  scarcely  necessary  to  say  that  one  must  pay  value  for  a  note  or  bill  in  order 
to  be  regarded  a  honajidc  holder,  so  as  to  exclude  equitable  defences  ;  and  it  will 
not  avail  to  that  end  that  the  paper  was  still  current  and  in  no  sense  discredited 
at  the  time  of  the  transfer.  Harpham  v.  Haynes,  30  111.  404.  And  if  one  who 
pays  value  for  current  paper  leaves  it  with  the  payee  for  collection,  and  he  trans- 
fers it  for  value  to  one  ignorant  of  the  facts,  the  first  purchaser's  title  will  fail, 
unless  he  can  impeach  the  second  transfer  as  against  the  holder.  Livingston  v. 
Littell,  15  Wis.  218.  But  notice  to  the  purchaser  of  negotiable  paper  that  it 
was  given  in  paynient  of  a  subscription  to  railway  stock,  will  not  entitle  the 
maker  to  show  that  the  same  was  obtained  by  fraud.  Andrews  v.  Hart,  17 
Wis.  297. 

The  cases  are  all  one  way  upon  the  point  that  even  a  bona  Jlde  holder  can 
only  recover  to  the  extent  of  his  interest  at  the  time  of  the  judgment.  Easter 
V.  Minard,  26  111.  494.  This  was  where  the  plaintiffs'  debt  had  been  paid  pend- 
ing the  action. 

If  the  first  indorsee  takes  negotiable  paper  while  current,  the  title  of  his 
indorsee  will  not  be  affected  by  the  fact  that  he  acquired  title  after  the  same 
became  due.     Lickbarrow  v.  Mason,  2  Term,  63,  71 ;  Robinson  v.  Reynolds,  2 


SWIFT   V.    TYSON.  215 

Q.  B.  196,  211  ;  Bassett  v.  Avery,  Ih  Ohio,  N.  s.  299  ;  Peabody  «.  Rees.  18  Iowa, 
571.  See  also  Woodinaii  v.  C'hiircliill,  52  Me.  58.  And  tlie  bona  fide  holder  of 
negotiable  paper  is  not  allected  by  any  knowledge  obtained  after  his  title  be- 
comes perfected.     Hoge  r.  Lansing,  35  N.  Y.  13G. 

Where  the  time  of  payment  of  a  negotiable  note  is  extended  by  an  agreement 
indorsed  upon  the  back,  one  who  takes  it  afterwards  will  be  subject  to  all 
eijuitios  between  the  parties.     i\Iarcal  v.  Melliet,  18  La.  An.  223. 

Wliere  the  acceptance  of  a  bill  appears  upon  its  face  to  have  been  by  procu- 
ration as  it  is  called,  that  is,  by  the  agent  of  the  acceptor  or  by  some  one  claiming 
to  act  as  his  agent,  all  purchasers  will  be  affected  by  any  want  of  authority  in 
such  agent.  Stagg  v.  Elliott,  12  C.  B.  n.  s.  373;  s.  c,  9  Jur.  n.  s.  158.  But 
the  acceptance  of  a  bill  drawn  by  procuration  admits  the  power  of  the  agent, 
and  the  acceptor  is  estopped  to  deny  it.  Ashpitel  v.  Bryan,  3  F.  &  F.  183  ;  s.  c, 
9  Jur.  X.  s.  791.  And  where  a  note  or  bill  is  made  or  accepted  in  blank, 
this  will  enable  the  party  intrusted  with  the  paper  so  in  blank  to  fill  it  with  any 
amount  unless  there  is  some  limitation  by  way  of  the  stamp  or  figures  in 
the  margin.     Henderson  v.  Bondurant,  39  Mo.  3G9. 

The  law  in  regard  to  acceptances  and  other  acts  in  connection  with  negotiable 
paper  being  made  in  blank,  is  considerably  discussed  in  Van  Duzer  v.  Howe,  21 
N.  Y.  531,  and  the  authorities  cited  and  commented  upon.  But  one  very  impor- 
tant consideration  connected  with  the  subject  is  not  here  adverted  to,  and  does  not 
seem  to  have  much  attracted  the  notice  of  the  profession  or  the  courts.  We  refer 
to  the  proper  limitations  indicated  by  a  signature  in  blank.  The  person  who  ac- 
cepts it  of  course  understands  that  he  may  not  use  it  beyond  the  amount  for  which 
it  was  given,  and  that  if  he  do  so  he  will  incur  the  penalties  of  forgery.  Rex 
V.  Hart,  7  Car.  &  P.  652 ;  Reg.  r.-Wilson,  2  Car.  &  K.  527  ;  Reg.  v.  Bateman, 
1  Cox,  Crim.  Cas.  186.  But  nevertheless  for  the  vindication  of  the  title  of  a 
bona  fide  holder  for  value,  he  is  permitted,  as  in  some  other  cases,  to  trace  his 
title  through  a  transaction  which  was  in  fact  felonious.  But  the  party  guilty  can 
have  no  benefit  of  such  a  filling  up  of  the  blank  signature,  even  to  the  extent 
for  which  it  was  given.  And  even  an  indorsee  for  value  of  a  blank  acceptance 
or  signature  thus  wrongfully  filled  up,  cannot  recover  upon  it,  provided  he  were 
cognizant  of  the  fact  that  it  was  issued  blank  and  fdled  up  by  force  of  the  author- 
ity confided  to  a  former  holder.  It  is  the  same  as  an  acceptance  by  procuration. 
Knowledge  of  the  fact  of  a  note  or  bill  having  been  made  by  virtue  of  an  au- 
thority is  sufficient  to  put  any  party  taking  the  paper  with  such  knowledge  upon 
incpiiry  as  to  the  extent  of  such  authority.  And  whether  he  make  the  inquiry  or 
accept  the  paper  without  it,  he  will  be  subject  to  any  defence  depending  upon  an 
excess  or  abuse  of  such  authority.  This  is  fully  recognized  by  Vice-Chancellor 
Stuart,  in  Hatch  v.  Searles.  2  Sm.  &  Gif.  147.  The  learned  judge  said  :  "  If 
the  holder  has  notice  of  the  imperfection  [that  the  signature  was  made  in  blank] 
he  can  be  in  no  better  situation  than  the  person  who  took  it  in  blank,  as  to  any 
right  against  the  acceptor  or  indorser  who  gave  it  in  blank."  This  qualification 
of  the  general  rule  laid  down  in  the  leading  case  of  Russel  v.  LangstaflTe,  2 
Doug.  514,  and  others  following  it,  seems  to  be  entirely  well  established  in  the 
English  courts.  But  we  infer  that  it  has  not,  as  yet,  obtained  recognition  with  us 
to  the  same  extent,  although  in  principle  it  seems  most  unquestionable. 

But  as  a  general  rule  it  will  not  be  sufficient  to  show  facts  known  to  the  holder 


216  HOLDER   FOR   VALUE. 

before  purchase,  suflicient  to  put  him  upon  inquiry,  as  was  formerly  held  in  Gill 
V.  Cubitt,  3  Barn.  &  C.  466.  That  case  was  overruled  in  Goodman  v.  Harvey,  4 
Adol.  &  J^Uis,  870 ;  and  it  is  now  entirely  well  settled  that,  in  order  to  impeach  the 
title  of  the  purchaser  of  current  negotiable  paper,  it  must  be  shown  that  he  acted 
in  bad  foitli,  believing  at  the  time  of  the  purchase  that  there  was  some  infirmity 
about  the  paper.  This  is  rather  an  extreme  view,  and  not  required  in  any  other 
similar  case,  but  it  has  been  considered  necessary  in  order  to  protect  the  title  to 
negotiable  paper,  and  is  settled  beyond  all  question.  See  Goodman  v.  Simonds, 
post,  239.  It  could  answer  no  good  purpose  to  say  what  is  most  unquestionable, 
that  the  doctrine  of  Gill  v.  Cubitt  will  answer  the  necessities  of  fair  dealers  in 
most  cases,  since  that  class  of  holders  will  not  ordinarily  shrink  from  the  strictest 
scrutiny  in  regard  to  the  circumstances  under  which  their  title  was  acquired. 

The  more  recent  decisions  are  all  based  upon  Goodman  v.  Harvey  ;  and  Gill  v. 
Cubitt  is  never  named  except  to  be  condemned.  We  recollect  the  time  when  the 
doctrine  of  the  latter  case  was  regarded  as  quite  commendable,  and  entirely 
salutary.  And  while  the  English  courts  now  require  proof  of  bad  faith  in  the 
purchase  in  order  to  impeach  the  title  of  the  holder,  it  is  not  uncommon  there  to 
find  cases  submitted  to  the  jury  upon  that  question,  where  the  evidence  would 
not  seem  of  the  most  conclusive  character,  not  more  so  than  that  required  in 
Gill  V.  Cubitt.  We  should  not  be  surprised  to  have  the  pendulum  of  judicial 
opinion  swing  back  more  and  more  in  that  direction,  until  we  reach  the  old 
equitable  ground  of  notice  sufficient  to  put  the  party  on  inquiry,  —  the  same 
rule  by  which  all  our  other  legal  and  equitable  rights  are  considered  as  suf- 
ficiently protected,  and  which  might  be  sufficient  for  the  holders  of  nego- 
tiable paper  if  it  were  not  considered  specially  sacred.  See  Dailey  v.  De  Frees, 
11  W.  R.  376  ;  Steinhart  v.  Boker,  34  Barb.  436  ;  Benior  v.  Paquin,  40  Vt.  199 ; 
Bassett  v.  Avery,  15  Ohio,  n.  .s.  299.  But  the  doctrine  of  Goodman  v.  Harvey 
is  now  too  well  established  to  be  called  in  question.  We  only  desire  that  specu- 
lators in  negotiable  paper  shall  be  content  to  shield  themselves  under  the  rule  in 
that  case,  and  not  ask  the  courts  finally  to  hold  that  nothing  short  of  proof  of  a 
felonious  intent  shall  impeach  their  title. 

There  seems  to  be  some  conflict  in  the  recent  cases,  how  far  the  fact  of  nego- 
tiable paper  being  made  or  indorsed  for  the  accommodation  of  the  parties  in 
interest  will  affiard  ground  of  defence  against  holders  for  value,  but  who  received 
the  same  when  overdue,  or  with  notice  that  it  was  accommodation  paper.  It  was 
held  at  an  early  day,  Charles  v.  Marsden,  1  Taunt.  224,  that  it  affiarded  no 
ground  of  defence  to  a  note  taken  before  due  for  value,  that  the  indorsee  knew 
at  the  time  that  the  maker  made  it  for  accommodation  of  the  payee.  And  the 
same  rule  has  been  since  repeatedly  recognized.  Powell  v.  Waters,  17  Johns. 
176 ;  Grandin  v.  Leroy,  2  Paige,  509 ;  Bank  of  Ireland  v.  Beresford,  6  Dow, 
237.  And  if  the  indorsee  knew  of  the  fact  of  the  paper  being  made  for  accom- 
modation at  the  time  he  received  it,  there  could  be  no  diffijrence  whether  he  took 
it  before  or  after  it  fell  due.  The  question  would  be  in  either  case,  how  far  the 
fact  of  its  being  given  for  accommodation  affiarded  ground  of  defence  in  the  hands  of 
the  holder  for  value.  And  that  question,  as  it  seems  to  us,  will  always  depend  upon 
whether  the  paper  was  used  by  the  party  accommodated  in  the  manner  contem- 
plated by  the  original  parties,  and  especially  by  those  signing  or  indorsing  for 
accommodation.     It  is  true  that  this  question  will  not  be  important  where  the 


PETTEE    V.    PIIOUT.  217 

pajjcr  passes  while  current;  hut  where  the  paper  is  taken  when  overdue,  or  with 
knowledf^e  tliat  it  was  j^iven  for  accouunodation,  the  defence  is  eijually  available. 
And  in  both  cases  the  proper  question  seems  to  be,  whether  the  paper  was  mis- 
applied by  the  party  accommodated.  If  not,  the  holder  for  value  may  i  ecover  to 
the  extent  of  his  interest.  East  River  Bank  v.  liutterworth,  4o  Barb.  47G.  But 
in  a  recent  case,  Chester  r.  Dorr,  41  N.  Y.  279,  by  a  divided  court,  a  contrary 
rule  seems  to  be  declared.  That  was  an  action  ajiainst  an  accouunodation  in- 
dorser.  No  question  is  made  in  the  opinion,  whether  the  party  accommodated 
used  the  paper  diiferently  from  what  he  was  expected  to  do.  The  majority  of 
the  Court  seemed  to  consider  that,  unless  the  paper  was  negotiated  while  current, 
all  parties  sij^ning  for  accommodation  might  claim  to  be  exonerated.  This  has 
certainly  not  hitherto  been  the  understanding  of  the  profession  in  regard  to  ac- 
commodation paper,  unless  the  jiaper  was  in  some  way  misapplied  l)y  the  party 
acconunodatcd.  The  Court  here  argued  that  the  indorser  for  accouunodation 
was  entitled  to  make  the  same  defence  against  a  purchaser  for  value  after  the 
note  fell  due,  which  lie  might  if  the  action  were  for  the  benefit  of  the  party  ac- 
commodated. But  this  will  surely  not  be  so  where  the  indorsement  is  made  to  ena- 
ble the  party  acconmiodated  to  negotiate  the  paper,  to  raise  money,  or  to  secure 
or  pay  his  own  debts.  In  sucli  cases  the  indorser  is  equally  l)ouud,  whether  the 
transfer  is  made  before  or  after  the  paper  falls  due,  and  whether  the  purchaser 
kn<  \v  the  indorsement  was  made  for  accommodation  or  not.  To  hold  otherwise 
would  be  to  encourage  fraud,  and  to  relieve  the  party  from  the  very  respon- 
sibility which  he  expected  to  meet,  and  which,  upon  every  principle  of  justice 
and  fair  dealing,  he  should  be  compelled  to  abide  by. 


Seneca  Pettee  v.  Richard  Prout. 

(3  dray,  502.     Supreme  Court  of  Massachusetts,  September,  1855.) 

Piisiim/ilion  of  title.  — In  an  action  upon  a  note  payable  to  A,  or  bearer,  the  production 
of  tlic  note  by  the  plaintiff,  H,  is  suthcient  evidence  of  his  title,  tliou-^li  he  is  the 
general  agent  of  A,  who,  the  answer  alleges,  is  the  owner  of  tiie  note. 

Equities.  —  One  to  whom  a  note  payable  to  A,  or  bearer,  is  transferred  before  matu- 
rity, takes  it  subject  to  no  equities  or  rights  of  set-off  which  the  maker  might  have 
against  A. 

Action  of  contract  on  a  promissory  note  for  $50,  dated  ^farch 
14,  IS")!,  signed  by  the  defendant,  and  payable  in  one  year  to  tlie 
Cheshire  Iron  Works  or  bearer,  with  interest.  Tiie  defendant,  in 
his  answer,  denied  that  the  phiintiff  was  the  owner  and  bearer  of 
the  note  sued  u))on,  and  alleged  that  it  was  the  property  of  the 
Cheshire  Iron  Works  ;  and  also  filed  a  declaration  in  set-off  upon 
the    following   note:    "$49.74.     Cheshire,  June   11,  ISol.     Six 


218  HOLDER    FOR    VALUE. 

months  after  date  we  promise  to  pay  to  the  order  of  Oilman  Bow- 
ker,  forty-nine  dollars  -{^\,  value  received,  ten  dollars  of  which  is 
to  be  paid  in  goods,  with  interest. 

"  Cheshire  Iron  Works,  by  S.  Pettee,  general  agent." 

The  case  was  submitted  to  the  Court  upon  a  statement  of  facts, 
in  which  it  was  agreed  that  the  plaintiff  was  the  general  agent  of 
the  Cheshire  Iron  Works ;  that  the  two  notes  were  duly  executed 
on  the  days  of  their  respective  dates ;  that  the  note  in  set-off  was 
assigned  by  the  holder  thereof  to  the  defendant,  for  a  valuable.con- 
sideration,  with  the  intention  of  securing  a  debt  against  the 
Cheshire  Iron  Works ;  that  the  Cheshire  Iron  Works  were  insol- 
vent, and  had  no  property ;  and  that  their  stockholders,  of  whom 
the  plaintiff  was  one,  were  individually  liable  for  their  debts. 

There  being  no  evidence  to  whom  the  note  sued  upon  belonged, 
beyond  the  note  itself,  the  defendant  contended  that  tlie  plaintiff 
had  not  proved  his  title  to  the  note ;  and  further  contended  that  if 
he  had,  the  note  for  $49.74  should  be  allowed  in  set-off. 

Shaw,  C.  J.  The  plaintiff  brings  his  action,  as  bearer  of  a  note 
made  by  the  defendant  to  the  Cheshire  Iron  Works  or  bearer.  He 
therefore  claims  as  the  holder  of  a  negotiable  promissory  note, 
payable  on  time,  and  not  dishonored ;  and  if  he  establishes  this 
title  by  proof,  he  is  entitled  to  the  same  privileges  and  immunities 
as  an  indorsee,  having  taken  a  note  by  indorsement  in  the  course 
of  business,  before  it  has  become  due.  He  is  not  subject  to  any 
equities  as  between  the  promisor  and  the  original  payee,  nor  to  the 
set-off  of  any  debt,  legal  or  equitable,  which  the  promisor  may 
afterwards  acquire.  Wheeler  v.  Guild,  20  Pick.  545.  By  giving 
a  note  payable  to  bearer  at  a  future  day,  which  is  strictly  a  nego- 
tiable note,  the  defendant  agreed  to  pay  the  amount  to  any  person 
to  whom  it  should  be  transferred,  before  the  day  of  payment,  with- 
out claiming  to  set  off  any  demand  which  he  then  had  or  might 
have,  against  the  promisee.  It  is  in  this  respect  like  mercantile 
notes  (in  use,  we  believe,  in  some  of  the  States  where  the  law 
allows  set-offs  and  other  equitable  defences,  even  against  indorsees 
of  promissory  notes),-  payable  "  without  defalcation,"  thereby 
meaning,  by  force  of  the  contract  itself,  to  bind  the  maker  to  pay 
the  amount  absolutely  to  the  regular  holder,  and  renouncing  any 
benefit  of  set-off  or  other  equitable  defence  against  the  payee. 

Then  tlie  question  is,  as  to  the  proof.     Where  a  plaintiff  brings 


PETTEE    V.    PROUT.  219 

the  note  flcclared  upon  in  his  hand,  and  olTers  it  in  evidence,  this 
is  not  only  evidence  tiiat  he  is  the  bearer,  but  also  raises  a  pro- 
sumption  of  fact  that  he  is  the  owner ;  and  this  will  stand  as  proof 
of  title,  until  other  evidence  is  produced  to  control  it.  Ordinarily, 
such  bearer,  relying  on  the  general  presumption,  has  no  means  of 
proving  the  transfer  of  the  note  to  himself. 

The  defendant  contends  that,  as  the  plaintiff  was  the  general 
agent  of  the  corporation  to  whom  the  note  was  payable,  and,  as 
such,  had  the  custody  of  all  their  notes,  his  possession  may  have 
been  the  possession  of  the  corporation.  But  we  think  this  fact 
alone  is  not  sufiicicnt  to  rebut  the  general  presumption. 

The  demand  relied  on  l)y  the  defendant  is  a  note  signed  by  the 
Cheshire  Iron  Works,  payees  of  the  note  in  suit,  and  payable  to 
order;  still  it  was  not  negotial^le,  because  payable  in  part  in  goods. 
A  negotiable  note  must  be  payable  in  money.  But  though  the 
defendant  could  not  sue  on  this  note  in  his  own  name,  yet  we  be- 
lieve by  the  Rev.  Sts.  c.  9G,  §  5,  as  the  assignee  of  a  chose  in 
action,  the  holder  of  such  note  might  use  it  as  a  set-off,  in  a  proper 
case,  as  against  a  suit  brought  by  the  debtor,  in  the  same  manner 
as  if  it  were  a  legal  debt.  But  it  is  unnecessary  further  to  remark 
on  the  validity  of  the  set-off;  the  ground  of  our  decision  is,  that 
the  plaintiff  held  the  note  in  suit  under  such  a  title  that  no  de- 
mand of  the  defendant,  legal  or  equitable,  against  the  Cheshire 
Iron  Works,  could  avail  him  as  a  set-off. 

Judgment  for  the  plaintiff . 
% 
See  Ellicott  v.  Martin,  G  Md.  509  ;  Goodman  i*.  Simonds,  pout,  239  ;  Picquet  v. 
Curtis,  1  Sumner,  478;  Hunter  v.  Kibbe,  5  McLean,  279;  Warren  e.  Gilman, 
15  Me.  70;  note  to  Swift  v.  Tyson,  ante,  213;  and  the  following  case. 


220  holder  for  value. 

John  M.  Way  v.  Ivory  W.  Richardson. 

(3  Gray,  -112.     Supreme  Court  of  Massachusetts,  March,  1855.) 

Presumption  of  title.  —  It  is  not  competent  for  the  defendant  to  deny  that  the  plaintiff 
is  the  owner  and  holder  of  a  note  upon  which  he  brings  suit  as  such,  without  trav- 
ersing tlie  signature,  or  the  indorsement,  or  the  delivery  of  the  note  ;  and  in  such  case 
evidence  is  inadmissible  to  prove  that  the  plaintiff  never  owned  the  note,  and  never 
employed  counsel  to  prosecute  the  action,  and  that  he  had  no  interest  in  the  suit. 

Action  op  contract  on  a  promissory  note  for  8100,  made  by  the 
defendant,  payable  to  his  own  order,  and  thus  indorsed :  "  I.  W. 
Richardson,"  "  Without  recourse,  J.  Wetherbee,  Jr."  Answer, 
that  the  defendant  executed  the  note  declared  upon,  without  any 
consideration,  and  for  the  accommodation  of  Nathaniel  Richard- 
son ;  that  the  note  was  delivered  by  Nathaniel  Richardson  to 
"Wetherbee,  and,  at  the  time  it  fell  due,  was  in  the  hands  of  Weth- 
erbee, and  held  by  him,  and  was  paid  by  Nathaniel  Richardson  to 
Wetherbee  while  it  was  so  in  his  hands ;  that  Wetherbee  is  still 
the  owner  of  the  note,  and  that  this  suit  is  prosecuted  for  his  ben- 
efit ;  and  that  if  the  plaintiff  is  the  owner  of  the  note,  he  received 
it  after  it  had  been  paid  and  was  overdue,  with  a  full  knowledge 
that  it  was  an  accommodation  note,  and  had  been  paid,  and  that 
he  paid  no  consideration  for  it.  Trial  in  the  Court  of.  Common 
Pleas  at  January  term,  1854,  before  Wells,  C.  J.,  who  signed  the 
following  bill  of  exceptions  :  — 

"  The  plaintiff  read  the  note  declared  on  and  the  indorsements 
thereon  to  the  jury,  and  rested  his  case.  The  defendant  then 
offered  to  prove  that  the  plaintiff  in  this  action  never  owned  the 
note  declared  upon,  and  never  had  said  note  in  his  possession,  nor 
employed  counsel  to  pursue  or  prosecute  said  action  ;  and  that 
the  plaintiff  had  no  interest  in  the  suit  or  judgment,  should  one  be 
recovered  in  his  favor ;  and  that  the  note  was  never  assigned  to 
the  plaintiff  by  delivery  or  otherwise  ;  and  that  the  plaintiff  never 
paid  any  thing  for  said  note.  To  this  the  plaintiff  objected,  upon 
two  grounds :  first,  that  it  was  not  admissible  under  the  defend- 
ant's answer ;  second,  that  if  proved,  it  would  form  no  defence  to 
this  action.  And  the  Court  rejected  the  evidence.  The  defendant 
offered  no  other  evidence,  and  the  Court  directed  a  verdict  for  the 
plaintiff.    To  all  which  rulings  of  the  Court  the  defendant  excepts." 


WAY    V.    RICHARDSON.  221 

Shaw,  C.  J.  The  evidence  offered  by  the  defendant  was  rightly 
rejected.  Indci)endcntly  of"  the  consideration  that  it  was  not 
sjjecified  in  the  answer,  the  evidence  would  have  constituted  no 
defence.  The  action  was  uj)on  a  note  made  by  the  defendant, 
payable  to  his  own  order,  and  by  him  itidorsed  in  blank,  and  then 
by  Wetherbee  indorsed  in  blank,  by  which  the  plaintiff,  if  holder, 
had  a  ri<2;ht  to  fill  up  the  indorsements,  and  make  the  note  payable 
to  himself,  as  second  indorsee,  which  we  are  to  presume  was  done, 
or  considered  as  done,  at  the  trial.  The  genuineness  of  the  sig- 
nature and  indorsements  was  admitted.  This,  with  the  production 
of  the  note,  was  priiiKi  farir  evidence  of  title,  and  good  unless 
rebutted  ;  for,  although  Wetherljee's  indorsement  was  "  without 
recourse,"  yet  this  was  as  effective  to  transfer  the  note,  as  if  those 
words  had  not  been  used ;  it  was  a  blank  indorsement. 

The  plaintiff,  by  his  attorney,  whose  authority  to  appear  it  was 
then  too  late  to  contest,  produced  the  note  at  the  trial ;  the  |)lain- 
titf's  possession  must  be  presumed  to  be  lawful,  and  to  have 
existed  from  the  time  of  the  indorsement,  until  the  contrary  ap- 
peared ;  and  no  evidence  to  the  contrary  was  offered.  It  was  not 
competent  for  the  defendant  to  deny  that  the  plaintiff  was  the 
owner  and  holder  of  the  note,  without  traversing  the  signature,  or 
the  indorsement,  or  the  delivery  of  the  note,  which  he  did  not 
offer  to  do. 

The  plaintiff  was  not  bound  to  prove  that  he  gave  value  for 
it ;  the  first  indorsee  might  have  given  it  to  him,  or  authorized 
him  to  sue  on  it  as  his  trustee.  If  the  plaintiff's  possession  of 
the  note  was  lawful,  it  nuist  have  been  delivered  to  him  by  the 
holder. 

Had  the  defendant  even  proved  what  in  his  answer  he  pro- 
posed to  prove,  —  that  the  note  was  indorsed  to  the  plaintiff  after 
it  was  due,  —  this  would  not  have  been  of  itself  a  defence.  A  note 
does  not  cease  to  be  ncgolial)le  and  transferaljle  by  indorsement 
or  delivery,  when  it  becomes  due.  Such  proof  wouUl  merely  have 
let  in  the  defendant  to  j)roof  that  it  had  been  paid  to  some  ante- 
cedent holder,  or  that  he  had  a  good  defence  against  the  plaintiff's 
indorser.     But  no  offer  was  made  of  any  such  proof. 

The  cases  cited  by  the  defendant  afford  no  authority  to  sustain 
a  contrary  view.  In  Richardson  v.  Lincoln,  5  ^let.  201,  there 
was  a  constructive  delivery  of  the  note  to  the  plaintiff's  attorney, 
simultaneous  with  the  indorsement.  In  Emmett  v.  Tottenham,  8 
Exch.  88-4,  the  decision  was  placed  distinctly  on  the  ground  that 


222  HOLDER    FOR   VALUE. 

the  action  was  brought  upon  a  copy  of  the  note,  and  that  there 
was  no  delivery  of  the  note  to  the  plaintiff,  or  to  any  one  as  his 
agent,  until  some  time  after  the  commencement  of  the  action. 

Exceptions  overruled. 

See  ante,  note  to  Swift  r.  Tyson,  p.  213,  also  the  preceding  case  and  citations. 


Davis  et  al.  v.  M'Cready  et  al. 

(17  N.  Y.  [3  Smith],  230.     Court  of  Appeals  of  New  York,  March,  1858.) 

Defence  of  breach  of  executory  agreement.  —  It  is  no  ground  of  defence  to  an  action 
against  the  acceptor  of  a  bill  that  the  holder  was  informed  that  it  was  accepted  in 
consideration  of  an  executory  contract,  if  he  had  no  notice  of  its  breach. 

Action  by  indorsees  against  acceptors  of  a  bill  of  exchange  ac- 
cepted in  part-payment  for  the  price  of  a  brig.  It  was  agreed  that 
the  vessel  should  be  put  in  good  repair,  and  made  tight,  staunch, 
and  strong.  Defence  that  this  agreement  had  not  been  performed. 
Plaintiffs  paid  full  value  for  the  bill,  and  took  it  with  a  knowledge 
of  the  said  agreement ;  but  without  knowledge  of  the  breach. 

Denio,  J.  The  sale  of  the  brig  and  the  executory  agreement 
of  the  vendors  to  make  the  necessary  repairs  to  render  her  sea- 
worthy, formed  a  good  legal  consideration  for  the  acceptance  of  the 
bill.  When,  therefore,  the  plaintiffs  at  the  time  of  receiving  it 
were  informed  that  it  was  accepted  on  that  consideration,  they 
were  not  notified  of  any  fact  which  impeached  its  validity  or  ren- 
dered it  in  any  respect  suspicious.  If  they  had  known  nothing  of 
the  consideration  upon  which  it  was  given,  they  would  nevertheless 
have  been  bona  fide  holders,  and  they  are  not  in  a  worse  condition 
because  they  had  been  informed  that  it  was  accepted  on  account 
of  a  transaction  legal  in  itself,  and  which  formed  an  adequate 
consideration  for  the  undertaking  of  the  acceptance.  Considera- 
tions founded  upon  reciprocal  promises  of  the  parties  are  of  com- 
mon occurrence  in  business,  and  bills  and  notes  supported  by  such 
considerations  have  always  been  held  valid.  It  is  upon  this  prin- 
ciple that  cross  notes  or  acceptances  for  mutual  accommodation 
have  been  upheld  whenever  they  have  come  before  the  courts. 


DAVIS  V.  m'creadt.  223 

Cameron  v.  Chappcll,  24  Wend.  94,  and  cases  cited  by  Nelson,  J.  ; 
Dowc  V.  Schutt,  2  Dcnio,  021.  In  the  first  of  these  cases  the 
acceptance  sued  on  was  given  in  consideration  of  a  promise  by 
the  drawer  to  send  the  acceptor  six  Imndred  busliels  of  wheat  at 
the  opening  of  navigation  the  ensuing  year.  The  bill  became 
payal)le  the  twelfth  of  May,  after  the  time  when  the  wheat  should 
have  been  delivered,  and  it  was  shown  it  never  had  been  deliv- 
ered. The  Court  held  that  the  acceptance  was  not  for  accommo- 
dation, but  was  business  paper,  and  was  valid  in  the  hands  of  the 
drawer,  so  that  usury  could  not  be  set  up  against  the  plaintiffs, 
who  had  discounted  it  for  a  premium  beyond  the  legal  rate  of  in- 
terest. If  one  will  issue  his  negotiable  paper  and  send  it  into  the 
world,  in  consideration  of  an  engagement  of  the  party  with  whom 
he  deals  to  do  some  act  for  his  benefit  in  future,  he  declares  in 
effect  that  he  will  pay  the  note  or  bill  according  to  its  terms  to 
any  one  who  shall  become  the  holder  for  value  in  the  course  of 
business,  and  rely  for  his  own  indemnity  upon  the  promise  he  has 
received  as  the  consideration  for  issuing  it. 

The  plaintiffs  were  not  bound  to  inquire  whether  the  vendors  of 
the  vessel  had  performed  their  agreement.  A  party  receiving  a 
bill  is  not  put  ui)on  inquiry  unless  circumstances  of  suspicion 
have  come  to  his  knowledge  ;  ^  and  I  have  already  said  that  there 
was  nothing  suspicious  or  out  of  the  common  course  of  business, 
in  the  circumstances  out  of  which  this  bill  arose.  The  agent  of 
the  acceptors  chose  to  rely  upon  the  personal  responsibility  of  the 
vendors  of  tlic  vessel  so  far  as  the  repairs  were  concerned.  As 
they  gave  their  acceptance  upon  time,  which  they  knew  might  be 
transferred  to  a  bona  fid r  holder  the  next  day,  so  it  is  presumed 
they  would  have  parted  with  their  money  upon  the  personal  en- 
gagement of  the  vendors  if  a  delay  in  payment  had  not  been  ma- 
terial to  them.  It  would  not,  in  my  opinion,  alter  the  case  if  it 
could  be  shown  that  the  vendors,  the  payees  of  the  bill,  had 
broken  their  contract  respecting  the  repairs  before  they  negotiated 
tiie  paper  to  the  plaintiffs,  it  being  found  that  the  latter  had  no 
notice  of  the  breacii.  The  plaintiffs  were  not  bound  to  follow  up 
the  transactions  between  the  original  parties  to  the  bill.  To  hold 
otherwise  would  attach  an  inconvenient  and  repugnant  condition 
to  such  an  acceptance.  By  accepting  simply  and  unconditionally 
a  negotiable  bill,  the  defendants  are  to  be  held  as  intending  to  give 

^  Nothing  short  of  proof  of  bad  faith  will  repel  the  prima  facie  title  of  the  holder. 
See  Goodman  v.  Simonds,  post,  239. 


224-  HOLDER   FOR   VALUE. 

it  all  the  qualities  of  commercial  paper,  one  of  which  is  that  it 
shaU  circulate  freely  for  the  purposes  of  business,  and  be  available 
in  the  hands  of  any  holder  for  value.  To  decide  that  one  who 
proposed  to  purchase  it,  and  who  had  a  Icnowledge  of  the  nature 
of  the  transaction  upon  which  it  was  given,  must  await  the  con- 
summation of  that  transaction,  would  essentially  impair  its  char- 
acter and  legal  effect.  But  in  this  case  it  was  not  known  to  any 
one  tlfkt  the  payees  had  broken  their  agreement  when  the  plain- 
tiffs took  the  bill.  The  payees  insisted  that  they  had  sufficiently  re- 
paired the  vessel  before  she  was  sent  to  sea,  and  the  plaintiffs'  agent, 
though  he  distrusted  her  condition  as  to  seaworthiness,  concluded 
to  receive  and  despatch  her  on  her  voyage  to  New  York.  Before 
she  arrived  at  her  destination  the  plaintiffs  purchased  the  bill. 
After  that  it  was  demonstrated  by  the  event  that*  the  repairs  were 
insufficient ;  for  she  leaked  to  such  an  extent  as  to  damage  the 
cargo,  and  required  extensive  repairs  upon  her  arrival.  If,  there- 
fore, the  plaintiffs  had  made  inquiries  when  the  bill  was  offered  to 
them  they  would  have  learned  that  the  plaintiffs'  agent  had  ac- 
cepted the  brig  as  a  seaworthy  vessel,  and  had  sent  her  to  sea.  So 
far  from  casting  suspicion  upon  the  bill  this  intelligence  would  have 
confirmed  them  in  the  belief  that  it  ought  to  be  paid  according  to 
its  tenor.  I  conclude,  therefore,  that  there  were  no  merits  in  the 
defence. 

All  the  rulings  of  the  referee  to  which  exceptions  were  taken, 
but  one,  related  to  testimony  concerning  breach  of  the  agreement 
of  repairs,  and  the  damages  consequent  thereon.  The  questions 
overruled  were  wholly  immaterial,  because  the  plaintiffs  could  not 
be  affected  by  the  breach  and  were  not  responsible  for  the  dam- 
ages. There  is  an  exception  of  a  different  character.  Before  the 
brig  sailed,  the  defendants'  agent  made  complaints  to  the  vendors 
of  the  insufficiency  of  the  repairs  ;  the  latter  declared  them  suffi- 
cient. The  agent  was  sworn  on  behalf  of  the  defendants,  and 
testified  that  upon  an  occasion  when  he  made  such  complaint,  Mr. 
Davis,  one  of  the  plaintiffs,  was  present.  This  testimony  was  given 
without  objection.  Subsequently,  the  defendants  offered  to  prove 
by  the  same  witness  that  Davis  was  present  when  he  made  such  a 
complaint,  and  it  is  stated  that  the  referee  overruled  the  offer. 
The  desire  seems  to  have  been  to  repeat  the  evidence  already  given. 
The  fact  that  one  of  the  plaintiffs  was  present  when  the  complaint 
was  made  had  some  tendency  to  show  that  he  had  knowledge  of 
the  breach  of  the  condition  ;  and  the  ruling  cannot  be  defended 


BREWSTER   V.   M'CARDEL.  225 

except  on  the  supnosition  that  the  offtir  was  rejected  because  the 
fact  was  ahcady  suniciently  proved.  It  does  not  appear  what4J,lie 
objection  was  which  tiie  plaintiffs'  counsel  made,  or  indeed  that  he 
did  object.  A  party  seeking  a  new  trial  on  account  of  an  erro- 
neous exclusion  of  evidence,  must  show  that  he  may  have  been  in- 
jured by  the  ruling.  As  the  precise  fact  sought  to  be  proved  was 
already  in  evidence,  no  prejudice  could  result  from  the  referee's 
refusing  to  have  it  repeated.  These  views  lead  to  the  affirinance 
of  the  judgment  of  the  Court  of  Common  Pleas. 
All  the  judges  concurring, 

Judgment  affirmed. 

In  Craig  v.  Sibbctt,  15  Penn.  State  (3  Harris),  288,  it  is  held  that  tlie  mere 
knowledge  of  the  holder  of  the  terms  of  the  arrangement  between  the  drawer 
and  acceptor  is  not  material.  In  this  case  the  holders  were  told  that  the  bill 
was  drawn  against  Hour  shipped  by  the  drawer  to  the  acceptor,  and  the  bill  of 
lading  was  indorsed  to  them  as  security  in  case  of  non-acceptance.  But  the  fact 
was  that  the  signature  of  the  bill  of  lading  was  fraudulently  procured.  Per 
Gibson,  C.  J.  :  *'  The  only  additional  matter  is  that  the  bill  of  lading  was  in- 
dorsed to  the  plaintiffs  as  a  security  in  case  of  non-acceptance ;  and  that  it  was 
presented  to  the  defendants  with  the  bill  of  exchange  ;  whence  an  argument  that, 
as  the  plaintiffs  were  apprised  of  the  course  of  dealing,  they  must  have  known 
the  acceptance  was  on  a  tacit  condition  that  the  flour  should  be  forwarded.  Has 
it  ever  been  supposed  that  the  purchaser  of  a  bill  drawn  against  cotton  to  be 
shipped  to  Liverpool  is  bound  to  guaranty  the  delivery  of  it?  .  .  .  The  cases 
show  that  the  payee  looks  only  to  the  terms  of  the  acceptance ;  and  that  when 
he  has  acted  in  good  faith,  he  is  not  to  be  prejudiced  by  the  acts  of  the  drawer." 


Brewster  v.  McC.\rdel. 

(b  Wendell,  478.     Supreme  Court  of  New  York,  January,  1832.) 

Postdated  jmper.  —  An  indorsee  for  value  of  a  postdated  note  may  recover  tliereon, 
though  lie  took  it  before  tlie  date  at  wliich  it  purported  to  be  executed. 

The  case  is  sufficiently  stated  in  the  opinion  of  the  Court. 

SuTHEHLAND,  J.  The  judgc  erred  in  charging  the  jury  that  the 
circumstance  of  the  note  having  been  negotiated  to  the  plaintiff" 
before  the  day  when  it  bore  date  was  a  strong  circumstance  of 
suspicion  sufficient  to  put  him  upon  inquiry,  and  that  he  therefore 

15 


226  HOLDER   FOR   VALUE. 

took  it  subject  to  any  defence  which  might  be  made  as  against  the 
original  payee. 

The  nolo  was  actually  made  and  delivered  to  the  payee  in  Oc- 
tober, 1828,  although  it  bore  date  in  May,  1829,  and  was  payable 
ninety  days  after  date.  It  was  transferred  to  the  plaintiff  for  a  valu- 
able consideration  in  February,  1829,  six  months  before  it  became 
due.  The  date  of  the  notes  is  in  no  respect  material,  except  for 
the  purpose  of  determining  when  it  is  payable.  There  is  no  legal 
objection  either  to  antedating  or  postdating  a  note,  and  I  am  not 
prepared  to  say  that  either  is,  in  itself,  and  disconnected  from 
other  circumstances,  a  legal  ground  of  suspicion,  so  as  to  put  the 
indorsee  upon  inquiry  and  subject  him  to  all  the  equities  existing 
between  the  original  parties  ;  7  Cowen,  337  ;  Chitty,  Bills,  77.  The 
Court  of  King's  Bench  in  Pasmore  v.  North,  13  East,  616,  held 
that  a  note  which  was  postdated^  and  which  was  transferred  to  the 
plaintiff  before  the  day  when  it  bore  date,  could  not  be  questioned 
or  impeached  by  the  maker.  That  case  is  not  distinguishable  from 
this,  and  I  think  was  rightly  decided  upon  the  well-established 
principles  applicable  to  negotiable  paper. 

A  new  trial  must  therefore  be  granted,  the  costs  to  abide  the 
event. 

See  Chitty,  Bills,  149  ;  Story,  Promissory  Notes,  §  48. 


Thomas  Bayley  et  al.  v.  John  Taber  et  al, 

(5  Massachusetts,  286.     Supreme  Court,  May,  1809.) 

Note  void  hij  statute.  —  Commercial  paper  declared  void  by  statute  is  void  even  in  the 
hands  of  a  honajide  holder  for  value  ;  and,  therefore,  where  promissory  notes  were 
antedated  to  avoid  a  statutory  proliibition ;  held,  that  in  an  action  against  the 
maker  he  could  prove  the  actual  date  at  which  they  were  made  and  issued,  even 
against  an  innocent  indorsee. 

The  declaration  in  this  action  contained  thirty-seven  counts  upon 
as  many  promissory  notes,  alleged  to  have  been  made  by  the 
defendants,  each  under  five  dollars,  payable  to  bearer  on  demand, 
for  value  received,  and  bearing  date  between  the  third  day  of  Octo- 
ber and  the  thirtieth  day  of  December,  1804. 


BAYLEY    V.    TABKR,  227 

The  action  was  tried  upon  the  general  issue,  before  Parker,  J., 
at  the  sittings  after  the  present  term.  ^ 

At  the  trial,  notes  comporting  with  the  several  counts  were  pro- 
duced in  evidence,  all  bearing  the  impression  of  plates,  types,  or 
printing.  The  signature  of  the  defendants  to  all  of  them  was 
admitted. 

The  defendants  offered  to  prove  that  some  of  the  notes  declared 
on  were  in  fact  made  and  issued  by  them  after  the  first  day  of 
April,  1805,  though  bearing  date  before  that  day  ;  and  that  tiie 
notes  which  had  been  so  made  were  antedated  by  tliem,  to  avoid 
the  operation  of  the  Statute  of480-4,  c.  58,  which  declares  notes  of 
the  like  description,  made  or  issued  after  that  day,  to  be  utterly 
void. 

Parker,  J.  This  cause  was  tried  before  me  at  the  sittings  after 
the  last  law  term  in  Cumberland,  in  May  last ;  and  I  then  inclined 
to  the  opinion,  that  the  defendants  should  not  be  permitted  to  allege 
a  falsity  in  an  instrument  made  and  signed  by  themselves,  and 
which  had  by  them  been  put  into  general  circulation  as  money. 
Notes  of  this  description,  under  the  denomination  of  Taber's  notes, 
to  a  large  amount,  having  become  a  common  currency  in  the  dis- 
trict of  Maine,  it  suddenly  struck  me  as  inconsistent  with  the  com- 
mon principles  of  justice,  and  the  policy  of  the  law,  that  the 
promisors  in  those  notes  should  be  allowed  to  avoid  payment  of 
them  to  an  innocent  holder,  by  alleging  that  they  bore  false  dates, 
and  by  showing  that  in  uttering  them  they  had  contravened  the 
laws  of  the  Commonwealth. 

I  therefore  rejected  the  evidence  offered  ;  but  very  soon  after  the 
trial,  having  revolved  the  question  in  my  mind  at  more  leisure,  I 
came  to  doubt  of  the  correctness  of  my  opinion,  and  intimated  my 
desire  to  the  counsel,  that  the  question  should  be  reserved  for  the 
consideration  of  the  wiiole  Court.  Thi§  was  done  in  such  manner 
as  to  cause  very  little  delay,  and  no  inconvenience  to  the  parties  or 
their  counsel  ;  it  having  been  agreed  that  the  question  should  be 
taken  up  by  the  Court  at  tiiis  adjourned  session,  and  that  the  argu- 
ments of  the  counsel  should  be  reduced  to  writing,  and  transmitted 
to  the  Court. 

Upon  an  attentive  consideration  of  the  question,  and  of  the  argu- 
ments sent  to  us,  which  on  both  sides  are  concise  and  perspicuous, 
we  are  unanimously  and  clearly  of  opinion,  that  the  facts  proposed 


228  HOLDER   FOR   VALUE. 

by  the  defendants  to  be  proved  to  the  jury  at  the  trial,  constitute  a 
good  defence  against  the  counts,  to  wliich  those  facts  are  applicable, 
and  that  it  is  competent  to  the  defendants  in  this  action  to  set  up 
and  maintain  such  defence. 

The  Statute  of  1804,  c.  58,  §  1,  enacts  that  all  bills,  notes,  checks, 
drafts,  or  obligations  whatsoever,  under  the  amount  of  five  dol- 
lars, payable  to  bearer  or  to  order,  shall  be  wholly  in  writing ;  and 
that  all  notes,  &c.,  under  the  aforesaid  amount,  and  payable  as 
aforesaid,  which  should  be  made  or  issued  after  the  first  day  of 
April  then  next,  and  which  should  bear  the  impression  of  types, 
plates,  or  printing,  should  be  utterly  void,  and  that  no  action  should 
be  thereon  sustained  in  any  court  of  law. 

The  second  section  of  the  same  statute  imposes  a  penalty  upon 
any  person  who  should  issue  or  pass  any  of  the  securities  described 
in  the  first  section,  after  the  said  first  day  of  April,  which  was 
April,  1805. 

The  same  statute,  c.  134,  imposed  an  increased  penalty  upon  any 
person  who  should,  after  the  tenth  day  of  the  same  April,  issue  or 
pass  like  notes,  other  tlian  those  of  incorporated  banks,  for  a  less 
sum  than  five  dollars,  or  whereon  less  than  five  dollars  should  be 
due,  with  intent  that  the  same  should  be  circulated  as  currency. 

The  statute  first  cited  is  peremptory  and  unequivocal,  in  enact- 
ing that  all  notes  like  those  declared  on  in  this  action,  made  or 
issued  after  the  first  day  of  April,  1805,  shall  be  utterly  void ;  and 
it  prohibits  the  sustaining  of  any  suit  upon  them  in  any  court  of 
law.  The  defendants  say,  and  they  offered  to  prove,  that  some  of 
the  notes  sued  in  this  action  were  made  and  issued  after  that  day. 
To  reject  the  proofs  of  these  facts,  because  the  defendants  are  the 
original  promisors,  and  because  the  plaintiffs  may  be  supposed  to 
be  innocent  holders  of  the  notes  for  valuable  considerations,  would 
be,  to  all  intents  and  purposes,  to  defeat  the  operation  of  the  statute, 
and  would  amount  to  a  judicial  repeal  of  an  act  of  tlie  legislature. 

The  maker  of  a  note  payable  to  bearer  is  generally  the  only  per- 
son to  be  called  upon  for  payment,  it  passing  from  liand  to  hand, 
on  the  credit  of  the  promisor's  name,  like  bank-bills,  the  receiver 
seldom  requiring  any  guaranty  from  him  who  passes  it.  Now  the 
declared  object  of  the  legislature  was  entirely  to  prevent  the  circu- 
lation of  such  paper.  But  if  by  giving  a  fictitious  date  to  them,  the 
maker  is  prevented  from  showing  that  they  were  made  or  issued 
after  the  time  when  they  were  declared  by  the  statute  to  be  void, 


BAYLEY    V.    TABER.  229 

they  would  continue  to  circulate,  as  lon^;  as  there  should  be  confi- 
dence in  tiie  ability  of  the  makers  to  pay  them. 

However  hard  the  operation  of  the  statute  may  appear  to  be 
against  persons,  into  whose  possession  such  notes,  may  liave  come 
bona  fide,  and  for  a  valuable  con'sideration,  it  is  an  hardship  created 
by  law  for  the  public  good,  and  the  courts  of  law  are  prohibited 
from  granting  any  relief  against  it. 

Nor  is  it  altogether  certain  that  the  receivers  of  such  notes  are 
free  from  blame,  although  not  privy  to  the  actual  making  or  ante- 
dating of  them.  The  laws  of  the  government  are  presumed  to  be 
known  l)y  all  the  citizens.  If  the  notes  were  in  fact  made  or  issued 
after  they  were  declared  void  by  statute,  and  after  a  penalty  was 
attached  to  the  passing  of  them,  although  no  penalty  is  expressly 
enacted  against  the  receiver  ;  yet  the  act  of  receiving  was  necessary 
to  enable  the  ofTender  to  pass  them,  and  in  this  view  the  receiver 
may  be  considered  as  having  aided  in  the  offence  of  passing.  Nor 
is  it  improbable  that  the  legislature  contemplated  the  punishment 
of  the  receiver,  when  they  took  from  him  all  power  of  coercing  pay- 
ment of  such  notes  in  the  courts  of  law.  But  be  this  as  it  may, 
whether  the  plaintiffs  in  this  action  are  innocent  or  not,  to  author- 
ize them  to  maintain  a  suit,  and  recover  judgment  on  notes  of  this 
description  so  situated,  when  the  legislature  has  declared  them  to 
be  utterly  void,  would  be  effectually  to  annul  an  act,  the  wisdom 
and  policy  of  which  the  legislature  alone  had  the  right  to  deter- 
mine. 

Nor  is  it  a  novel  doctrine,  that  a  person  shall  be  permitted  to 
avoid  his  contract  by  alleging  his  own  criminality,  provided  it  con- 
sists in  the  violation  of  some  positive  statute  of  the  government. 
Contracts,  the  consideration  of  which  is  money  won  at  play,  or 
loaned  at  unlawful  interest,  have  always  been  subject  to  the  same 
rule,  not  only  against  those  who  participated  in  the  offence,  but 
even  against  innocent  indorsees,  when*  they  have  claimed  the  per- 
formance of  such  contracts. 

The  case  of  Lowe  v.  Waller'  shows  this  long  to  have  been  the 
law  in  England  ;  and  it  is  understood  that  the  like  principle  has 
been  uniformly  adopted  and  practised  upon  by  the  courts  in  this 
country. 

It  has  been  suggested  by  the  counsel  for  the  plaintiffs  in  the  close 
of  their  argument,  that  to  make  this  a  good  defence,  it  should  have 

1  Doug.  736. 


230  HOLDER   FOR   VALUE. 

been  specially  pleaded.  But  it  is  not  necessary  ;  for  in  assumpsit, 
every  thing  which  destroys  the  right  of  action  may  be  given  in 
evidence  under  the  general  issue. 

Indeed,  there  seems  to  be  no  room  to  doubt  upon  this  question  ; 
and  nothing  but  a  reluctance  to  permit  a  man  to  avail  himself  of  a 
falsity  in  circulating  these  notes,  and  afterwards  to  avoid  payment 
by  showing  the  truth,  could  have  caused  a  hesitation  at  the  trial. 

The  verdict  must  be  set  aside,  and  a  new  trial  granted. 

See  following  case  and  note. 


Alexander  Paton  v.  Augustus  B.  Coit  et  al.  3, 

(5  Michigan  [1  Cooley],  505.     Supreme  Court,  October,  1858.) 

Illegal  consideration.  Burden  of  proof.  — Whenever  the  consideration  of  negotiable  paper 
between  the  original  parties  has  been  illegal,  especially  if  it  is  as  to  them  in  viola- 
tion of  a  positive  prohibition  of  statute,  proof  of  such  illegality  throws  upon  the 
indorsee  the  burden  of  proving  that  he  took  it  bona  fide,  and  gave  value  for  it. 

Assumpsit  against  the  acceptors  of  a  bill  of  exchange  given  for 
intoxicating  liquors  sold  in  violation  of  the  Prohibitory  Liquor 
Law,  which  makes  such  paper  "  utterly  null  and  void  against  all 
persons,  and  in  all  cases,  excepting  only  as  against  the  holders," 
"  who  may  have  paid  therefor  a  fair  price,  and  received  the  same  ^^^ 
upon  a  valuable  and  fair  consideration,  without  notice  or  knowl- 
edge of  such  illegal  consideration." 

The  plaintiffs  were  indorsees  of  the  payees. 


IB      '^N^ 


On  the  trial,  the  acceptance  having  been  given  in  evidence,  the 
plaintiff  rested. 

The  defendant  then  introduced  a  witness,  and  being  required  to 
state  what  he  expected  to  prove  by  such  witness,  stated  that  he 
expected  to  prove  that  such  acceptance  was  given  in  payment  and 
as  security  for  ten  barrels  of  intoxicating  liquor,  called  whiskey, 
purchased  by  defendant,  of  the  drawers  of  said  draft,  on  the  thir- 
tieth day  of  March,  1857,  in  Detroit. 

The  plaintiffs  objected  to  such  evidence,  upon  the  ground  that 
under  the  exception  in  section  two  of  the  Prohibitory  Liquor  Law 
of  1855,  the  presumption  was  that  said  draft  was  in  the  hands  of 


PATON   V.    COIT.  231 

bona  fide  holders,  to  wit,  the  })laintilTs  ;  and  tliat  the  onus  was  on 
the  defendant  to  show,  or  propose  to  show,  notice  before  said  testi- 
mony could  be  received.  The  Court  sustained  the  objection,  and 
refused  to  allow  the  testimony  to  be  given  ;  and  defendant  ex- 
cepted. 

Judgment  having  been  rendered  for  plaintiffs  below,  for  the 
amount  of  the  acceptance,  the  defendant  brought  the  case  to  this 
Court  by  writ  of  error. 

Christiancy,  J.  Whether  the  evidence  in  this  case  was  properly 
rejected,  does  not  depend  upon  the  question.  Whether,  standing 
alone,  it  would  have  constituted  a  complete  defence  against 
the  draft  in  the  hands  of  a  bona  fide  holder  for  value ;  but. 
Whether  it  would  have  been  sufficient  to  throw  upon  the  plaintiff 
the  burden  of  proving  himself  to  be  such  bona  fide  holder;  or. 
Whether,  in  fact,  the  evidence  tended,  prima  facie ,  to  establish  a 
defence. 

It  is  assumed  by  the  counsel  for  the  defendants  in  error  (plain- 
tiffs below),  that  the  only  effect  of  the  statute  in  reference  to 
negotiable  paper  given  for  liquors  sold,  "  is  to  render  such  paper 
without  consideration  as  between  the  immediate  parties,"  and  that 
"  the  effect  of  the  exception  in  section  two  is  simply  to  put  this 
statute  equity  on  a  footing  with  all  other  equities  "  between  the 
original  parties  to  negotiable  paper. 

If  this  be  the  only  effect  of  the  statute,  then,  according  to  the 
prevailing  current  of  recent  decisions,  the  evidence  was  properly 
rejected,  though  the  cases  upon  this  point  are  by  no  means  uni- 
form ;  and  we  do  not  wish  to  be  understood  as  giving  any  opinion 
upon  the  question  presented  by  this  hypothesis,  as  we  do  not 
think  it  involved  in  the  present  case. 

The  defence  here  proposed  was  not  merely  the  ivanl,  but  the 
illegality  of  consideration  ;  and  this,  being  allowed  as  a  defence 
between  the  original  parties,  irrespective  of  and  even  contrary  to 
the  equities  of  the  parties,  cannot,  without  perversion  of  laniruage, 
be  called  an  equity.  It  is  not  on  the  defendants'  account  that  sucli 
a  defence  is  allowed,  as  will  more  fully  appear  in  the  sequel. 

The  effect  of  the  statute  in  question  is  not  merely  to  render 
such  paper  without  consideration,  but  absolutely  void  and  illegal, 
between  the  immediate  parties,  and  all  others  who  have  not  ob- 
tained it  for  value,  and  without  notice,  —  not  only  void   in   the 


232  HOLDER   FOR   VALUE. 

negative  sense  of  having  no  legal  basis,  but  aflEirmatively  illegal  as 
violating  the  positive  provisions  of  the  statute.  It  was  not  even 
contended  that  the  facts  offered  to  be  shown  by  the  defendant 
would  not  have  made  2i  prima  facie  case  of  an  illegal  sale,  without 
showing  that  the  sale  did  not  come  within  any  of  the  exceptions 
of  the  statute ;  and  if  the  plaintiffs  claimed  to  maintain  the  valid- 
ity of  the  sale  under  any  such  exception,  the  burden  of  proof 
(this  being  a  civil  case)  rested  upon  them  to  bring  it  within  the 
exception. 

Now,  upon  principle,  as  a  question  of  statute  construction,  and 
without  reference  to  any  authority,  when  the  statute  expressly 
declares  all  such  paper  void  and  illegal,  and  forbids  any  action  to 
be  brought  or  maintained  upon  it,  "  except  when  brought  by  a 
bona  fide  holder  who  has  received  the  same  upon  a  valuable  and 
fair  consideration  without  notice  or  knowledge,"  &c.,  it  would 
seem  to  follow  as  a  logical  necessity,  that  when  the  paper  is  shown 
to  have  been  given  for  such  illegal  consideration,  the  plaintiff's 
right  of  recovery  is  cut  off  by  the  general  prohibition  of  the  stat- 
ute, unless,  in  avoidance  of  this,  he  gives  evidence  of  those  facts 
which  alone  can  bring  him  within  the  exception. 

We  do  not  propose  to  give  a  definite  opinion  upon  the  point, 
whether,  the  illegality  being  first  shown,  the  burden  of  proof  in 
this  case  would  have  rested  upon  the  plaintiffs  to  show  actual 
want  of  notice ;  this  might  be  requiring  actual  proof  of  a  nega- 
tive. But  we  are  inclined  to  the  opinion  that  they  should  have 
shown  the  nature  of  the  transaction  accompanying  the  transfer ; 
and  if  that  disclosed  no  suspicion  of  such  notice,  it  might  make 
a  prima  facie  case  of  want  of  notice,  and  throw  upon  the  defend- 
ant the  burden  of  proving  notice.  But  the  amount  of  the  consid- 
eration given  by  the  plaintiff  is  distinct  from  the  question  of 
notice,  and  the  absence  of  such  consideration,  in  such  a  case, 
would  be  a  defence,  though  the  paper  had  been  taken  by  the  plain- 
tiff without  notice.  The  amount  of  consideration  given  by  the 
plaintiff  is  an  affirmative  fact  peculiarly  within  his  own  knowl- 
edge, and  not  generally  in  that  of  the  defendant,  and  being  neces- 
sary to  bring  the  plaintiff's  case  within  the  exception  of  the 
statute,  should  be  proved  by  him.  To  allow  him  to  recover  with- 
out such  proof,  would  be  an  evasion  of  the  statute.  Such  proof 
(the  illegality  being  first  shown)  is  a  necessary  part  of  the  plain- 
tiff's case,  without  which  he  shows  no  prima  facie  right  to  recover  ; 


PATON    V.    COIT.  233 

and  tliough,  in  ordinary  cases,  this  fact  would  be  presumed  in 
favor  of  the  holder,  this  presumption  can  never  be  allowed  with- 
out proof,  when  tiie  paper  was  absolutely  void  between  the  original 
parties,  on  the  ground  of  fraud,  illegality,  or  duress. 

This  construction  of  tlie  statute  is  sustained  by  authority.  In 
England,  by  tiie  statute  of  Anne,  a  note  or  bill  given  or  indorsed 
upon  a  usurious  consideration,  was  void,  even  in  the  hands  of  a 
bona  fide  holder  for  value,  Chitty,  Bills,  9  Am.  ed.  110  ;  but 
the  statute,  58  Geo.  111.  c.  08,  made  such  note  valid  in  the  hands 
of  a  bona  fide  holder  for  value  without  notice.  In  the  case  of 
Wyat  V.  Campbell,  1  Mood.  &  M.  80,  where  the  note  had  been  in- 
dorsed by  a  previous  indorser  upon  a  usurious  consideration,  and 
no  notice  given  to  plaintiff  to  prove  consideration,  it  was  con- 
tended that  the  plaintiff  was  not  bound  to  prove  it.  But,  by 
Lord  Tenterden  C.  J.  :  "  The  statute,  58  Geo.  III.  c.  93, 
makes  a  note  tainted  with  usury  valid  in  the  hands  of  a  bona  fide 
holder  ;  the  onus  is  therefore  upon  the  holder  to  prove  he  is  such  ; 
otherwise  the  statute  does  not  apply,  and  the  note  is  void  under 
the  statute  of  Anne." 

In  that  case,  it  is  true,  the  exception  was  in  a  subsequent  stat- 
ute ;  here  it  is  in  the  same  statute ;  but  we  are  unable  to  perceive 
how  this  can  make  any  difference  as  to  the  burden  of  proof.  If 
the  fact  was  not  to  be  presumed  in  that  case,  it  cannot  be  in  this. 

But  whether  this  conclusion  be  right  or  wrong,  as  depending 
purely  upon  a  question  of  statute  construction,  can  make  little 
difference  in  this  case.  The  rule  as  to  the  burden  of  proof  is  the 
same  upon  principle  and  authority  at  common  law.  "Whenever 
the  consideration  of  the  paper  between  the  original  parties  has 
been  illegal,  especially  if  in  violation  of  a  positive  prohibition  of 
statute,  proof  of  such  illegality  throws  upon  the  holder  the  bur- 
den of  proving  that  he  got  it  bona  fide^  and  gave  value  for  it. 
Northam  v.  Latouche,  4  Car.  <fe  P.  140  ;  Bailey  v.  Bidwell,  13  Mees. 
&  W.  73  ;  Harvey  v.  Towers,  6  Exch.  656  ;  Smith  v.  Braine,  16  Q.  B. 
201  ;  Fitch  v.  Jones,  32  Vax^.  L.  &  Eq.  134  ;  Yallett  v.  Parker,  6 
Wend.  615  ;  Edwards,  Bills,  686,  687  ;  Chitty,  Bills,  11th  Am.  ed. 
661,  662  ;  Story,  Bills,  §  193. 

The  case  of  Bailey  v.  Bidwell  is  directly  in  point ;  and  Parke, 
B.,  gives  a  very  satisfactory  reason  why  the  fact  in  question  is  not 
to  be  presumed  for  the  plaintiff.  "  If,"  he  says,  "  the  note  were 
proved  to  have  been  obtained  by  fraud,  or  affected  by  illegality, 


234  HOLDER   FOR  VALUE. 

that  afforded  a  presumption  that  the  person  who  had  been  guilty 
of  the  illegality  would  dispose  of  it,  and  would  place  it  in  the 
hands  of  another  person  to  sue  upon  it."  The  subsequent  case 
of  Fitch  V.  Jones,  above  cited,  shows  that  in  such  case  the  original 
payee  is  still  presumed  to  be  the  owner,  and  that  the  plaintiff  sues 
for  his  benefit ;  and  it  is  to  overcome  this  presumption  that  the 
plaintiff  is  required  to  prove  himself  a  bona  fide  holder  for  value. 

The  rule  is  the  same  as  to  the  burden  of  proof,  where  it  is  shown 
that  the  paper  was  obtained  by  fraud  or  duress,  and  when  stolen, 
or  put  in  circulation  by  fraud.  See  authorities  above  cited,  and 
Mills  V.  Barber,  1  Mees.  &  W.  425 ;  Holme  v.  Karsper,  5  Binn. 
469  ;  Aldrich  v.  Warren,  16  Me.  465  ;  N.  Y.  &  Va.  State  Stock  Bank 
V.  Gibson,  5  Duer,  574.  In  fact,  many  of  the  cases,  and  most  of 
the  elementary  works,  place  illegality  in  the  same  category  with 
fraud  or  duress,  as  casting  the  burden  of  proof  upon  the  holder. 

But  while  the  result  is  the  same,  it  is  manifest  that  the  basis  of 
the  rule  in  the  case  of  illegality,  though  equally  solid,  is  quite 
different.  In  the  case  of  duress  and  fraud,  as  well  as  where  the 
paper  has  been  stolen,  the  equities  of  tlie  defendant  constitute  the 
basis  of  the  rule.  But  in  the  case  of  illegality  of  consideration, 
both  parties  are  generally  equally  in  fault ;  and  it  is  not  to  protect 
the  equities  of  the  defendant,  but  on  broad  grounds  of  public 
policy,  —  to  uphold  the  law,  and  to  discourage  its  violation  or 
evasion,  —  that  the  burden  of  proof  is  cast  upon  the  plaintiff.  It 
is  as  much  the  duty  of  courts  to  discourage  the  violation  or  eva- 
sion of  law  as  to  protect  the  equities  of  parties.  And  it  is  upon  this 
principle  only  that  the  naked  defence  of  illegality  is  allowed.  See 
opinion  of  Lord  Mansfield  in  Holman  v.  Johnson,  1  Cowp.  341. 
And  upon  this  principle,  courts  should  be  careful  to  avoid  doing 
any  thing  to  facilitate  the  enforcement  of  such  contracts,  unless  it 
appear  affirmatively  that  the  plaintiff  is  not  in  fault,  and  that  he 
has  real  equities  to  be  protected. 

The  evidence  offered  was  improperly  rejected.     The  judgment 
must  be  reversed,  and  a  new  trial  granted. 
All  the  justices  concurred. 

There  is  no  controversy  in  regard  to  the  law  upon  the  subject  discussed  in  the 
two  preceding  cases.  Where  negotiable  paper  is  by  statute  declared  void  ab  initio, 
it  will  be  so  held  in  the  hands  of  a  honajide  holder.  Aurora  v.  AVcst,  22  Ind.  88. 
But  it  was  held  in  Marine  Bank  v.  Clements,  31  N.  Y.  33,  that  in  order  to  render 
a  note,  transferred  by  an  insolvent  corporation  void  in  the  hands  of  a  bona  fide 


FOWLER   V.    BRANTLY.  236 

holder,  it  must  appear  that  the  corporation  was  either  insolvent  at  the  time  or  then 
contemplating  insolvency,  and  that  the  transfer  was  made  to  give  a  preference 
to  particular  creditors.  But  in  the  absence  of  statutory  provisions  declaring  the 
securities  void,  the  bona  fide  holder  will  not  be  affected  by  any  ille<;ality  in  the 
consideration  of  negotiable  securities.  Story,  Promissory  Notes,  §  l'J2;  Wil- 
liams V.  Cheney,  3  Gray,  210:  opinion  by  Bigelow,  J.,  and  cases  cited;  Hub- 
bard V.  Chapin,  2  Allen,  328.  Savage,  C.  J.,  in  Vallett  v.  Parker,G  Wend.  615, 
622,  lays  down  the  distinction  between  paper  declared  ^'Did  by  the  legislature  and 
by  the  courts.  He  says  :  "  Wherever  the  statutes  declare  notes  void,  they  are 
and  must  be  so  in  the  hands  of  every  holder;  but  where  they  are  adjudged  by 
the  Court  to  be  so,  for  failure  or  the  illegality  of  the  consideration,  they  are 
void  only  in  the  hands  of  the  original  parties,  or  those  who  are  chargeable  with 
or  have  had  notice  of  the  consideration." 

See  Goodman  v.  Simonds,  post,  239,  and  note ;  ante,  note  to  Swift  v.  Tyson, 
186 ;  also  Bayley  v.  Taber,  ante,  229 ;  Fowler  v.  Brantly,  infra. 


Samuel  L.  Fowler,  Plaintiff  in  Error,  v.  Harris  Brantly 
et  al.,  Defendants  in  Error. 

(14  Peters,  318.     Supreme  Court  of  the  United  States,  January,  1840.) 

What  sufficient  to  put  the  holder  upon  inqinry.  —  A  note  made  payable  to  the  cashier  of  a 
bank,  and  drawn  within  a  peculiar  form  to  be  within  tlie  usages  of  tlie  bank,  was 
sent  to  an  agent  to  procure  a  discount  at  the  bank.  The  note  was  rejected,  and 
marked  in  pencil,  with  a  mark  employed  by  the  bank  to  indicate  that  it  liad  been 
offered  and  refused.  The  agent  then  sold  the  note  and  applied  the  proceeds  to  his 
own  use.  Held,  tliat  the  note  on  its  face  was  sufficient  to  put  the  liolder  upon 
inquiry,  and  that  he  could  not  recover  thougli  he  had  no  knowledge  of  the 
fraud. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Catron,  J.  This  is  an  action  of  assumpsit  by  the  assignee  of  a 
note  against  the  makers.  The  questions  of  law  arising  in  this 
cause  depend  on  the  construction  of  a  note  of  hand,  in  the  following 
words  :  — 

"  Selma,  Dallas  County,  Alabama,  March  1,  1836. 

"  Eleven  months  after  date,  we,  Harris  Brantly,  Peyton  S.  Graves, 
and  Hugh  Ferguson,  jointly  and  severally  promise  to  pay  Andrew 
Armstrong,  cashier,  or  bearer,  $2000,  value  received,  negotiable 


236  HOLDER    FOR    VALUE. 

and    payable   at   the  Branch  Bank  of  the  State  of  Alabama,  at 
Mobile. 

(Signed)  Harris  Brantly, 

Peyton  S.  Graves, 
Hugh  Ferguson. 
"Credit:  Diego  M'Voy. 

Harris  Brantly, 
Peyton  S.  Graves, 
Hugh  Ferguson." 

The  note  had  on  it  the  two  indorsements  of  Diego  M'Voy  and 
William  D.  Primrose  ;  and  that  of  Taulmin,  Hazard,  and  Company 
was  stricken  out.  On  the  face  of  the  note  there  was,  in  pencil,  the 
figures  "  169." 

The  defendants,  the  three  makers,  introduced  evidence  to  prove 
that  the  note,  in  its  present  form  (except  the  indorsements),  was 
sent  by  one  of  the  makers  to  M'Voy,  who  was  his  factor  in  Mobile, 
to  be  offered  for  discount  in  the  Branch  Bank  of  the  State,  in  that 
city,  as  an  accommodation  note  ;  the  proceeds  of  which  were  to  be 
forwarded  to  said  maker.  That  the  note  was  ofifered  for  discount 
and  rejected.  The  factor  then  proposed  to  raise  money  on  the  note 
for  his  own  use,  without  the  knowledge  of  the  makers,  and  intended 
to  conceal  the  appropriation  of  the  note  from  them.  The  first  per- 
son to  whom  he  ofifered  to  sell  the  note  deemed  the  attempt  a 
fraud,  and  refused  to  purchase.  M'Voy  then  indorsed  and  trans- 
ferred the  note  to  Primrose  for  $1200,  communicating  to  him  it 
had  been  offered  for  discount  at  the  bank  and  rejected. 

Taulmin,  Hazard,  and  Company  held  a  note  for  $3250,  on  Black, 
indorsed  by  Vail  and  Dade,  and  by  Primrose,  and  which  was  past 
due ;  to  discharge  which,  in  part.  Primrose  transferred  the  note  in 
controversy  to  Taulmin,  Hazard,  and  Company  ;  and  Taulmin, 
Hazard,  and  Company  indorsed  the  same  before  its  maturity,  to  the 
plaintiff.  Fowler,  and  received  credit  on  their  account ;  they  being 
largely  indebted  to  him  at  the  time. 

The  leading  feature  in  the  cause,  involving  the  principle  on  which 
it  turns,  is  this  :  the  note  was  in  the  form  prescribed  by  the  bank 
to  those  who  desired  accommodations  at  it  ;  which  form  was  not  in 
use  before  its  adoption  there.  The  memorandum  on  the  left-hand 
side  of  the  note,  and  signed  by  the  drawers,  was  designed  to  show 
the  officers  of  the  bank  to  whose  credit  the  money  was  to  be  placed, 


FOWLER    V.    BRANTLY.  237 

should  the  note  be  discounted  ;  and  by  tlie  usages  of  the  bank,  no 
other  person  tlian  the  one  thus  named  could  receive  the  money. 

Primrose  testified  he  knew  from  the  pencil-mark  on  the  face  of 
the  note,  it  had  been  offered  for  discount  and  refused,  when  he 
purchased  it.  The  cashier  proved  the  pencil-mark  was  made 
according  to  the  usage  of  the  bank  on  all  notes  offered  for  discount 
and  refused. 

To  a  part  of  the  first  instruction,  that  held  if  the  plaintiff  took 
the  note  in  payment  of  a  pre-existing  debt,  due  to  him  from  Taul- 
min,  Hazard,  and  Company,  then  the  jury  ought  to  find  for  the 
defendants,  excei)tion  is  taken  ;  and  the  Court  refused  to  instruct 
the  jury,  that,  if  tlie  plaintiff  took  the  note  fairly  in  payment  of  a 
debt  due  to  him,  before  its  maturity,  without  notice  of  the  purpose 
for  which  M'Voy  had  held  it,  then  he  was  entitled  to  recover. 

And  also  refused  to  instruct,  if  the  jury  believed  plaintiff  took 
the  note  bona  fide  in  payment  of  a  previous  debt,  that  he  had  no 
notice  of  any  fraud,  and  there  were  no  circumstances  to  put  him 
upon  an  inquiry  into  any  fraud  committed  on  the  part  of  M'Voy, 
he  was  entitled  to  recover. 

There  were  other  instructions  asked  and  refused ;  but,  as  they 
are  in  effect  the  same  as  those  recited,  an  answer  to  which  will 
cover  the  whole  case,  they  need  not  be  further  noticed. 

The  known  customs  of  the  bank,  and  its  ordinary  modes  of  trans- 
acting business,  including  the  prescribed  forms  of  notes  offered  for 
discount,  were  matters  of  proof,  and  entered  into  the  contract ;  and 
the  parties  to  it  must  be  understood  as  having  governed  themselves 
by  such  customs  and  modes  of  doing  business  ;  and  this  whether 
they  had  actual  knowledge  of  them,  or  not ;  and  it  was  especially 
the  duty  of  all  those  dealing  for  the  paper  in  question  to  ascertain 
them  if  unknown.  .Such  is  the  established  doctrine  of  this  Court, 
as  laid  down  in  Renner  v.  The  Bank  of  Columbia,  9  Wheat.  581 ; 
Mills  V.  The  Bank  of  the  United  States,  11  Wheat.  431,  and  the 
Bank  of  Washington  v.  Triplett  and  Neale,  1  Peters,  32,  33. 

The  note  sued  on  is  peculiar  in  its  form  ;  it  was  made  for  the 
purposes  of  discount,  and  only  intended  for  negotiation  at  the 
bank,  and  not  for  circulation  out  of  it.  The  pencil-mark  on  its 
face  when  sold,  was  common  to  all  rejected  paper,  and  was  put 
there  by  the  othcers  of  tlie  bank  as  evidence  of  the  fact  that  it  had 
been  offered  and  rejected  ;  and  those  dealing  for  it,  with  the  mark 
on  its  face,  must  be  presumed  to  have  had  knowledge  what  it 


238  HOLDER    FOR    VALUE. 

imported  ;  as  the  slightest  inquiry  would  have  ascertained  its 
meaning.  These  were  tlie  legal  presumptions  attached  to  the  con- 
tract, when  the  plaintiff  purchased  it ;  and  the  explanatory  evidence 
to  prove  the  customs  of  the  bank,  was  introduced  to  enlighten  the 
Court  and  jury  in  regard  to  the  rules  governing  the  transaction, 
and  furnishing  the  law  of  the  case  ;  and  which  the  plaintiff,  when 
he  purchased  the  paper,  is  presumed  to  have  known  and  understood, 
as  the  Court  knew  and  understood  it  after  it  was  proved  on  the 
trial. 

This  was  the  case,  made  up  of  law  and  fact,  on  which  the  Court 
was  asked  to  charge  the  jury  ;  and  not  the  abstract  proposition 
whether,  on  a  proper  construction  of  the  statutes  of  Alabama,  nego- 
tiable paper,  payable  in  bank,  purchased  bona  fide,  and  without 
notice  of  an  existing  infirmity,  but  taken  in  discharge  of  a  pre- 
existing debt,  carried  the  infirmity  with  it  into  the  hands  of  the 
purchaser  ;  for  the  reason  that  the  mode  of  payment  was  not  in 
the  usual  course  of  trade. 

A  note  overdue,  or  bill  dishonored,  is  a  circumstance  of  suspicion, 
to  put  those  dealing  for  it  afterwards  on  their  guard  ;  and  in  whose 
hands  it  is  open  to  the  same  defences  it  was  in  the  hands  of  the 
holder  when  it  fell  due.  13  Peters,  79.  After  maturity,  such  paper 
cannot  be  negotiable  "  in  the  due  course  of  trade  ;"  although  still 
assignable. 

So  the  paper  before  us  carried  on  its  face  circumstances  of  sus- 
|)icion,  so  palpable  as  to  put  those  dealing  for  it,  before  maturity, 
on  their  guard  ;  and  as  to  require  at  their  hands  strict  inquiry  into 
the  title  of  those  through  whose  hands  it  had  passed.  Failing  to 
be  thus  diligent,  they  must  abide  by  the  misfortune  their  negligence 
imposed,  and  stand  in  the  condition  of  M'Voy. 

As  between  him  and  the  defendants,  there  was  no  contract  or 
liability  on  their  part ;  nor  as  bearer  of  the  note,  could  he  lawfully 
pass  it  off  in  the  due  course  of  trade,  so  as  to  communicate  a  better 
title  to  another  ;  the  face  of  the  paper  betraying  its  character  and 
purposes,  and  M'Voy's  want  of  authority. 

All  the  rulings  of  the  Court  below  must  be  referred  to  this  paper, 
and  to  the  special  case  made  by  the  proofs.  Any  instruction  asked, 
which  cannot  be  given  to  the  whole  extent  asked,  may  be  simply 
refused  ;  or  it  may  be  modified  at  the  discretion  of  the  Court.  No 
instruction  was  asked  that  could  have  been  lawfully  given  ;  to 
every  one  the  Court  could  well  say,  and  did  in  substance  say,  that 


GOODMAN    V.    SIMONDS.  239 

under  no  circumstances  could  a  purchase  of  this  note  he  made  by 
the  plaintifi",  from  Tauhnin,  llazard,  and  Company,  so  as  to  exempt 
it  in  the  hands  of  the  assignee,  from  the  infirmity  it  was  subject  to 
in  the  hands  of  M'Voy, 

And  in  regard  to  the  last  part  of  the  first  instruction,  where  the 
jury  is  in  substa'hce  told,  that  if  they  believed  the  note  was  taken 
in  payment  of  a  pre-existing  debt,  due  to  plaintiff,  from  Taulmin, 
Hazard,  and  Company,  still,  they  should  find  for  the  defendants  ; 
the  Court  might  have  gone  further,  and  instructed  the  jury,  that 
neither  could  the  plaintiff  recover  had  the  note  been  purchased  bona 
fide,  and  without  notice  of  the  fraudulent  conduct  of  M'Voy. 

The  judgment  is,  therefore,  ordered  to  be  affirmed. 

The  distinction  between  the  class  of  cases  to  which  the  above  decision  belongs, 
and  that  to  which  Goodman  v.  Simonds,  infra,  belongs,  is  this :  In  the  latter  case 
the  paper  was  valid,  and  in  itself  clear  of  all  suspicion  ;  while  in  the  preceding 
case  the  paper  bore  upon  its  face  the  evidence  of  its  defects.  In  Goodman  r. 
Simonds,  the  bill  or  note  could  only  be  impeached  by  extraneous  circumstances ; 
in  Fowler  v.  Brantly  the  paper  itself  was  its  own  impeachment.  See  Goodman 
r.  Simonds,  infra. 


Timothy  S.  Goodman,  Plaintiff  in  Error,  v.  John  Simonds. 

(20  Howard,  343.     Supreme  Court  of  the  United  States,  December,  1857.) 

Bonajide  holder's  claim  only  to  be  rqyelled  by  had  faith.  —  In  an  action  by  the  holder  of  a 
bill  of  exchange  placed  by  tlie  drawer  in  tiie  hands  of  the  holder  as  collateral 
security  for  his  debt,  the  following  instruction  was  given  to  tlie  jury  :  "  That  if  such 
facts  and  circumstances  were  known  to  the  plaintiff  as  caused  him  to  suspect,  or 
that  would  iiave  caused  one  of  ordinary  prudence  to  suspect  that  the  drawer  had 
no  interest  in  tlie  bill,  and  no  autiiority  to  use  the  same  for  his  own  benefit,  and 
by  ordinary  diligence  he  could  have  ascertained  these  facts,"  the  plaintifi'  could 
not  recover.  Held,  that  the  instruction  was  erroneous,  and  that  notliing  short  of 
bad  faith  in  the  holder  would  overcome  his  title  ;  and  the  burden  of  proof  is  upon 
him  who  assails  the  title  to  show  such  bad  faith. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Clifford,  J.     This  was  a  writ  of  error  to  the  Circuit  Court  of 
the  United  States  for  the  district  of  Missouri. 

Timothy  S.  Goodman,  a  citizen  of  the  State  of  Ohio,  complained 


240  HOLDER   FOR  VALUE. 

in  the  Court  below  of  John  Simonds,  a  citizen  of  the  State  of 
Missouri,  in  a  plea  of  trespass  on  the  case  upon  promises.  The 
declaration  was  filed  on  the  first  day  of  March,  1854.  It  con- 
tained two  counts ;  one  upon  a  bill  of  exchange,  and  the  other 
upon  an  account  stated.  At  the  April  term  following,  the  defend- 
ant appeared  and  pleaded  the  general  issue,  which  was  joined, 
and  several  special  pleas  in  bar  of  the  action.  The  special  pleas 
were  held  bad  on  demurrer,  and  at  the  October  term,  1855,  the 
parties  went  to  trial  on  the  general  issue.  Robert  M.  Nesbit,  a 
witness  called  for  the  plaintiff,  testified  that  he  was  a  notary  public 
of  the  county  of  St.  Louis  ;  and  that  as  such,  on  the  fifteenth  day  of 
January,  1848,  he  presented  the  bill  in  suit  for  payment  to  John  Si- 
monds, the  acceptor,  who  refused  to  pay  it,  and  that  he  afterwards 
gave  due  notice  of  the  presentment  and  refusal  to  both  indorsers. 
And  the  witness  further  testified  that  he  was  well  acquainted  with 
the  signatures  of  all  the  parties  to  the  bill,  except  that  of  the  draw- 
er, and  that  they  were  genuine.  Whereupon  the  plaintiff  read  in 
evidence  the  bill  of  exchange  described  in  the  first  count  of  the 
declaration,  together  with  the  indorsements  thereon,  as  they  appear 
in  the  record.  W.  Nesbit  &  Co.  were  merely  nominal  holders  of 
the  bill,  never  having  had  any  interest  in  it,  and  only  indorsed  it 
to  the  plaintiff  for  the  greater  convenience  in  bringing  tlie  suit. 
Evidence  was  then  introduced  on  the  part  of  the  defendant,  exhib- 
iting substantially  the  following  state  of  facts :  On  the  twenty- 
"first  day  of  June,  1847,  the  defendant  addressed  a  letter  to  Wallace 
Sigerson,  who  resided  at  Cincinnati,  informing  him  that  he  wished 
to  avail  himself  of  banking  facilities  in  that  place  to  carry  on  cer- 
tain business  in  which  he  and  John  Sigerson  had  determined  to 
engage,  and  asking  his  assistance  as  a  correspondent,  to  negotiate 
discounts,  inclosing  at  the  same  time  his  letter  of  credit  for  ten 
thousand  dollars,  and  two  bills  of  exchange,  each  for  the  sum  of 
five  thousand  dollars,  and  suggesting  in  tlie  same  letter  that  they 
should  require  some  twenty  to  twenty-five  thousand  dollars  during 
the  next  four  or  five  months,  in  sums  of  about  five  thousand  dol- 
lars, as  the  same  could  be  used  from  time  to  time.  In  the  same 
letter  also  he  instructed  his  correspondent  to  negotiate  five  thou- 
sand dollars  immediately,  authorizing  him  to  use  for  that  purpose 
either  the  letter  of  credit  or  the  bills  of  exchange.  When  those 
bills  were  transmitted  to  Cincinnati  they  were  in  all  respects  per- 
fect bills  of  exchange,  except  that  the  name  of  the  drawer  was 


GOODMAN    V.    SIMONDS.  241 

wanting,  and  tliey  wore  witliont  date.  They  were  l)otli  made  pay- 
able to  the  order  of  John  Sigerson,  and  hy  him  indorsed  in  blank, 
and  were  accepted  by  the  defendant.  Soon  after  their  receipt, 
Wallace  Sigerson,  as  drawer,  procured  one  of  the  bills  to  be  dis- 
counted according  to  his  instructions,  and  remitted  the  proceeds, 
or  a  part  thereof,  to  the  defendant ;  and  it  also  appeared  that,  dur- 
ing that  season,  he  procured  other  lulls  of  the  same  kind  to  be 
discounted  for  the  same  jjarties,  to  the  amount  of  twenty-five 
thousand  dollars.  The  other  bill  forwarded  at  that  time  is  the  one 
now  in  suit.  Wallace  Sigerson  had  also  large  transactions  of  his 
own  the  same  season,  amounting  to  four  hundred  thousand  dollars. 
Many  of  his  own  transactions  were  with  his  bnjther,  John  Siger- 
son, who  was  the  payee  and  indorser  of  this  bill,  and  was  jointly 
engaged  in  the  same  business  with  the  defendant.  He  and  his 
brother  interchanged  accommodation  paper,  and  some  of  their 
acceptances  were  regularly  discounted  in  blank,  and  it  did  not 
appear  that  any  complaint  was  made,  either  by  the  acceptor  or 
indorser,  that  this  bill  had  not  been  accounted  for  or  returned. 
There  were  dealings,  also,  the  same  season,  between  T.  S.  Good- 
man &  Co.  and  Wallace  Sigerson.  They  made  a  settlement  on  the 
twelfth  day  of  October,  1847,  when  it  was  ascertained  that  the 
amount  due  to  T.  S.  Goodman  &  Co,  was  about  five  thousand  six 
hundred  dollars,  arising  principally  from  notes  discounted,  secured 
by  bills  of  exchange  as  collaterals,  on  which  nothing  had  been 
realized.  At  the  settlement  the  debt  was  divided  into  two  notesf 
one  having  sixty  and  the  other  seventy-five  days  to  run  ;  and  Wal- 
lace Sigerson  testified  that  he  gave  his  two  notes  in  payment  of 
the  debt,  and  left  this  bill  as  collateral  security  to  the  notes,  fixing 
the  dates  so  that  the  notes  would  mature  twelve  or  fifteen  days  be- 
fore the  bill.  Two  drafts  on  Ravisess,  Bulock,  &  Co.,  previously 
held  as  collaterals,  were  embraced  in  the  settlement,  and  formed  a 
part  of  the  indebtedness  for  which  the  notes  were  given ;  and  Afc- 
Donald,  who  was  the  book-keeper  of  the  plaintiff's  firm,  and  a  wit- 
ness for  the  defendant,  testified  he  knew  of  no  other  collateral 
security  than  this  bill,  which  the  firm  held  for  those  noies.  It 
would  seem,  therefore,  that  all  the  prior  collaterals  were  surren- 
dered to  the  defendant  at  the  settlement.  There  is  some  confu- 
sion, and  perhaps  uncertainty,  in  the  evidenre  reported,  respecting 
the  history  of  the  bill  from  tlie  time  it  went  into  the  possession  of 
Wallace  Sigerson  till  it   was  thus  placed  in   the   hands  of  T.  S. 


242  HOLDER   FOR   VALUE. 

Goodman  &,  Co.,  as  collateral  security  to  the  above-mentioned 
notes.  It  may,  however,  be  gathered  from  the  testimony  of  Wal- 
lace Sigerson,  that  he  first  oriered  it  for  discount  to  the  Ohio  Life 
and  Trust  Company,  and  shortly  afterward  to  the  plaintiff,  for  the 
same  purpose,  and  that  the  plaintiff  declined  to  discount  it,  but 
soon  after  took  it  as  collateral  security  for  temporary  loans.  How 
long  the  bill  remained  in  the  possession  of  the  plaintiff  as  collat- 
eral security  for  temporary  loans  does  not  appear,  nor  for  whose 
benefit  the  money  was  obtained.  When  the  settlement  took  place, 
Wallace  Sigerson  told  the  plaintiff  that  he  had  a  right  to  use  the 
bill,  and  the  plaintiff  agreed  that  it  should  not  be  sent  to  St.  Louis^ 
for  collection  till  after  the  maturity  of  the  notes  to  which  it  was 
collateral.  Nothing  of  the  kind  was  agreed  when  it  was  left  as 
collateral  security  for  temporary  loans.  Wallace  Sigerson  became 
the  drawer  of  this  bill,  as  he  had  previously  done  with  respect  to 
the  other,  which  was  sent  him  at  the  same  time,  and  filled  up  the 
date,  but  whether  at  the  time  of  the  settlement  or  previously,  was 
liot  entirely  certain.  He  failed  in  business  in  November,  1847, 
and  on  the  twentieth  day  of  the  same  month,  T.  S.  Goodman  &  Co. 
addressed  a  letter  to  C.  W.  Clark  and  Brothers,  inclosing  this  bill, 
and  requesting  them  to  pass  it  at  the  least  rate,  not  exceeding 
twelve  per  cent  interest,  saying :  "  We  do  not  indorse  it,  as  we  are 
selling  it  for  another  ;  "  and  when  L.  C.  Clark,  one  of  that  firm, 
a  few  days  afterward  offered  the  bill  for  sale  to  the  defendant,  "  he 
said  it  was  a  forgery  of  his  name ;  that  Wallace  Sigerson  had  no 
authority  to  use  it."  At  the  trial,  the  Court,  on  the  prayer  of  the 
plaintiff,  instructed  the  jury  to  the  effect  that,  if  the  plaintiff  ac- 
quired the  bill  of  Wallace  Sigerson  as  collateral  security  without 
notice  of  his  want  of  authority  to  transfer  it,  that  the  plaintiff  was 
unaffected  by  such  abuse  of  trust,  and  that  the  defendant  was  pre- 
cluded from  setting  it  up  as  a  defence  in  this  suit,  to  which  no  ex- 
ceptions were  taken.  We  pass  over  the  first  instruction  given  to 
the  jury  on  the  prayer  of  the  defendant,  for  the  same  reason  that 
it  was  not  excepted  to,  and  proceed  to  examine  the  second,  as 
amended  by  the  Court,  which  presents  the  principal  subject  of 
controversy  at  the  present  time.  It  was  to  the  effect  that,  "  if  such 
facts  and  circumstances  were  known  to  the  plaintiff  as  caused  him 
to  suspect,  or  that  would  have  caused  one  of  ordinary  prudence  to 
suspect,  that  Wallace  Sigerson  had  no  interest  in  the  bill,  and  no 
authority  to  use  the  same  for  his  own  benefit,  and  by  ordinary  dili- 


GOODMAN    V.    SIMONDS.  243 

^encG  he  could  have  ascertained  these  facts,  then  the  jury  will  find 
for  tlie  defendant." 

I.  The  general  question  which  the  bill  of  exceptions  presents, 
arising  upon  that  instruction,  is  certainly  one  of  very  considerable 
importance,  especially  to  the  mercantile  community,  as  it  affects 
the  transfer  and  free  circulation  of  bills  of  exchange  and  promis- 
sory notes,  which,  by  virtue  of  their  negotiable  quality,  constitute 
the  principal  medium  fur  the  transaction  of  their  business  affairs. 
There  is,  however,  some  reason  to  doubt  whether  the  evidence  at 
the  trial  furnished  any  proper  basis  for  the  application  of  the  in- 
struction in  this  case,  even  supposing  the  principle  announced  to 
be  correct  as  an  alistract  proposition ;  and  tliis  gives  rise  to  a  pre- 
liminary question,  which  will  be  first  considered,  whether  the  in- 
struction ought  not  to  be  regarded  as  objectionable  on  that  account. 
When  a  prayer  for  instruction  is  presented  to  the  Court,  and  there 
is  no  evidence  in  the  case  for  the  consideration  of  tiie  jury,  it  ought 
always  to  be  withheld ;  and,  as  a  general  rule,  if  it  is  given  under 
such  circumstances,  it  will  be  error  in  the  Court,  for  the  reason 
that  its  tendency  may  bo  and  often  is  to  mislead  the  jury,  by  with- 
drawing their  attention  from  the  legitimate  points  of  inquiry  in- 
volved in  the  issue.  All  that  was  shown  at  the  trial,  in  addition 
to  the  description  of  the  bill,  was  the  refusal  of  the  plaintiff  to 
discount  it  when  it  was  offered  for  that  purpose,  his  possession 
and  control  of  it  shortly  after  as  a  pledge  for  temporary  loans,  and 
the  subsequent  transfer  of  the  bill  to  him  as  collateral  security  at 
the  settlement,  together  with  the  circumstances  of  that  transaction 
and  what  appeared  in  the  letter  of  T.  S.  Goodman  &,  Co.,  trans- 
mitting the  bill  to  St.  Louis  for  sale.  Other  circumstances  are 
adverted  to  in  the  printed  argument  for  the  defendant ;  but  as 
they  do  not  appear  to  be  sustained  by  the  evidence  in  the  case, 
they  are  omitted.  Nothing  transpired  when  the  bill  was  offered 
for  discount  more  than  what  occurs  on  similar  occasiojis  in  the 
daily  transactions  among  business  men.  It  was  offered  and  de- 
clined, and  that  was  the  whole  transaction  so  far  as  it  was  dis- 
closed in  the  evidence.  No  reasons  were  assigned  by  the  plaintiff 
for  declining,  and  none  were  asked  for  by  the  holder  who  offered 
the  bill.  Mere  speculative  inferences  are  never  allowable,  and 
cannot  be  regarded  as  evidence.  The  refusal  to  discount  the  bill 
mi'uht  have  been  for  the  reason  supposed  in  the  instruction  ;  and 
so  also  it  might  have  been  for  a  very  different  reason,  such  as  a 


244  HOLDER   FOR   VALUE. 

prior  obligation  to  other  customers,  want  of  available  funds,  or 
from  a  desire  for  further  information  as  to  tlie  pecuniary  standing 
of  the  parties  to  this  bill  ;  and  whether  it  was  for  any  one  of  the 
reasons  suggested  or  some  other,  in  the  absence  of  any  explana- 
tion, was  a  mere  naked  conjecture.  Another  answer  may  also  be 
given  to  this  suggestion  which  is  equally  decisive,  and  that  is  the 
subsequent  conduct  of  the  plaintiff  in  taking  the  bill  as  a  pledge 
for  temporary  loans,  which  seems  to  negative  the  supposition  alto- 
gether that  the  previous  refusal  to  discount  it  was  on  account  of 
any  suspicion  he  entertained,  either  as  to  the  genuineness  of  the 
paper,  or  of  tlie  authority  of  the  holder  to  pass  it.  Some  time 
elapsed  after  the  bill  was  offered  for  discount,  before  it  was  finally 
transferred  to  the  plaintiff,  and  tliat  fact  undoubtedly  was  well 
known  to  the  plaintiff  at  the  time  of  the  transfer  ;  and  so  also  was 
the  more  important  one  in  this  investigation,  that  during  all  that 
time  the  bill  remained  in  the  custody  or  under  the  control  of  Wal- 
lace Sigerson,  as  the  ostensible  owner,  and  that  he  claimed  and 
exercised  over  it  all  the  rights  of  a  holder  for  value.  If  these  cir- 
cumstances are  taken  in  connection  with  each  other,  as  they  unques- 
tionably should  be,  there  can  be  no  doubt  they  were  far  better  suited 
to  inspire  confidence  in  the  title  of  the  holder  than  to  excite  sus- 
picion in  regard  to  his  authority  to  pass  the  bill ;  and  if  they  had 
that  effect,  it  was  plainly  the  fault  of  the  defendant  in  executing 
and  forwarding  the  bill  to  his  correspondent,  and  in  intrusting  it 
to  his  control,  and  suffering  it  to  remain  in  his  custody  without 
inquiry  or  complaint.  The  want  of  date  to  the  bill  at  the  time  it 
was  offered  for  discount,  under  the  circumstances  disclosed  in  the 
evidence,  was  entirely  an  immaterial  consideration.  When  the  de- 
fendant sent  the  bill  to  Wallace  Sigerson,  indorsed  in  blank  and 
without  date,  and  intrusted  it  to  his  care  and  discretion  to  be  used 
for  his  own  benefit,  he  thereby  empowered  him  to  fill  the  blank  as 
a  necessary  incident  to  the  trust  conferred,  just  as  effectually  as 
if  the  authority  had  been  expressly  delegated  by  the  terms  of  the 
letter  in  which  it  was  sent.  Nor  was  it  of  any  consequence  that 
it  was  antedated,  as  compared  with  the  time  when  it  was  passed  to 
the  plaintiff,  inasmuch  as  it  was  filled  up  by  his  own  correspondent 
before  he  parted  with  its  possession  and  control,  and  was  actually 
made  to  bear  date  subsequent  to  the  time  when  it  was  received 
from  the  defendant.  In  filling  it  up  he  but  carried  into  effect  one 
of  the  purposes  for  whicli  it  had  been  forwarded,  as  is  plainly  in- 


r.OODMAN   V.    SIM0ND3.  245 

dicatcd  from  the  general  scope  and  design  of  the  letter.  lie  was 
authorized  to  use  the  hill  to  raise  money  for  tliu  henefit  of  the 
defendant ;  and,  in  order  to  use  the  bill  for  tliat  purpose,  it  must 
have  been  expected  that  he  would  become  tiie  drawer,  and  fill  up 
the  date  at  his  discretion.  Independently,  however,  of  the  terms 
of  tlie  letter,  it  may  be  asserted  as  a  general  i)rinciple  that,  where^ 
a  party  to  a  negotiable  bill  of  exchange  or  promissory  note  intrusts  ^ 
it  to  the  custody  of  another,  wlien  it  is  without  date,  whether  it  be 
for  tlie  purpose  to  accommodate  the  person  to  whom  it  was  intrust- 
ed or  to  be  used  for  his  own  benefit,  such  bill  or  note  carries  on  its 
face  an  implied  authority  to  fill  up  the  blank  ;  and,  as  between 
such  party  to  the  bill  or  note  and  innocent  third  parties,  the  per- 
son to  whom  it  was  so  intrusted  must  be  deemed  the  agent  of  the 
party  who  committed  such  bill  or  note  to  his  custody,  and  as  act- 
ing under  his  authority,  and  with  his  approbation.  Mitchell  v. 
Culver,  7  Cow,  33G,  and  note. 

The  general  doctrine  on  this  subject,  and  the  reasons  on  which 
it  is  founded,  are  stated  by  Shaw,  C.  J.,  in  Androscoggin  Bank  v. 
Kimball,  10  Gush.  378,  as  follows :  "  Tlie  rule  is  very  clear,  that  if 
one  party,  intending  to  accopamodate  another,  signs  his  name  to  a 
blank  paper,  he  authorizes  the  other  to  whom  he  delivers  it,  and 
for  whose  accommodation  it  was  made,  to  fill  up  the  blank  ;  and 
the  filling  up,  being  done  by  his  authority,  is  his  act,  and  he  is 
bound  by  it ;  and  we  concur  in  the  principle,  and  think  it  applies 
with  even  more  force  when  it  was  done  for  his  own  benefit,  as  in 
this  case."  Violett  ik  Patton,  5  Cranch,  142  ;  Russel  v.  Langstaflfe, 
2  Doug.  514 ;  CoUis  v.  Emett,  1  H.  Black.  313  ;  Montague  v.  Per- 
kins, 22  Eng.  L.  <t  Eq.  510. 

The  circumstances  thus  far  considered  we  think  afforded  no 
ground  of  inference  wliatever  to  support  the  theory  of  fact  assumed 
in  the  instruction.  But  it  is  more  difiicult  to  dispose  of  those  that 
follow  in  the  same  way,  on  account  of  the  extremely  indefinite 
nature  of  the  inquiry  arising  under  the  instruction.  One  man  is 
more  readily  influenced  to  suspect  fraud  in  matters  of  business 
tiian  another,  and  the  same  individual  may  be  differently  impressed 
by  similar  transactions  occurring  at  different  times  under  precisely 
similar  circumstances  ;  so  that  in  some  cases,  where  the  evidences 
to  excite  suspicion  were  slight,  it  might  be  impossible  to  determine 
whether  they  were  or  were  not  of  a  character  to  be  regarded  as 
tending  to  support  an  issue  like  the  one  presented  under  the  first 


246  HOLDER   FOR   VALUE. 

branch  of  the  instruction,  without  first  ascertaining  the  general 
characteristics  of  the  mind  of  the  individual  who  was  tlie  subject 
of  tlie  inquiry,  and  his  usual  habit  in  conducting  his  business 
affairs,  A  striking  illustration  of  the  difficulty  attending  the  in- 
vestigation is  to  be  found  in  the  instruction  itself,  assuming  for 
fthe  present  that  it  must, be  understood  according  to  the  usual 
import  of  the  language  employed.  Under  its  first  branch  it  was 
necessary,  in  order  to  relieve  the  defendant,  that  the  jury  should 
find  that  such  facts  and  circumstances  were  known  to  the  plaintiff 
as  caused  him  to  suspect  the  title  or  authority  of  the  holder  to 
transfer  the  bill.  But  the  jury  might  come  to  the  conclusion  that 
the  plaintiff  was  thoughtless,  confiding,  or  inattentive  on  the  occa- 
sion, and  that  he  in  fact  took  the  bill  without  any  such  suspicion; 
and  to  guard  against  the  effect  of  such  a  finding,  the  second 
branch  of  the  instruction  was  framed,  and  under  that  it  was  of  no 
consequence  whether  the  plaintiff  himself  suspected  the  title  of 
the  holder  or  not,  as  the  defendant  was  nevertheless  to  be  fully 
exonerated  if  the  jury  found  that  such  facts  and  circumstances 
\^ere  known  to  him  as  would  have  caused  one  of  ordinary  pru- 
dence to  suspect,  and  by  ordinary  diligence  he  could  have  ascer- 
tained the  true  state  of  the  title.  Here  was  an  attempt  to 
prescribe  a  standard  in  the  investigation,  by  which  the  degree  of 
suspicion  intended  to  be  required  to  defeat  the  claim  of  the  plain- 
tiff could  be  ascertained  and  measured  by  the  jury ;  but  under 
the  first  branch  of  the  instruction  no  such  attempt  was  made,  and 
no  other  criterion  was  furnished  to  guide  the  jury  in  their  deliber- 
ations, than  mere  naked  suspicion ;  and  consequently,  if  the  jury 
believed,  from  the  evidence  in  the  case,  that  the  plaintiff  at  the 
time  of  the  transfer  suspected  the  title  or  authority  of  tlie  holder 
to  pass  the  bill,  no  matter  how  slight  his  suspicions  were,  they 
were  directed  to  return  their  verdict  for  the  defendant.  With  this 
explanation  as  to  the  nature  of  the  present  inquiry,  we  will  pro- 
ceed to  notice  the  remaining  circumstances  relied  on  as  evidence 
in  the  case  to  support  the  instruction.  They  consist  of  the  knowl- 
edge that  the  plaintiff  is  supposed  to  have  acquired  at  the  settle- 
ment, that  Wallace  Sigerson  was  embarrassed  in  his  business 
affairs,  and  of  the  subsequent  conduct  of  his  firm,  in  forwarding 
the  bill  to  St.  Louis  before  the  maturity  of  the  notes,  and  the  re- 
mark in  their  letter  that  they  did  not  indorse  the  bill,  as  they  were 
selling  it  for  another.     These  circumstances  are  consistent  with 


GOODMAN   V.    SIMONDS.  247 

the  proposition  of  fact  assumed  in  the  instruction  ;  and  though 
they  arc  susceptible  of  an  entirely  diiferent  exj>lanation,  yet  per- 
liaps  it  woukl  be  going  too  far  to  say,  as  matter  of  law,  that  they 
afforded  no  ground  of  inference  in  the  direction  supposed  Ijy  the 
defendant.  We  think,  therefore,  that  the  judgment  ought  not  to 
be  reversed  on  the  ground  that  there  w^s  no  evidence  in  the  case- 
to  authorize  tlie  instruction.  We  say  so,  however,  in  reference  to 
the  peculiar  issue  arising  under  that  instruction,  and  the  form  of 
the  questions  sul)mittcd  to  the  jury,  and  not  in  respect  to  any 
different  issue  which  may  properly  a»ise  hereafter  in  cases  of  tliis 
description.  There  is  a  wide  difference  between  suspicion  and 
knowledge  in  respect  to  the  subject-matter  under  consideration, 
and  even  as  between  the  evidence  of  suspicion,  and  sucli  as  would 
show  gross  negligence  on  the  part  of  a  banker  or  business  man 
when  discounting  or  purchasing  negotial)le  paper  transferable  by 
delivery.  A  person  may  often  suspect  in  matters  of  business  what 
i»  fact  he  does  not  believe,  and  experience  teaches  that  he  will 
sometimes  suspect  what  he  has  no  reason  to  believe,  and  that  too 
when  the  evidences  to  excite  suspicion  are  so  slight  that  he  himself 
would  scorn  to  acknowledge  them  as  the  basis  of  his  action  in  the 
premises.  Evidence  merely  tending  to  show,  as  in  this  case,  that 
a  party,  in  acquiring  a  negotiable  bill  of  exchange  or  promissory 
note,  sus])ected  the  title  of  the  holder  at  the  time  of  the  delivery, 
would  clearly  be  insufficient  to  authorize  the  conclusion  that  he 
was  guilty  of  gross  negligence  when  the  transfer  was  made,  and  it 
would  hardly  constitute  an  approach  towards  proof  that  he  had 
knowledge  that  such  holder,  who  was  known  to  be  dealing  in  such 
paper,  and  claimed  the  right  to  use  it,  was  guilty  of  any  breach  of 
trust  in  passing  it. 

II.  The  more  important  question,  whether  the  instruction  was 
correct,  remains  to  be  considered ;  and  in  aj)proaching  that  (pics- 
tion  it  becomes  necessary,  in  the  first  place,  to  ascertain  what  the 
instruction  was,  and  to  deduce  from  it  the  principle  of  commercial 
law  which  was  apj)lied  to  the  case.  It  was  somewhat  peculiar  in 
its  language,  and,  in  fact,  contained  two  distinct  propositions, 
differing  essentially  in  certain  aspects,  and  not  entirely  reconcilable 
with  each  other ;  and  yet  we  cannot  doubt  that  the  Circuit  Court, 
in  giving  the  instruction  to  the  jury,  intended  to  apply  the  doc- 
trine to  the  case,  that  the  title  of  the  holder  of  a  negotiable  bill  of 
exchange  acquired  before  maturity  is  not  protected  against  prior 


248  HOLDER   FOR   VALUE. 

equities  of  the  antecedent  parties  to  the  bill,  where  it  was  taken 
without  inquiry,  aud  under  circumstances  which  ouglit  to  have 
excited  the  suspicions  of  a  prudent  and  careful  man.  Such  was 
certainly  the  general  scope  of  the  instruction,  especially  its  second 
proposition  ;  and  such,  it  may  be  presumed,  was  the  general  prin- 
^ciple  intended  to  be  embo4ied  in  the  questions  submitted  to  the 
jury.  They  have  been  so  treated  here  in  the  oral  argument  for 
tlie  plaintiff,  and  were  treated  in  the  same  way  in  tlie  printed 
argument  filed  for  the  defendant.  Whether  either  or  both  of  the 
questions,  in  the  form  in  which  they  were  submitted,  were  objec- 
tionable as  involving  a  departure  from  the  doctrine  intended  to  be 
applied,  it  will  not  become  necessary  to  inquire.  One  thing  is  cer- 
tain, —  if  the  general  principle  cannot  be  sustained,  there  is  nothing 
in  the  features  of  the  departure  from  it,  or  the  particular  phrase- 
ology of  the  questions  submitted,  to  benefit  the  defendant.  Un- 
doubtedly the  same  general  idea  pervaded  the  instruction,  though 
the  questions  were  submitted  to  the  jury  in  different  forms,  ill 
order  to  meet  the  different  aspects  of  the  evidence  in  the  case.  It 
was  to  the  effect,  that  if  the  plaintiff  had  acquired  the  bill  under 
tlie  circumstances  described  in  either  branch  of  the  instruction, 
then  he  had  acted  without  due  caution,  and  was  not  entitled  to 
recover.  All  the  other  grounds  of  defence  had  been  provided  for 
in  other  prayers  for  instruction.  This  one  was  obviously  prepared 
to  raise  the  single  question,  whether  the  plaintiff  had  acted  with 
due  caution  in  acquiring  the  bill,  and  consequently  assumed  all 
the  other  requisites  of  a  good  title  in  favor  of  the  plaintiff.  The 
only  question,  therefore,  arising  under  the  instruction,  is,  whether 
tlie  rule  of  commercial  law  applied  to  the  case  was  correct.  Bills 
of  exchange  are  commercial  paper  in  the  strictest  sense,  and  must 
ever  be  regarded  as  favored  instruments,  as  well  on  account  of 
their  negotiable  quality  as  their  universal  convenience  in  mercan- 
tile affairs.  They  may  be  transferred  by  indorsement ;  or  when 
indorsed  in  blank,  Or  made  payable  to  bearer,  they  are  transferable 
by  mere  delivery.  The  law  encourages  their  use  as  a  safe  and 
convenient  medium  for  the  settlement  of  balances  among  mercan- 
tile men  ;  and  any  course  of  judicial  decision  calculated  to  restrain 
or  impede  their  free  and  unembarrassed  circulation,  would  be 
contrary  to  the  soundest  principles  of  public  policy.  Mercantile 
law  is  a  system  of  jurisprudence  acknowledged  by  all  commercial 
nations ;  and  upon  no  subject  is  it  of  more  importance  that  there 


GOODMAN    V.    8IMOND9.  249 

should  be,  as  far  as  practicable,  uniformity  of  decision  throughout 
the  world.  A  well-defined  and  correct  exposition  of  the  ri<rhts  of 
a  bo)ui  fide  holder  of  a  negotiable  instrument  was  given  by  tliis 
Court  in  .Swift  v.  Tyson,  10  Peters,  1,'  as  long  ago  as  1842  ;  and 
we  adoj)t  that  exposition  relative  to  the  point  under  consideration 
on  the  present  occasion,  as  one  accurately  defining  the  nature  and. 
character  of  the  title  to  those  instruments  which  such  holder  ac- 
quires when  they  are  transferred  to  him  for  a  valuable  considera- 
tion. This  Court  then  said,  and  we  now  repeat,  that  a  bona  fide 
holder  of  a  negotial>le  instrument  for  a  valuable  consideration, 
without  notice  of  facts  which  impeach  its  validity  between  the 
antecedent  parties,  if  he  takes  it  under  an  indorsement  made 
before  the  same  becomes  due,  holds  the  title  unaffected  by  these 
facts,  and  may  recover  thereon,  although,  as  between  the  antece- 
dent parties,  the  transaction  may  be  without  any  legal  validity. 
That  question  was  not  one  of  new  impression  at  the  date  of  that 
decision,  nor  was  it  so  regarded  either  by  the  Court  or  the  learned 
judge  who  gave  tlie  opinion ;  on  the  contrary,  it  was  declared  to 
be  a  doctrine  so  long  and  so  well  established,  and  so  essential  to 
the  security  of  negotiable  paper,  that  it  was  laid  up  among  the 
fundamentals  of  the  law,  and  required  no  authority  or  reasoning 
to  be  brought  out  in  its  support ;  and  the  opinion  on  that  point 
was  fully  approved  by  every  member  of  the  Court,  and  we  see  no 
reason  to  qualify  or  change  it  in  any  respect.  Such  being  the 
settled  law  in  this  Court,  it  would  seem  to  follow  as  a  necessary 
consequence  from  the  proposition  as  stated,  that  if  a  bill  of  ex- 
change indorsed  in  blank,  so  as  to  be  transferable  by  delivery,  be 
misappropriated  by  one  to  whom  it  was  intrusted,  or  even  if  it  be 
lost  or  stolen,  and  afterwards  negotiated  to  one  having  no  knowl- 
edge of  these  facts,  for  a  valuable  consideration,  and  in  the  usual 
course  of  business,  his  title  would  be  good,  and  that  he  would  be 
entitled  to  recover  the  amount.  .The  law  was  thus  framed,  and  has 
been  so  administered,  in  order  to  encourage  the  free  circulation  of 
negotiable  paper  by  giving  confidence  and  security  to  those  who 
receive  it  for  value ;  and  this  principle  is  so  comprehensive  in 
respect  to  bills  of  exchange  and  }jromissory  notes,  which  pass  by 
delivery,  that  the  title  and  'possession  are  considered  as  one  and 
inseparable,  and  in  the  al)sence  of  any  explanation  the  law  pre- 
sumes that  a  party  in  possession  holds  the  instrument  for  value 
until  the  contrary  is  made  to  appear,  and  the  burden  of  proof  is 

I  Ante,  186. 


250  HOLDER   FOR   VALUE. 

on  the  party  attempting  to  impeach  the  title.  These  principles 
are  certainly  in  accordance  with  the  general  current  of  authorities, 
and  are  believed  to  correspond  with  the  general  understanding  of 
those  engaged  in  mercantile  pursuits.  The  word  notice,  as  used 
by  this  Court  on  the  occasion  referred  to,  we  think  must  be  under- 
.  stood  in  the  same  sense  as  knowledge,  and  indeed  that  is  one  of 
its  usual  and  appropriate  significations.  Where  the  supposed 
defect  or  infirmity  in  the  title  of  the  instrument  appears  on  its  face 
at  the  time  of  the  transfer,  the  question  whether  a  party  who  took 
it  had  notice  or  not,  is  in  general  a  question  of  construction,  and 
must  be  determined  by  the  Court  as  matter  of  law  ;  and  so  it  was 
understood  by  this  Court  in  Andrews  v.  Pond  et  al.,  13  Peters,  65, 
where  it  is  saiid  that  "  a  person  who  takes  a  bill  which  upon  the 
face  of  it  was  dishonored,  cannot  be  allowed  to  claim  the  privileges 
which  belong  to  a  bona  fide  holder.  If  he  chooses  to  receive  it 
under  such  circumstances,  he  takes  it  with  all  the  infirmities  be- 
longing to  it,  and  is  in  no  better  condition  than  the  person  from 
whom  he  received  it."  And  the  same  doctrine  was  adopted  and 
enforced  in  Fowler  v.  Brantly,  14  Peters,  318,^  where,  in  speaking  of 
a  promissory  note,  so  marked  as  to  show  for  whose  benefit  it  was 
to  be  discounted,  this  Court  held  that  all  those  dealing  in  paper 
"  with  such  marks  on  its  face,  must  be  presumed  to  have  knowledge 
of  what  it  imported."     See  Brown  v.  Davies,  3  T.  R.  80. 

Other  cases  of  like  character,  where  the  defect  appears  on  the 
face  of  the  instrument,  are  referred  to  in  the  plinted  argument  for 
the  defendant  as  affording  a  support  to  tlie  instruction  under  con- 
sideration ;  but  it  is  so  obvious  that  they  can  have  no  such  ten- 
dency, that  we  forbear  to  pursue  the  subject.  Ayer  v.  Hutchins, 
4  Mass.  370  ;  Wiggin  v.  Bush,  12  Johns.  306  ;  Cone  v.  Baldwin,  12 
Pick.  545  ;  Brown  v.  Taber,  5  Wend.  566. 

But  it  is  a  very  different  matter  when  it  is  proposed  to  impeach 
the  title  of  a  holder  for  value,  by  proof  of  any  facts  and  circum- 
stances outside  of  the  instrument  itself.  He  is  then  to  be  affected, 
if  at  all,  by  what  has  occurred  between  other  parties,  and  he  may 
well  claim  an  exemption  from  any  consequences  flowing  from  their 
acts,  unless  it  be  first  shown  that  he  had  knowledge  of  such  facts 
and  circumstances  at  the  time  the  transfer  was  made.  Nothing 
less  than  proof  of  knowledge  of  such  facts  and  circumstances  can 
meet  the  exigencies  of  such  a  defence  ;  else  the  proposition  as 

1  Ante,  235. 


GOODMAN    V.    SIMONDS.  251 

stated  is  not  true,  that  a  party  who  acquires  commercial  paper  in 
the  usual  course  of  business,  for  value  and  without  notice  of  any 
defect  in  the  title,  may  hold  it  free  of  all  equities  l^etweeii  the  an- 
tecedent parties  to  the  instrument.  Admit  the  ])roposition,  and 
the  conclusion  follows.  And  the  (jucstion  whether  the  party  had 
such  knowledge  or  not,  is  a  question  of  fact  for  the  jury,  and,  like 
other  disputed  questions  of  scienter,  must  be  submitted  to  their 
determination,  under  the  instructions  of  the  Court;  and  the  proper 
inquiry  is,  did  the  party,  seeking  to  enforce  the  payment,  have 
knowledge,  at  the  time  of  the  transfer,  of  the  facts  and  circum- 
stances which  impeach  the  title,  as  between  the  antecedent  parties 
to  the  instrument?  and  if  the  jury  find  that  he  did  not,  then  he  is 
entitled  to  recover,  unless  the  transaction  was  attended  by  bad 
faith,  even  though  the  instrument  had  been  lost  or  stolen.  Every 
one  must  conduct  himself  honestly  in  respect  to  the  antecedent 
parties,  when  he  takes  negotiable  paper,  in  order  to  acquire  a  title 
which  will  shield  him  against  prior  equities.  While  ho  is  not 
obliged  to  make  inquiries,  he  must  not  wilfully  shut  his  eyes  to 
the  means  of  knowledge  which  he  knows  are  at  hand,  as  was 
plainly  intimated  by  Baron  Parke,  in  May  v.  Chapman,  16  Mees. 
&  W.  355,  for  the .  reason  that  such  conduct,  whether  equiv- 
alent to  notice  or  not,  would  be  plenary  evidence  of  bad  faith. 
Mere  want  of  care  and  caution,  which  was  the  criterion  assumed 
in  the  instruction,  falls  so  far  below  the  true  standard  required  by 
law,  which  is  knowledge  of  the  facts  and  circumstances  that  im- 
peach the  title,  that  we  feel  indisposed  to  pursue  the  general  dis- 
cussion, and  proceed  to  confirm  the  views  we  have  advanced  as  to 
what  the  law  is,  by  referring  to  some  of  the  decisions  in  the  Eng- 
lish courts,  from  which,  as  an  important  source  of  commercial 
law,  most  of  our  own  rules  upon  the  subject  have  been  derived. 

Tiie  leadini:;  case,  among  the  more  modern  decisions  in  that 
country,  is  that  of  (Joodman  v.  Harvey,  -4  Adol.  &  Ellis,  870.  That 
was  a  case  in  bank,  on  a  rule  nisi,  which  was  made  absolute. 
Lord  Benman,  in  delivering  judgment,  said :  "  We  are  all  of 
opinion  that  gross  negligence  only  would  not  be  a  sufficient  an- 
swer, where  a  party  has  given  consideration  for  the  bill ;  gross 
negligence  may  be  evidence  of  mala  fides,  but  it  is  not  the  same 
thing.  Where  the  bill  has  passed  to  the  plaintiff  without,  any 
proof  o[  bad  fa  nil  in  iiim,  there  is  no  objection  to  his  title."  That 
case  was  followed  by  Uther  r.  Rich,  10  Adol.  &  Ellis,  784,  which 


252  HOLDER    FOR    VALUE. 

was  also  argued  before  a  full  Court,  and  the  same  learned  judge 
held  that  the  only  proper  mode  of  implicating  the  plaintiff  in  the 
alleged  fraud  by  pleading  was  to  aver  that  lie  had  notice  of  it, 
leaving  the  circumstances  by  which  that  notice  was  to  be  proved, 
directly  or  indirectly,  to  be  established  in  evidence  ;  and  he  fu» 
ther  held,  that  an  averment  that  the  plaintiff  was  not  a  bona  fide 
holder  was  not  equivalent.  According  to  the  rule  laid  down  in 
Goodman  v.  Harvey,  which  indubitably  is  the  settled  law  in  all  the 
English  courts,  proof  that  the  plaintiff  had  been  guilty  of  gross 
negligence  in  acquiring  the  bill,  ought  not  to  defeat  his  right  to 
recover ;  and  if  not,  it  serves  to  exemplify  the  magnitude  of  the 
error  assumed  in  the  instruction,  that  any  facts  and  circumstances 
which  would  excite  the  suspicion  of  a  careful  and  prudent  man 
were  sufficient  to  destroy  the  title.  It  is  clear  that  one  or  the 
other  of  these  rules  must  be  incorrect ;  both  cannot  be  upheld. 
Gross  negligence  is  defined  to  consist  of  the  omission  of  that  care 
which  even  inattentive  and  thoughtless  men  never  fail  to  take  of 
their  own  property  ;  and  if  such  neglect  would  not  defeat  the  right 
to  recover  —  and  clearly  it  would  not,  unless  attended  by  bad 
faith  —  it  cannot  require  any  further  reasoning  to  demonstrate 
that  tlie  instruction  was  erroneous.  Several  cases  have  been 
decided  in  England  upon  the  same  subject,  and  to  the  same  effect, 
and  the  rule  laid  down  in  Goodman  v.  Harvey  is  now  adopted  and 
sanctioned  by  the  most  approved  elementary  treatises  upon  com- 
mercial law.  Raphael  v.  The  Bank  of  England,  33  Eng.  L.  &  Eq. 
276 ;  Palmer  v.  Richards,  1  Eng.  L.  &  Eq.  529 ;  Arbouin  v.  An- 
derson, 1  Adol.  &  Ellis,  N.  s.  498  ;  May  v.  Chapman,  16  Mees.  & 
W.  355  ;  Chitty,  Bills,  12th  ed.  257 ;  Story,  Bills,  3d  ed.  §  416  ; 
Byles,  Bills,  4th  Am.  ed.  121-126  ;  Smith's  Mer.  Law,  ed.  1857, 
255 ;  Edwards,  Bills,  309 ;  1  Saund.  PI.  &  Ev.  591 ;  Wheeler  v. 
Guild,  20  Pick.  545  ;  Brush  v.  Scribner,  11  Conn.  368  ;  Backhouse 
V.  Harrison,  5  Barn.  &  Adol.  1098  ;  Gwynn  v.  Lee,  9  Gill,  138. 

These  cases,  beyond  controversy,  confirm  the  rule  laid  down  by 
this  Court  in  Swift  v.  Tyson,  and  they  also  furnish  the  fullest  evi- 
dence, by  their  harmony  each  with  the  other,  as  well  as  by  their 
entire  consistency  with  the  principal  case,  that  the  law  has  been 
uniform  since  the  decision  in  Goodman  v.  Harvey,  which  was  de- 
cided in  1836  ;  and  we  think  it  will  appear,  upon  an  examination, 
that  it  has  always  been  the  same,  at  least  from  a  very  early  period 
in  the  history  of  English  jurisprudence  down  to  the  present  time. 


GOODMAN    V.    SIMONDS.  253 

except  for  an  interval  of  about  twelve  years,  while  the  doctrine 
prevailed  which  is  now  invoked  in  support  of  the  instruction  in 
this  case.  Tlmt  doctrine  had  its  origin  in  Gill  v.  Cul>itt,  -j  Barn. 
&  C.  466,  and  it  was  followed  by  the  other  cases  referred  to  in 
|he  printed  art^uraent  for  defendant.  It  was  decided  in  1824,  and 
it  is  true,  as  the  cases  cited  abundantly  show,  that  it  was  acqui- 
esced in  for  a  time,  as  a  correct  exposition  of  the  commercial  law 
upon  the  subject  undcM-  consideration.  At  the  same  time,  it  is 
proper  to  remark,  that  there  is  not  wanting  respectable  authority 
that  it  had  been  much  disa}>proved  of  before  it  was  directly  ques- 
tioned ;  and  it  is  certain,  that  nearly  two  years  before  it  was 
finally  overruled,  Parke,  J3.,  in  delivering  judgment  in  Foster  v. 
Pearson,  regarded  it  as  mere  "  dicta,  rather  than  the  decision  of  the 
judges  of  the  King's  Bench."  See  Raphael  v.  The  Bank  of  England, 
'[supral  per  Cresswell.  The  reasons  assigned  for  that  departure 
from  the  long-established  rule  upon  the  subject  are  as  remarkable 
and  unsatisfactory  as  ilie  change  was  sudden  and  radical,  and  yet 
their  particular  examination  at  this  time  is  unnecessary.  It  is  a 
sufficient  answer  to  the  case  to  say,  that  it  has  been  distinctly 
overruled  in  the  ti"ibunal  where  it  was  decided,  and  has  not  been 
considered  an  authority  in  that  Court  for  more  than  twenty  years. 
The  doctrine,  says  Mr.  Chitty  in  his  Treatise  on  Bills,  is  now  com- 
pletely exploded,  and  the  old  rule  of  law  that  the  holder  of  bills 
of  exchange,  indorsed  in  blank  and  transferable  by  delivery,  can 
give  a  title  which  he  does  not  possess,  to  a  person  taking  them 
bona  fide  for  value,  is  again  re-established  in  its  fullest  extent.  It 
was  not,  however,  accomplished  at  a  single  blow,  but  the  error,  so 
to  speak,  was  literally  broken  up  and  destroyed  by  instalments. 
The  foundation  of  the  superstructure  was  severely  shaken  in  Crook 
V.  Jadis,  5  Barn.  &  Adol.  909,  when  the  full  bench  first  came  to 
the  conclusion  that  want  of  due  care  and  caution  was  insufficient 
to  constitute  a  defence,  and  that  gross  negligence,  at  feast,  must 
be  shown,  to  defeat  a  recovery.  But  it  was  left  to  the  case  of 
Goodman  v.  Harvey  to  announce  a  complete  correction  of  the 
error,  when  Lord  Dennian  declared,  we  have  shaken  otf  the  last 
remnant  of  the  contrary  doctrine. 

A  brief  reference  to  some  of  the  earlier  cases  will  be  sufficient 
to  show  that  the  decision  in  Gill  v.  Cubitt,  was  a  departure  from 
the  well-known  and  long-estal)lislied  rule  upon  the  subject  under 
consideration.     One  of  the  earliest  cases  usually  referred  to  is  that 


254  HOLDER    FOR    VALUE, 

of  Hinton's  case,  reported  i»  2  Show.  247.  It  was  an  action  on 
the  case  against  the  drawer  upon  a  bill  of  exchange  payable  to 
bearer.  The  Court  ruled  that  the  holder  must  entitle  himself  to 
it  on  a  consideration  ;  "  for  if  he  come  to  be  bearer  by  casualty  or 
knavery^  he  sliall  not  have  the  benefit  of  it ;  "  and  so  in  Anonymous| 
1  Salk.  12G,  wliore  a  bank-note  payable  to  A,  or  bearer,  was  lost, 
and  found  by  a  stranger,  and  by  him  transferred  to  C,  for  value. 
Holt,  C.  J.,  held  that  "  A  might  have  trover  against  the  stranger, 
for  he  had  no  title  to  it,  but  not  against  C,  by  reason  of  the  course 
of  trade,  which  creates  a  property  in  the  bearer."  And  again  in 
Miller  v.  Race,  1  Burr.  452,  462,  where  an  inn-keeper  received  a 
bank-note  from  his  lodger  in  the  course  of  business,  and  paid  the 
balance,  Lord  Mansfield  held  he  might  retain  it,  as  he  came  by  it 
fairly  and  bona  fide,  and  for  value,  and  without  knowledge  that  it 
had  been  stolen.  And  on  a  second  occasion,  in  Grant  v.  Vaughan, 
3  Burr.  1516,  where  a  bill  payable  to  bearer  was  lost,  and  the 
finder  passed  it  to  the  plaintiff,  the  same  Court  left  it  to  the  jury 
to  find  whether  he  came  to  the  possession  fairly  and  bona  fide. 
But  a  still  stronger  case  is  that  of  Peacock  v.  Rhodes,  2  Doug. 
632,  where  a  bill  of  exchange,  indorsed  in  blank,  was  stolen  and 
passed  to  the  plaintiff  by  a  man  not  known.  It  was  argued  for 
the  defendant,  that  a  holder  should  not  in  prudence  take  a  bill 
unless  he  knew  the  person.  Lord  Mansfield  answered,  "  that  tlie 
law  is  well  settled,  that  a  holder  covamg  fairly  by  a  bill  has  nothing 
to  do  with  the  transaction  between  the  original  parties.  .  .  . 
The  question  oi  mala  fides  was  for  the  consideration  of  the  jury." 
And  lastly,  and  to  the  same  effect,  is  Lawson  v.  Weston  et  ah,  4 
Esp.  bQ,  where  a  bill  of  exchange  for  X500  was  lost  or  stolen,  and 
was  discounted  by  plaintiff  for  a  stranger.  It  was  insisted  for  the 
defendant,  that  "  a  banker  or  any  other  person  should  not  dis- 
count a  bill  for  one  unknown,  without  usiny  diligence  to  inquire 
into  the  circumstances."  Lord  Kenyan  replied,  that  "  to  adopt 
the  principles  of  the  defence  would  be  to  paralyze  the  circulation 
of  all  the  paper  in  the  country,  and  with  it  all  its  commerce  ;  that 
the  circumstance  of  the  bill  having  been  lost,  might  have  been 
material,  if  they  eoidd  bring  knowledge  of  that  fact  home  to  the 
plaintiff.''''  Tiie  cases  cited,  commencing  in  1694  and  ending  in 
1801,  are  sufficient  to  show  what  the  state  of  the  law  was  in  1824, 
.when  Gill  v.  Cubitt  was  decided,  especially  as  the  judges  of  the 
King's  Bench,  in  giving  their  opinions  on  that  occasion,  did  not 


GOODMAN    V.    SIM0ND9.  255 

pretend  that  there  were  any  later  decidons  in  which   it  had  been 
modified. 

111.   But,  assuming  that  the  in.struction  was  erroneous,  it  is  still 
insisted  by  the  course  of  the  argument  for  the  defendant,  that  it 
^as  immaterial  ;  and  the  arjrument  proceeds  upon  the  ground  tliat 
the  case,  as  made  in  tlie  bill  of  exceptions,  shows  that  the  plain- 
tiff was  not  the  holder  of  the  bill  foi*  a  valuable  consideration,  in 
the  usual  course  of  business.     On  the  contrary,  it  is  insisted  that 
he  held  it  merely  as  a  collateral  security  for  a  pre-existing  debt, 
without  any  present  consideration  at  the  time  of  the  transfer,  and 
that  a  party  who  takes  negotiable  paper  under  such  circumstances 
does  not  acquire  it  in  the  usual  course  of  business,  and  conse- 
quently takes  it  subject  to  prior  equities.     Whatever  may  be  our 
impressions  in  a  case  like  the  one  supposed,  we  think  the  question 
does  not  arise  in  the  present  record,  assuming   the  facts  to  be  as 
they  are  exhibited  in  the  bill  of  exceptions  ;  and  the  answer  to  the 
argument  will  be   based  entirely  upon   that  assumption,  without 
prejudice  to  what  may   hereafter  appear.     When  the  settlement 
was  made,  the  new  notes  were  given  in  payment  of  the  prior  in- 
debtedness  and  the  collaterals  previously  held  were  surrendered 
to  the  defendant,  and  the  time  of  payment  was  extended  and  defin- 
itively fixed  by  the  terms  of  the  notes,  showing  an  agreement  to 
give  time  for  the  payment  of  a  debt  already  overdue,  and  a  forbear- 
ance to  enforce  remedies  for  its  recovery  ;  and  the  implication  is 
very  strong  that  the  delay  secured  by  the  arrangement  constituted 
the  principal  inducement  to  the  transfer  of  the  bill.     Such  a  sus- 
pension of  an  existing  demand  is  frequently  of  the  utmost  impor- 
tance to  a  delator,  and  it  constitutes  one  of  the  oldest  titles  of  the 
law  under  the  head  of  forbearance,  and  has  always  been  considered 
a  sufficient  and  valid  consideration.    Eltingu.  Vanderlyn,  4  Johns. 
437  ;  Morton  v.  Burn,  7  Adol.  &  Ellis,  19  ;  Baker  v.  Walker,  14 
Mees.   &  W.  465  ;  Jennison  v.  Stafford,  1  Gush.    108 ;  Walton 
V.   Mascall,  13  Mees.    &   W.  453 ;  Com.  Dig.  action  assumpsit, 
B.  1 ;  -Wheeler  v.  Slocum,  10  Pick.  62  ;  Story,  Promissory  Notes, 
§  186,  and  cases  cited.     The  surrender  of  Other  instruments,  al- 
though held  as  collateral  security,  is  also  a  good  consideration  ; 
and  this,  as  well  as  the  former  proposition,  is  now  generally  ad- 
mitted, and  is   not  open  to   dispute.     Dupeau   v.  Waddington,   6 
Whar.  220  ;  Hornblower   r.  Proud,  2  Barn.  &  xUd.  327  ;  Hideout 
V.  Bristow,  1  Cromp.  &  J.  231 ;  Bank  of  Salina  v.  Babcock,  21 
Wend.  499  ;  Youngs  v.  Lee,  2  Ker.  551.      It  seems  now  to  be 


256  HOLDER   FOR   VALUE. 

agreed  that,  if  there  was  a*present  consideration  at  the  time  of 
the  transfer,  independent  of  the  previous  indebtedness,  a  party 
acquiring  a  negotiable  instrument  before  its  maturity  as  a  col- 
lateral security  to  a  pre-existing  debt,  without  knowledge  of  the 
facts  which  impeach  the  title  as  between  the  antecedent  parties, 
thereby  becomes  a  holder  in  the  usual  course  of  Ijusiness,  and  that 
his  title  is  complete  so  that  it  will  be  unaffected  by  any  prior  equi- 
ties between  other  parties,  at  least  to  the  extent  of  the  previous 
debt  for  which  it  is  held  as  collateral.  White  v.  Springfield  Bank, 
3  Sandf.  S.  0.  222 ;  New  York  M.  Iron  Works  v.  Smith,  4  Duer, 
362.  And  the  better  opinion  seems  to  be  in  respect  to  parol  con- 
tracts, as  a  general  rule,  that  there  is  but  one  measure  of  the  suffi- 
ciency of  a  consideration,  and,  consequently,  whatever  would  have 
given  validity  to  the  bill  as  between  the  original  parties,  is  suffi- 
cient to  uphold  a  transfer  like  the  one  in  this  case.  We  are  not 
aware  that  the  principle  as  thus  limited  and  qualified,  is  now  the 
subject  of  serious  dispute  anywhere,  and  that  is  amply  sufficient 
for  the  decision  of  this  cause.  Whether  the  same  conclusion 
ought  to  follow  where  the  transfer  was  without  any  other  consid- 
eration than  what  flows  from  the  nature  of  the  contract  at  the  time 
of  the  delivery,  and  such  as  may  be  inferred  from  the  relation  of 
debtor  and  creditor  in  respect  to  the  pre-existing  debt,  is  still  the 
subject  of  earnest  discussion,  and  has  given  rise  to  no  small  diver- 
sity of  judicial  decision.  It  seems  it  is  regarded  as  sufficient  in 
England,  according  to  a  recent  case.  Poiricr  v.  Morris,  20  Eng. 
L.  &  Eq.  103  ;  Byles,  Bills,  pp.  96,  127.  A  contrary  rule  pre- 
vails in  New  York,  as  appears  by  several  decisions.  Codding- 
ton  V.  Bay,  20  Johns.  637  ;  Stalker  v.  McDonald,  6  Hill,  93  ;  and 
also  in  Tennessee,  Napier  v.  Elam,  5  Yerg.  108.  It  is  settled  that 
it  is  a  sufficient  consideration  in  Massachusetts,  Vermont,  and 
New  Jersey,  and  such  was  the  opinion  of  the  late  Justice  Story, 
as  appears  from  his  remarks  in  Swift  v.  Tyson,  and  in  his  valua- 
ble treatise  on  Bills  of  Exchange.  Stoddard  v.  Kimball,  6  Gush. 
469 ;  Story,  Bills,  §  192  ;  Chicopee  Bank  v.  Chapin,  8  Met.  40  ; 
Blanchard  ?;.  Stevens,  3  Cush.  162;  Atkinson  v.  Brooks,  26  V. 
669  ;  Allaire  v.  Hartshorne,  1  Zabr.  QQb.  We  think,  however,  that 
the  point  does  not  arise  in  this  case,  for  the  reasons  before  stated, 
and  consequently,  forbear  to  express  any  opinion  upon  the  sub- 
ject. The  judgment  of  the  Circuit  Court  is  reversed,  and  the 
cause  remanded  Ibr  further  proceedings,  with  directions  to  issue  a 
new  venire. 


GOODMAN    V.    SIMONDS.  257 

The  doctrine  of  this  case  was  aji^ain  maintained  in  the  Supreme  Court  of  the 
United  States,  in  Bank  of  Pittsburgh  v.  Neal,  22  How.  Ii6,  and  in  Murray  r. 
Lardner,  2  Wall.  110;  and  in  the  latter,  the  doctrine  of  Gill  v.  Cubitt  is  again 
emphatically  denied.  Murray  r.  Lardner  was  a  case  of  stolen  coupon  bonds, 
payable  to  bearer.  It  was  held  that  the  rules  pertaining  to  ordinary  coiniMercial 
paper  applied  to  these ;  and  tiiat  a  purchaser,  in  good  faitli,  is  unaffected  by 
want  of  title  in  the  vendor;  the  burden  of  proof  resting  upon  the  party  who 
assails  the  possession.  Mr.  Justice  tixvayne,  in  delivering  the  opinion  of  the 
Court,  after  stating  the  points  decided  in  the  principal  case,  proceeds  to  say : 
"  Such  is  the  settled  law  of  this  Court,  and  we  feel  no  disposition  to  depart  from 
it.  The  rule  may  perhaps  be  said  to  resolve  itself  into  a  question  of  honesty  or 
dishonesty,  for  guilty  knowledge  and  wilful  ignorance  alike  involve  the  result  of 
bad  faith.  Tliey  are  the  same  in  effect.  Where  there  is  no  fraud  there  can 
be  no  ([uestion.  The  circumstances  meniioned,  and  others  of  a  kindred  char- 
acter, while  inconclusive  in  themselves,  are  admissible  in  evidence ;  and  fraud 
established,  whether  by  direct  or  circumstantial  evidence,  is  fatal  to  the  title  of 
the  holder. 

"The  rule  laid  down  in  the  class  of  cases  of  which  Gill  r.  Cubitt  is  the  ante- 
type,  is  hard  to  cumprehend,  and  dillicult  to  apply.  One  innoeent  holder  may  be 
more  or  less  suspicious  under  similar  circumstances  at  one  time  than  at  another; 
and  the  same  remark  applies  to  prudent  men.  One  prudent  man  may  also  sus- 
pect where  another  would  not,  and  the  standard  of  the  jury  may  be  higher  or 
lower  than  that  of  other  men  ecjually  prudent  in  the  management  of  their  affairs. 
Tiie  rule  established  by  the  other  line  of  decisions  has  the  advantage  of  greater 
clearness  and  directness.  A  careful  judge  may  readily  so  submit  a  case  under  it 
to  the  jury  that  they  can  hardly  fail  to  reach  the  right  conclusion.'' 

Upon  the  important  subject  of  coupon  bonds,  he  says:  "  We  are  well  aware 
of  the  importance  of  the  principle  involved  in  this  inquiry.  These  securities 
are  found  in  the  channels  of  commerce  everywhere,  and  their  volume  is  constantly 
increasing.  They  represent  a  large  part  of  the  wealth  of  the  commercial  world. 
The  interest  of  the  community  at  large  in  the  subject  is  deep-rooted  and  wide- 
branching.  It  ramifies  in  every  direction,  and  its  fruits  enter  daily  into  the  affairs 
of  persons  in  all  conditions  of  life.  While  courts  should  be  careful  not  so  to 
shape  or  apply  the  rule  as  to  invite  aggression  or  give  an  easy  triumph  to  fraud, 
they  should  not  forget  the  considerations  of  equal  importance  which  lie  in  the 
other  direction.  In  Miller  r.  Race  [1  Burr.  452],  Lord  Mansfield  placed  his 
judgment  mainly  on  the  ground  that  there  was  no  difference  in  principle  between 
bank-notes  and  money.  In  Grant  r.  Vaughan  [3  Burr.  1516],  he  held  that  there 
was  no  distinction  between  bank-notes  and  any  other  commercial  paper.  At  that 
early  period  his  f;\r-reacliing  sagaiity  saw  the  importance  and  the  bearings  of  the 
subject." 

The  doctrine  of  Gill  v.  Cubitt  was  however  adopted  in  the  courts  of  several 
States  before  the  overruling  case  of  Goodman  r.  Harvey  had  become  generally 
known  in  this  country.  See  Sandford  r.  Norton,  14  Vt.  "JJS  ;  Hall  r.  Hale,  8 
Conn.  336  ;  Cone  v.  Baldwin,  Vl  I'ick.  545  ;  Boyd  i'.  Mclvor,  11  Ala.  822  ;  Nichol- 
son V.  Patton,  13  La.  213  ;  Smith  r.  Alechanics'  Bank,  6  La.  An.  610,  Slulell,J., 
dissenting.  Goodman  v.  Harvey  is  adopted  in  Worcester  Bank  i'.  Dorchester  and 
M.  Bank,  10  Cash.  488.     But  see  Mcrriam  v.  Granite  Bank,  8  Gray,  254,  259. 

17 


258  HOLDER   FOR   VALUE. 

It  is  also  the  law  in  Georgia,  Maryland,  and  Texas.  Matthews  v.  Poythress,  4 
Ga.  287,  306  ;  Ellicott  v.  Martin,  6  Md.  509  ;  Grenaux  v.  Wheeler,  6  Texas,  515. 
Goodman  v.  Harvey  was  directly  denied  in  Pringle  v.  Phillips,  5  Sandf.  157 ; 
but  this  case  was  overruled  in  the  Court  of  Appeals  in  1866,  and  Goodman  v. 
Harvey  adopted.  Magee  v.  Badger,  34  N.  Y.  (7  Tiff.)  247.  See  also  Belmont 
Branch  Bank  v.  Hoge,  35  N.  Y.  (8  Tiff.)  65,  reaffirming  Magee  v.  Badger,  and 
stating  that  Gill  v.  .Cubitt  has  been  repeatedly  overruled,  both  in  England  and 
in  America.  Goodman  v.  Harvey  is  cited  by  all  the  text-writers  as  declaring  the 
soundest  law.  See  authorities  cited  by  Mr.  Justice  Clifford,  srqjrn.  Also 
Story,  Promissory  Notes,  §  197  and  note  ;  Id.  Bills  of  Exchange,  §§  194,  416 ; 
3  Kent,  Com.  81,  82,  note.  With  so  many  strong  authorities  in  favor  of  the 
rule  in  the  principal  case,  there  can  be  little  doubt  that  the  early  cases  which 
follow  Gill  V.  Cubitt  will  eventually  be  overruled. 

It  follows  from  the  rule  in  the  principal  case  that  mere  proof  of  want  of  con- 
sideration will  not  throw  the  burden  upon  the  plaintiff  of  showing  that  he  is  a 
bonajide  holder  for  value,  and  without  notice.  And  so  are  the  cases  since  Good- 
man I".  Harvey.  See  Whittaker  v.  Edmunds,  1  Moody  &  R.  366 ;  Mills  v.  Bar- 
ber, 1  Mees.  &  W.  425 ;  Low  v.  Chifney,  1  Bing.  N.  C.  267  ;  Smith  v.  Braine, 
16  Q.  B.  244,  253 ;  Knight  v.  Pugh,  4  Watts  &  S.  445 ;  Fletcher  v.  Gushee,  32 
Maine,  587  ;  Ellicott  v.  Martin,  6  Md.  509  ;  Ross  v.  Bedell,  5  Duer,  462. 


George  Fisher  v.  Daniel  Leland,  Jr.,  et  al. 

(4  Gushing,  456.     Supreme  Court  of  Massachusetts,  October,  1849.) 

Indorsee  affected  with  notice.  —  One  who  has  taken  commercial  paper  by  indorsement 
before  it  is  due,  with  notice  of  fraud  in  its  inception,  is  subject  to  the  same  de- 
fences, in  an  action  against  the  maker,  that  could  be  raised  against  the  payee  to 
whom  the  fraud  had  attached.  And  the  maker,  against  such  indorsee,  can  give  in 
evidence  tlie  fraudulent  acts  of  tlie  payee,  and  the  admissions  and  confessions  of 
the  latter,  while  he  was  the  holder  of  the  note. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Shaw,  C.  J.  The  single  question  is,  whether,  after  the  defend- 
ant had  proved  that  the  plaintiff  took  the  note  in  question  by 
indorsement  before  it  was  due,  but  with  notice  that  the  promisors 
intended  to  defend  on  the  ground  that  the  note  was  obtained  by 
the  payee  of  the  maker  by  fraud,  they  could  give  in  evidence  the 
fraudulent  acts  of  the  payee ;  and  wliether  they  could  give  in 
evidence  the  admissions  and  confessions  of  the  payee,  whilst  he 
was  the  holder  of  the  note  and  before   the  indorsement,  to  prove 


FISHER    V.    LELAND.  .  259 

such  fraud.  The  distinction  appears  to  be  this  :  tliat  when  an 
indorsee  takes  a  bill  or  note,  by  indorsement,  before  it  is  due,  and 
without  notice  of  fraud  or  other  matter  of  defence,  he  takes  it  on 
an  independent  title  by  the  indorsement,  and  will  not  be  affected 
by  any  payment,  set-off,  fraudulent  consideration,  or  other  matter 
of  defence,  which  the  acceptor  or  promisor  might  have  had  against 
any  i)revious  holder  or  prior  party.  He  is  not  in  privity  with  such 
prior  party,  does  not  claim  under  him,  and  is  not  bound  by  the 
acts,  frauds,  or  admissions  of  any  such  prior  party.  And  in  order 
to  give  the  highest  credit  and  the  freest  circulation  to  negotiable 
securities,  transferred  by  indorsement,  in  favor  of  commerce,  this 
principle  is  held  with  great  firmness  and  strictness ;  and  by  a 
series  of  recent  decisions,  the  rule  upon  the  subject,  instead  of 
being  relaxed,  is  held  with  greater  strictness  than  formerly. 
O'Keefe  v.  Dunn,  G  Taunt.  305  ;  Dunn  v.  O'Keefe,  5  Maule  &  S. 
282  ;  Gill  v.  Cubitt,  3  Barn.  &  C.  466  ;  Goodman  v.  Harvey,  4 
Adol.  &  Ellis,  870  ;  Foster  v.  Pearson,  1  Cromp.,  Mees.  &  R.  849 ; 
Arbouin  v.  Anderson,  1  Adol.  &  Ellis,  n.  s.  498. 

But  where  a  negotiable  note  is  found  in  circulation  after  it  is 
due,  it  carries  suspicion  on  the  face  of  it.  The  question  instantly 
arises.  Why  is  it  in  circulation  ;  why  is  it  not  paid  ?  Here  is 
something  wrong.  Therefore,  although  it  does  not  give  the  in- 
dorser  notice  of  any  specific  matter  of  defence,  such  as  set-off, 
payment,  or  fraudulent  acquisition,  yet  it  puts  him  on  inquiry  ; 
he  takes  only  such  title  as  the  indorser  himself  has,  and  subject  to 
any  defence  which  would  be  made,  if  the  suit  were  brought  by  the 
indorser.  The  note  does  not  cease  to  be  negotiable  ;  the  indorsee 
takes  a  title,  and  may  sue,  but  he  is  so  far  in  privity  with  his 
indorser  that  he  takes  only  his  title ;  and  if  the  defendant  could 
make  any  defence  against  a  suit  brought  by  such  indorser,  he  can 
make  it  against  the  indorsee. 

This  rule  is  settled  in  the  case  of  a  suit  by  an  indorsee  taking 
the  note  overdue,  by  a  series  of  authorities,  which  show  not  only 
that  such  defence  may  Ije  made,  but  that  it  may  be  proved  by 
the  same  evidence,  i)y  which  it  might  have  been  proved  if  the  in- 
dorser were  plaintitit';  to  wit,  tlie  admissions  of  such  indorser, 
made  whilst  he  was  the  holder.  Sylvester  v.  Crapo,  15  Pick.  92 ; 
Barough  v.  White,  4  Barn.  &  C.  325  ;  Phillips  v.  Cole,  10  Adol.  & 
Ellis,  106  ;  Beauchamp  r.  Parry,  1  Barn.  &  Ad.  89.  These  author- 
ities might  be  multiplied  almost  indefinitely. 


260  HOLDER   FOR   VALUE. 

But  the  indorsement  of  a  note  overdue  is  only  one  mode  of 
giving  the  indorser  notice  that  there  is  some  matter  of  defence 
relied  on  ;  if  he  has  express  notice,  he  may  take  it  and  may  sue 
the  note,  but  he  takes  subject  to  such  defence  as  the  defendant 
might  make  against  the  indorser. 

Tlie  case  in  an  early  volume  of  the  reports  of  this  Court,  Wil- 
son V.  Holmes,  5  Mass.  543,  was  one  where  tlie  plaintiff  had  no- 
tice in  the  form  of  the  indorsement,  which  was:  "  Pay  T.  W.,  or 
order,  for  our  use,  value  received  in  account."  See  Humphries 
V.  Blight,  4  Dall.  370  ;  White  v.  Kibling,  11  Johns.  128.  In  the 
early  leading  case  on  this  subject.  Brown  v.  Davies,  3  T.  R.  80, 
83,  Lord  Kenyon^  who  was  not  disposed  to  go  quite  the  length  of 
the  doctrine  held  by  Mr.  Justice  Buller,  says,  "1  agree,  &c.,  if  it 
appears  on  the  face  of  the  note  to  have  been  dishonored,  or  if 
knowledge  can  be  brought  home  to  the  indorsee  that  it  had  been 
so."  In  a  note  to  the  same  case,  in  Taylor  v.  Mather,  where  the 
defence  was  that  the  note  was  obtained  by  fraud,  and  where  it  was 
negotiated  when  overdue,  Buller,  J.,  says  :  "  Such  a  note  is  nego- 
tiable, but  if  there  are  any  circumstances  of  fraud  in  the  transac- 
tion, I  have  always  left  it  to  the  jury,  on  the  slightest  evidence,  to 
presume  that  the  indorsee  was  acquainted  with  the  fraud." 

It  seems,  therefore,  that  it  is  not  that  the  indorsement  of  a  note 
after  it  is  due  is,  per  se,  such  as  to  render  the  note  void,  or  to 
defeat  the  right  of  the  plaintiff ;  but  if  there  are  anterior  circum- 
stances, such  as  fraud  in  obtaining  the  note,  the  fact  that  the 
indorsee  takes  it  when  overdue,  is  a  circumstance  of  suspicion, 
which  should  put  him  on  inquiry,  and  leads  to  a  presumption  that 
he  knew,  or  by  inquiry  might  know,  of  such  fraud,  and  is  deemed 
constructive  notice  of  it.  It  identifies  the  title  of  the  indorsee 
with  that  of  the  indorser.  This  being  so,  actual  notice  of  such 
fraud,  brought  home  to  the  knowledge  of  the  indorsee  at  the  time 
he  took  the  note  by  indorsement,  is  equally  availing  to  prove  that 
he  is  not  a  bona  fide  holder,  and  to  give  the  defendant  the  same 
ground  of  defence  as  he  would  have  had  against  the  indorser. 

Exceptions  overruled. 

See  Goodman  v.  Simonds,  ante,  240,  and  note,  257,  258. 


IIASCALL   V.    WniTMORE.  261 

William  Hascall  and  "Roland  TI.  Gerry  v.  Joel 

AVniTMORK. 

(19  Maine,  102.     Supreme  Court,  April,  lS-11.) 

Indorsee  with  notice  claimimj  under  holder  without.  —  (Jne  who  purchases  commercial  paper 
for  value,  with  notice  of  dcfi-ct  in  its  inception,  from  a  bonn  Jul  holder  without  no- 
tice, stands  upon  .the  rij;hts  of  the  latter,  antl  may  recover  the  amount  of  the  paper. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Shepley,  J.  The  plaintiffs  are  joint  owners  of  a  negotiable 
promissory  note  purchased  before  it  became  payable.  One  of  them 
is  a  holder  for  value  without  notice ;  the  other  with  notice,  but 
deriving  his  title  through  others  who  were  bona  fide  holders  with- 
out notice.  As  between  the  original  parties  the  note  may  be 
regarded  as  made  without  consideration.  Andrews,  who  was  the 
first  and  an  innocent  indorsee  for  value,  did  not  indorse  it,  when 
he  disposed  of  it,  and  he  was  properly  admitted  as  a  witness. 
Whitaker  v.  Brown,  8  Wend.  490.  He  could  have  collected  it,  for 
the  want  of  consideration  could  not  be  set  up  against  him.  A 
knowledge  of  the  facts  acquired  afterward  would  not  affect  his 
rights.  He  had  not  only  a  legal  right  to  hold  and  collect  it,  but  to 
negotiate  it.  And  the  maker  could  not  impair  that  right  by  giving 
notice  that  it  was  made  without  consideration.  Nor  would  he  be 
injured  by  a  transfer  to  one  having  a  full  knowledge  of  the  facts  ; 
for  his  position  would  not  be  more  unfavorable  than  before. 

Bayley  states,  that  the  want  of  consideration  cannot  be  insisted 
upon  "  if  the  plaintiff,  or  any  intermediate  party  between  him  and 
the  defendant,  took  the  bill  or  note  bona  fide  and  upon  a  valuable 
consideration."     Bayley,  o.lO,  ed.  by  Phillips  k  Sewall. 

The  case  of  Thomas  v.  Newton,  2  Car.  &  P.  606,  was  assumpsit 
on  a  bill  drawn  by  Wilson  on  the  defendant  and  accepted,  and  by 
him  indorsed  to  Dandridgc  and  by  him  to  the  plaintiff.  The  de- 
fence was  a  want  of  consideration.  Lord  Tenterden  says,  "  if  the 
defendant  shows,  that  there  was  originally  no  consideration  for  the 
bill,  that  throws  it  on  the  plaintilf  to  show  that  he  gave  value  for 
it,  or  that  value  was  given  for  it  by  Dandridgc ;  for  if  cither  the 
plaintiff  or  Dandridgc  gave  value  for  it,  the  plaintiff  may  recover ; 

otherwise  the  defendant  is  entitled  to  recover."  ^ 

« 

In  Solomons  v.  The  Bank  of  England,  13  East,  134, 135,  note  (6), 

1  This  doctrine  has  been  exploded.  See  Goodman  v.  Sinionds,  ante  240,  and  note 
257,  258  ;  also  ante,  note  to  Swift  v.  Tyson,  p.  186. 


262  HOLDER   FOR   VALUE. 

it  appeared,  that  the  bank-note  had  been  obtained  fraudulently  from 
Batson  &  Co.,  who  informed  the  bank  of  it.  The  plaintiff  as  holder 
claimed  payment  of  the  bank,  and  it  was  refused.  He  had  received 
the  bill  of  Hendricks  &  Co.  ;  and  it  did  not  appear,  that  he  paid 
value  for  it  before  notice.     Lord  Keyiyon  says,  "  upon  this  evidence 

1  think  Solomons  must  be  considered  to  be  in  the  same  situation 
as  Hendricks  &  Co."  But  as  it  did  not  appear,  that  they  were 
holders  for  value  without  notice,  the  plaintiff  did  not  recover. 

In  Smith  v.  Hiscock,  14  Maine,  449,  where  a  negotiable  promis- 
sory note  had  been  indorsed  bona  fide  and  for  value  before  it  was 
payable,  the  Chief  Justice  says,  "  the  want  of  consideration  is  not 
an  available  defence  against  a  subsequent  holder,  to  whom  it  may 
have  been  passed  after  it  was  due.  The  promise  is  good  to  the  first 
indorsee  free  from  that  objection  ;  and  the  power  of  transferring  it 
to  others  with  the  same  immunity  is  incident  to  the  legal  right 
which  he  had  acquired  in  the  instrument.  By  the  first  negotiation 
the  want  of  consideration  between  the  original  parties  ceases  as  a 
valid  ground  of  defence." 

If  the  relations  between  the  maker  and  holder  only  were  to  be 
considered,  the  want  of  consideration  would  be  a  good  defence 
against  one,  who  did  not  purchase  for  value,  or  who  did  so  after  it 
was  once  due.  And  yet  it  has  been  decided,  that  one  so  situated 
may  avoid  that  defence  by  showing,  that  it  could  not  have  been 
interposed  against  a  prior  holder.  The  same  principle  appears  to 
.be  equally  applicable  to  a  holder  who  has  purchased  with  notice. 
If  the  relations  between  himself  and  the  maker  only  were  to  be 
considered  he  could  not  recover.  But  purchasing  of  one  who  had 
no  notice  he  must  be  considered  to  be  in  the  same  situation  and  as 
entitled  to  the  same  protection. 

Defendant  defaulted  and  judgment  for  amount  due  on  the  note. 

The  doctrine  of  this  case  is  well  settled.  See  Boyd  v.  McCann,  10  Md.  118; 
Prentice  v.  Zane,  2  Grat.  262 ;  Watson  v.  Flanagan,  14  Texas,  354 ;  Howell 
V.  Crane,  12  La.  An.  126  ;  Woodworth  v.  Huntoon,  40  111.  131 ;  Bassett  r.  Avery, 
15  Ohio  State,  299  ;  Lickbarrow  v.  Mason,  2  T.  R.  63,  71 ;  Robinson  v.  Reynolds, 

2  Q.  B.  196,  211  ;  Story,  Promissory  Notes,  §  191,  where  the  rule  is  thus  stated: 
"  The  partial  or  total  failure  of  consideration,  or  even  fraud  between  the  antecedent 
parties,  will  be  no  defence  or  bar  to  the  title  of  a  bona  fide  holder  of  a  note 
for  a  valuable  consideration,  at  or  before  it  becomes  due,  without  notice*  of 
any  infirmity  therein.  The  same  rule  will  apply,  although  the  present  holder 
has  such  notice,  if  he  yet  derives  a*title  .  .  .  from  a  prior  bona  fide  holder  for 
value.  This  doctrine,  in  both  its  parts,  is  indispensable  to  the  security  and  cir- 
culation of  negotiable  instruments  :  and  it  is  founded  in  the  most  comprehensive 
and  liberal  principles  of  public  policy." 


grant  v.  ellicott.  263 

Grant  and  Gary  v.  Ellicott. 

(7  Wendell,  227.     Supreme  Court  of  New  York,  May,  1831.) 

Accommodation  paper.  Holder  with  notice.  —  In  an  action  by  an  indorsee  of  a  bill  of  ex- 
change against  the  acceptor  it  is  no  defence  tliat  the  bill  was  accepted  for  the 
accommodation,  of  the  drawer,  and  tiiat  the  indorsee  had  knowledge  of  the  fact 
when  he  took  tlie  bill. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Savage,  C.  J.  The  defendant  says  he  ought  not  to  pay  the  bill, 
because  no  consideration  passed  between  him  and  Graham,  and 
this  was  known  to  the  plaintiffs  :  that  is,  the  defendant  accepted  the 
bill  for  the  accommodation  of  the  drawer,  which  the  plaintiffs  knew. 
This  is  no  defence  ;  it  was  so  decided  in  Smith  i\  Knox,  3  Esp. 
46.  Lord  Eldon  there  held  that  where  a  bill  is  given  for  the 
accommodation  of  the  drawer  or  payee,  and  is  sent  into  the  world, 
it  is  no  answer  to  an  action  upon  it  against  the  acceptor,  that  lie 
accepted  it  for  the  accommodation  of  the  drawer,  and  that  the  fact 
was  known  to  the  holder  ;  in  such  case  the  holder,  if  he  gave  a 
bona  fide  consideration  for  it,  is  entitled  to  recover,  though  he  had 
full  knowledge  of  the  transaction.  In  that  case  the  plaintiff  pro- 
duced no  proof  but  of  handwriting  of  the  parties  to  the  bill. 

The  case  of  Charles  v.  Marsden,  1  Taunt.  224,  was  very  like  this 
case.  The  action  was  brought  by  the  indorsee  against  the  acceptor. 
The  defendant  pleaded  that  it  was  accepted  for  the  accommodation 
of  the  drawer,  and  without  any  consideration,  and  that  this  was 
known  to  the  plaintifis  when  they  took  the  bill,  after  it  was  due. 
Mansfield^  C.  J.,  says  :  "  There  is  no  allegation  of  fraud  in  this 
plea,  nor  any  allegation  that  the  plaintiff  did  not  give  a  valuable 
consideration  for  this  bill ;  it  must  therefore  be  presumed  that  he 
did."  Lawrence,  Justice,  says :  "  In  the  present  case,  it  is  to  be 
supposed  that  the  party  (drawer)  persuades  a  friend  to  accept  a 
bill  from  him  because  he  cannot  lend  him  money,  would  there  be 
any  objection,  if,  with  the  knowledge  of  tiie  circumstance  that  this 
is  an  accommodation  bill,  some  person  should  advance  money  upon 
it  before  it  was  due  ?  Then  what  is,  the  objection  to  his  furnishing 
it  after  it  is  due  ?     For  there  is  no  reason  why  a  bill  may  not  be 


264  HOLDER   FOR   VALUE. 

negotiated  after  it  is  due,  unless  there  was  an  agreement  for  the 
purpose  of  restraining  it." 

I  know  of  no  decision  supporting  this  plea,  and  it  would  be 
extremely  prejudicial  to  commercial  paper  if  it  could  be  supported. 
Tlie  acceptor  in  a  bill  is  considered  in  the  same  light  as  an  indorser 
of  a  promissory  note  ;  and  it  is  well  known  that  much  of  the  paper 
discounted  in  our  banks  is  accommodation  paper,  and  it  never  has 
been  supposed  that  the  indorser  in  such  case  is  not  liable. 

Judgment  for  plaintiffs  on  demurrer,  with  leave  to  amend,  on 
payment  of  costs. 

This  rase  enunciates  an  elementary  principle,  and  does  not  require  the  cita- 
tion of  authorities  to  sustain  it.  There  are,  however,  some  peculiar  doctrines 
growing  out  of  the  law  of  accommodation  paper;  these  are  illustrated  in  the 
following  cases.     See  also  note  to  Swift  v.  Tyson,  ante,  p.   186. 

It  is  no  defence  that  the  paper  was  overdue  when  the  indorsee  took  it  with 
knowledge  that  it  was  accommodation  paper.  Thompson  v.  Shepherd,  12  Met. 
311. 


Small  et  al.  v.  Smith. 

(1  Denio,  583.     Supreme  Court  of  New  York,  October,  1845.) 

Fraudulent  diversion.  —  One  who  purchases  accommodation  paper  with  knowledge  that 
the  terms  and  conditions  on  which  the  accommodation  was  given  have  been  vio- 
lated is  not  a  bonajide  holder  as  against  the  party  who  lent  his  name  for  accommo- 
dation. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Beardsley,  J.  If  the  evidence  given  on  the  trial  was  true,  and 
that  was  for  the  jury  to  determine,  it  is  perfectly  clear  that  the 
note  was  delivered  to  the  plaintiffs  in  violation  of  the  agreement 
upon  which  it  had  been  indorsed  by  the  defendant.  The  plaintiffs 
therefore  were  not  entitled  to  recover,  unless  they  received  it  bona 
fide  and  upon  a  valuable  consideration.  Both  were  necessary.  It 
must  have  been  received  in  good  faith,  without  notice  of  the 
arrangement  on  which  the  indorsement  had  been  made,  and  tlie 
transfer  must  have  been  upon  what  the  law  regards  as  a  valuable 


8MALL    V.    SMITH.  265 

consideration.  These  principles  admit  of  no  dispute  ;  and  al- 
tliough  upon  some  points  of  commercial  law  in  close  proximity  to 
those  I  have  stated,  discordant  opinions  may  l)e  found,  Stalker  v. 
McDonald,  6  Hill,  93,  Swift  v.  Tyson,  16  Peters,  1,  there  is  entire 
harmony  as  to  those  I  have  mentioned. 

The  judge  charged  that  if  the  plaintiffs  received  the  note  in  pay- 
ment and  satisfaction  of  a  deht  due  to  them  from  Hulburt,  the 
maker  of  the  note,  that  was  a  sufficient  consideration  for  its  trans- 
fer, and  they  thereby  became  purchasers  for  value.  This,  as  a 
legal  proposition,  is  not  questioned  ;  but  the  bill  of  exceptions  fails 
to  show  any  evidence  to  which  this  principle  could  be  applied. 
There  was  no  proof  which  tended  to  show  that  the  note  had  been 
transferred  in  extinguishment  of  the  debt  of  llull)urt.  The  judge, 
therefore,  in  my  view  of  the  case,  erred  in  submitting  that  question 
to  the  jury. 

Bnt  I  shall  not. dwell  on  this  point,  for  the  case  may  be  disposed 
of  on  the  question  of  good  faith. 

It  appears  by  the  testimony  of  Hulburt,  that  he  was  indebted  to 
the  plaintiffs  in  a  sum  exceeding  the  amount  of  this  note,  and  that 
Small,  one  of  the  plaintiffs,  came  to  Vienna,  where  Hulburt  resided, 
to  secure  payment  of  said  debt.  Small  proposed  to  Hulburt  to 
give  a  note  at  one  year  with  security,  and  the  defendant,  who  lived 
in  another  county,  was  spoken  of  for  that  purpose.  Small  said  he 
would  take  the  defendant  as  surety,  and  it  was  arranged  that  while 
Small  was  absent  (as  he  was  going  "West  for  a  few  days),  Hulburt 
should  go  to  the  defendant's  residence  in  order  to  obtain  him  as 
such  surety.  Pursuant  to  this  arrangement  Hull)urt  went  to  see 
the  defeiulant,  and  told  him  what  he  wanted.  At  first  the  defend- 
ant refused  to  indorse,  but  it  was  finally  agreed  between  them  that 
he  would  indorse  the  note  upon  condition  that  one  Austin,  who 
then  held  a  note  given  by  the  defendant,  should  deposit  the  same 
with  a  third  person,  there  to  remain  until  the  defendant  should  be 
discharged  from  said  indorsement.  The  note  in  question  was  ac- 
cordingly signed  by  Hulburt  and  indorsed  by  the  defendant,  but  it 
was  not  to  be  transferred  to  Small,  or  used  in  any  manner,  until 
the  one  held  l)y  Austin  had  been  deposited  under  said  arrangement. 
Hulburt  returned  with  the  note  to  Vienna,  where  Austin  lived,  and 
told  him  of  the  arrangement  under  which  the  indorsement  had 
been  made.  Austin  declined  to  comply  with  that  arrangement,  but 
Hulburt,  as  he  states,  left  the  note  in  suit  on  Austin's  table,  and 


266  *  HOLDER   FOR    VALUE. 

did  not  see  it  again  until  Small  had  returned  to  Vienna.  Hulburt 
first  saw  Small  after  his  return  at  Austin's  office,  where,  on  arriv- 
ing at  the  office,  according  to  the  testimony  of  Hulburt,  Small  said 
to  him :  "  We  have  fixed  that  matter,  and  Mr.  Austin  has  let  me 
have  the  note."  The  witness  then  inquired  of  Austin,  in  Small's 
presence,  in  what  manner  the  note  had  been  turned  out,  and 
whether  the  arrangement  of  the  defendant  had  been  complied  with, 
to  which  Austin  made  no  answer,  but  Small  said  he  had  pre- 
vailed on  Mr.  Austin  to  indorse  the  note  and  he  had  got  it.  This, 
according  to  the  witness  Hulburt,  was  all  which  passed  at  that 
time.  Another  witness  (Paul),  who  was  present,  said  the  remark 
of  Hulburt  to  Austin  was,  that  he  supposed  he  had  not  turned  out 
the  note  without  complying  with  the  request  of  Mr.  Smith,  the 
defendant,  to  which  Austin  made  no  answer,  but  Small  said  he 
had  prevailed  on  Mr.  Austin  to  indorse  the  note  and  had  released 
Mr.  Smith. 

It  is  not  material  which  of  these  witnesses  was  correct  as  to  the 
form  of  the  remarks  made  at  that  time.  Both  come  to  the  same 
result ;  for  what  was  said,  according  to  the  statement  of  either 
witness,  was  full  notice  to  Small  that  the  indorsement  had  been 
procured  upon  some  arrangement  or  condition  which  had  not  been 
complied  with.  Here,  then.  Small  had  actual  notice  that  the  in- 
dorsement was  conditional  ;  and  if  the  note  was  subsequently 
transferred  to  him,  he  would  necessarily  take  it  subject  to  that  con- 
dition. When  this  notice  was  given,  the  note  was  in  Small's 
hands.  He  had  received  it,  as  he  said,  of  Mr.  Austin.  But  it  can- 
not be  pretended  he  had  received  it  of  Austin  upon  any  considera- 
tion moving  between  them.  Indeed,  the  first  remark  of  Small  to 
Hulburt,  and  all  that  was  said  on  that  occasion,  goes  to  show  that 
whatever  might  have  been  done  by  Austin  had  been  done  for  Hul- 
burt and  not  for  himself,  and  in  furtherance  of  the  negotiation 
which  had  been  commenced  between  Hulburt  and  Small.  It  is  not 
shown  that  Austin  had  authority  from  Hulburt  to  transfer  this  note 
to  Small  on  any  terms,  although  it  may  be  inferred  that  he  was 
authorized  to  do  so,  on  complying  with  the  condition  upon  which 
the  defendant's  indorsement  had  been  made.  Small  did  not  set  up 
that  he  had  received  the  note  as  the  property  of  Austin,  and  the 
whole  transaction  shows  he  did  not.  He  could  not,  therefore,  upon 
the  facts  as  disclosed  by  the  witnesses,  pretend  that  he  had  acquired 
title  to  the  note  in  any  manner  before  lie  was  apprised  by  Hulburt 


MOHAWK    BANK    V.    COREY.         *  2G7 

that  the  indorsement  was  made  on  a  condition  which  had  not  been 
performed.  It  is  more  a  matter  of  inference  than  of  any  thing 
like  direct  proof,  tliat  Hullnirt  at  any  time  assented  to  the  transfer 
of  the  note  to  Small ;  bnt  if  he  did  so,  after  notice  to  Small  of  the 
condition  on  which  tlic  indorsement  had  been  made,  it  is  plain  that 
the  plaintiffs  ought  nut  to  recover,  as  the  condition  has  never  l)een 
performed.  If  the  plaintiffs  claim  as  purchasers  of  the  note  from 
Austin,  they  are  met  by  two  oVyections :  first.  Small,  one  of  the 
plaintiffs,  was  aware  that  the  note  l>clongcd  to  Hulburt  and  not  to 
Austin ;  and,  secondly,  it  is  not  shown  that  the  plaintiffs  paid  or 
advanced  any  thing  to  Austin,  or  that  any  consideration  passed 
between  them  for  the  transfer  of  the  note.  And  as  to  Hulburt,  if 
he  assented  to  the  transfer  of  the  note  to  Small,  it  was  after  ex- 
plicit notice  that  the  indorsement  was  conditional,  as  is  proved  by 
the  testimony  of  both  Paul  and  Hulburt.  Had  the  case  been  put 
to  the  jury  upon  the  point  of  notice,  with  suitable  explanations, 
there  is  no  doubt  what  the  verdict  should  and  would  have  been, 
unless  these  witnesses  were  wholly  discredited.  I  think  the  case  • 
was  not  so  submitted  to  the  jury,  and  that  it  should  be  sent  back 
for  a  new  trial. 

Neiv  trial  granted. 

See  preceding  and  following  cases. 


Mohawk  Bank  v.  Corey  and  Livermore,  Impleaded. 

(1  Hill,  513.     Supreme  Court  of  New  York,  July,  1841.) 

Accommodation  paper.  Diversion.  —  Where  it  does  not  appear  tliat  the  acconinioilation 
party  had  any  interest  in  tlie  manner  in  which  liis  paper  was  to  be  applied,  it  is 
immaterial  that  it  was  not  used  according  to  agreement. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Bronson,  J.  The  indorscrs,  Corey  and  Livermore,  lent  their 
names  to  Borst,  the  maker,  for  the  purpose  of  giving  him  credit, 
and  he  was  at  liberty  to  negotiate  the  note  in  any  way  he  thought 
proper.     Borst  says,  he  got  them  to  indorse  it  for  the  purpose  of 


268  "  HOLDER   FOR   VALUE. 

enabling  liim  to  get  it  discounted  at  the  Albany  City  Bank,  to 
raise  money  to  buy  barley.  But  it  does  not  appear  that  the  in- 
dorsers  had  any  interest  in  having  it  discounted  by  the  Albany 
City  Bank,  or  that  the  use  which  Borst  should  make  of  the  money 
was  in  any  way  important  to  them.  They  merely  asked  Borst 
what  he  was  going  to  do  with  the  money,  and  he  told  them  he  was 
going  to  purcliase  barley  with  it.  If  the  note  had  been  made  for 
the  purpose  of  taking  up  another  note  in  the  Albany  City  Bank, 
to  which  the  indorsers  were  parties,  it  would  have  presented  a  dif- 
ferent question.  But  here,  although  the  indorsers  had  the  curios- 
ity to  inquire  what  use  the  maker  designed  to  make  of  the  note, 
they  had  no  interest  in  the  question ;  and,  so  far  as  appears,  they 
would  just  as  readily  have  lent  their  names  if  the  maker  had  told 
them  he  wished  to  take  up  his  notes  in  the  plaintiffs'  bank,  —  the 
use  which  he  afterwards  made  of  the  paper.  Within  the  proper 
legal  sense  of  the  term,  there  has  been  no  diversion  of  the  note 
from  the  purpose  for  which  it  was  made  and  indorsed.  The  in- 
dorsers lent  their  names  for  the  purpose  of  giving  the  maker  credit 
generally,  and  without  any  concern  with  the  use  which  should  be 
made  of  that  credit. 

But  if  there  had  been  a  diversion  of  the  note  from  its  proper  use, 
the  plaintitfs  would  still  be  entitled  to  recover.  They  not  only  took 
the  note  in  payment  of  two  other  notes  which  they  then  held 
against  Borst  indorsed  by  Voorhees,  but  they  gave  up  those  secu- 
rities. They  also  gave  up,  of  course,  the  suit  which  had  been 
commenced  and  was  then  pending  on  the  two  notes.  This  is  a 
stronger  case  than  that  of  the  Bank  of  Salina  v.  Babcock,  21 
Wend.  499.  There  have  been  several  other  decisions  to  the  same 
eifect,  which  are  not  yet  published.^  It  is  not  denied  that  the 
plaintiffs  are  bona  fide  holders  of  the  paper,  and  it  is  equally  clear 
that  they  paid  a  valuable  consideration  for  it. 

New  trial  denied. 

The  rule  is  thus  stated  in  Wardell  v.  Howell,  9  Wend.  170,  per  Sutherland, 
J. :  "  Where  a  note  has  effected  the  substantial  purpose  for  which  it  was  de- 
signed by  the  parties,  an  accommodation  indorser  cannot  object  that  it  was  not 
effected  in  the  precise  manner  contemplated  at  the  time  of  its  creation.  .  .  .  But 
where  a  note  has  been  diverted  from  its  original  destination,  and  fraudulently 
put  in  circulation  by  the  maker  or  his  agent,  the  holder  cannot  recover  upon  it 
against  an  accommodation  indorser,  without  showing  that  he  received  it  in  good 
faith,  in  the  ordinary  course  of  trade,  and  paid  for  it  a  valuable  consideration." 

1  Bank  of  Sandusky  v.  Scoville,  24  Wend.  115. 


STODDARD   V.    KIMBALL.  209 

Charles  Stoddard  et  al.  v.  John  Klmuall. 

(6  Gushing,  469.     Supreme  Court  of  Massachusetts,  October,  1850.) 

Misapplication. — In  an  action  by  the  indorsee  against  the  indorser  who  liad  indorsed 
the  paper  for  tlio  maker's  accommodation,  the  indorser  cannot  raise  the  defence 
that  the  note  was  misapplied  by  tlie  maker,  without  showing  that  the  plaintiff  liad 
knowledge  of  the  misapplication. 

Amount  of  recovery.  —  If  accommodation  paper  has  been  tiken  to  secure  a  pre-existing 
debt  of  a  less  amount  than  tiiat  expressed  on  the  face  of  the  paper,  the  holder  can 
recover  against  the  accommodation  indorser  only  the  amount  of  the  debt,  if  he 
(the  holder)  is  not  liable  to  any  third  person  for  any  surplus. 

The  case  is  stated  in  tlie  opinion  of  the  Court. 

Shaw,  C.  J.  This  was  a  suit  brouglit  by  the  plaintiff  as  indorsee 
of  a  promissory  note,  against  the  defendant  as  indorser.  The 
defence  reHed  on  was,  tliat  tlie  defendant  indorsed  the  note,  at  the 
request  and  for  tlie  accommodation  of  the  maker,  for  a  special  pur- 
pose, that  of  taking  up  another  note,  on  which  he  was  indorser,  and 
that  it  was  not  so  applied,  but  w-as  negotiated  to  the  plaintiffs,  as 
collateral  security  for  a  debt  due  to  them.  The  defendant  also 
contended,  that  the  plaintiffs,  at  the  time  of  taking  the  note,  had 
notice  of  the  misapplication  of  the  same,  as  above  stated  ;  but  this 
fact  was  left  to  the  jury,  who  found  that  the  plaintiffs  had  no  such 
notice. 

It  further  appeared  that  some  payments  had  been  made  by  tlie 
maker  of  the  note  to  the  jjlaintiffs,  towards  the  discharge  of  tlie 
debt,  for  securing  which  to  the  plaintiffs  this  note  was  received,  and 
also  that  the  maker  being  insolvent,  the  plaintiffs  proved  this  debt 
against  his  estate,  and  received  a  dividend. 

The  defendant  contended  that  if  liable  at  all,  he  was  liable  only 
for  the  balance  of  the  debt  diie  the  plaintiffs,  if  less  than  the  amount 
of  the  note,  and  the  judge,  who  tried  tlie  cause,  so  ruled,  subject  to 
the  opinion  of  the  whole  Court,  and  in  case  they  should  be  of 
opinion  that  the  plaintiffs  are  entitled  to  recover  the  whole  amount, 
the  verdict  is  to  be  altered  and  amended  accordingly. 

"We  think  the  direction  was  right.  An  indorser  of  an  accommo- 
dation note,  passed  by  indorsement  to  a  bona  fide  holder,  in  due 
course  of  business,  is  effectually  bound  to  all  the  liability,  to  w'liich, 


270  ^,  HOLDER   FOR   VALUE. 

by  law,  the  indorser  of  a  business  note  is  liable.  He  stipulates  to 
take  on  himself  the  qualified  obligation  of  one,  who  indorses  and 
puts  in  circulation  a  note  taken  by  himself  for  value  in  the  course 
of  business. 

If  indeed  an  accommodation  note  is  obtained  from  another,  by 
fraud,  deception,  or  false  practices,  or  having  been  o1)taincd  for  one 
purpose,  is  fraudulently  misapplied  to  another,  and  it  is  negotiated 
to  one,  even  for  value,  with  full  notice  of  the  fraud  in  obtaining  or 
misusing  it,  he  cannot  recover  ;  he  is  not  a  bona  fide  holder  ;  an 
attempt  to  recover  it  would  make  him  a  partaker  in  the  fraud ;  and 
the  same  would  be  true  of  a  business  note. 

In  the  present  case,  it  appearing  that  the  note  was  negotiated  to 
the  plaintiffs  before  it  was  due,  for  a  valuable  consideration,  and 
the  jury  having  found  that  they  took  it  without  notice  of  the  mis- 
application by  the  maker,  it  is  clear  that  they  have  a  right  to 
recover  ;  and  the  only  remaining  question  is,  for  what  amount  they 
may  recover.  In  general,  the  holder  of  an  indorsed  note  will  be 
entitled  to  recover  the  whole  amount  of  the  face  of  the  note,  because 
the  presumption  of  fact,  in  the  absence  of  counter  proof,  is,  that  he 
gave  the  full  value  for  it,  or  that  he  took  it  from  some  other  holder 
for  value,  to  collect  the  amount,  receive  a  certain  part  to  his  own 
use,  and  account  to  the  party  from  whom  he  took  it  for  the  surplus. 
Having  taken  it  to  secure  a  pre-existing  debt,  of  a  less  amount,  he 
is  a  holder  for  value  in  his  own  right,  only  to  the  amount  of  the 
debt  due  him.  If,  therefore,  it  appears  in  proof,  that  the  plaintiff 
is  not  accountable  to  any  third  person  for  any  surplus,  then  there 
is  no  reason  why  he  should  recover  any  more  than  the  balance  of 
the  debt,  for  which  he  is  a  bona  fide  holder  for  value.  Here,  it 
appears  that  the  plaintiff  received  this  note  of  the  maker,  for  whose 
accommodation  the  defendant  indorsed  it.  It  being  obvious  that 
the  plaintiff  can  recover  nothing  as  trustee  for  the  party  from 
whom  he  received  it,  he  is  liable  over  to  nobody  for  the  surplus, 
and  therefore  can  have  judgment  only  for  the  amount  due  to  him- 
self, for  his  own  use  and  in  his  own  right,  which  is  so  much  of  the 
note  as  may  be  necessary  to  satisfy  the  balance  of  the  debt,  for  the 
security  of  which  he  received  it. 

Judgment  on  the  verdict  for  the  plaintiff  for  the  smaller  sum. 

See  Allaire  v.  Hartshorne,  1  Zabr.  665,  holding  that,  if  the  paper  is  invalid 
between  the  original  parties  for  want  of  consideration,  the  holder  can  recover 
only  the  amount  which  he  has  actually  advanced ;  citing  Edwards  v.  Jones,  7 


BAXTER   V.    LITTLE.  .  271 

Car.  &  P.  633 ;  s.  c,  2  Meos.  &  W.  414 ;  Robins  v.  Maidstone,  4  Add.  & 
Ellis  (n.  .s.),  811  ;  Chitty,  Bills  (Hth  cd.),  81  ;  Sedffwick,  Damages,  241.  This 
doctrine  is  also  sustained  liy  the  following  authorities:  Chicopee  Bank  v.  Cha- 
pin,  8  Met.  40;  Hilton  i\  Smith,  5  Gray,  400;  Ilolenian  v.  Ilobson,  8  Ilninph. 
127;  Williams  v.  Smith,  2  Hill,  301;  Valotte  v.  Mason,  1  Smith,  Ind.  89; 
WilFin  V.  Roberts,  1  Esp.  2G1  ;  Jones  v.  Hibbert,  2  Stark.  304.  See  also 
Bond  I'.  Fitzpatrick,  4  Gray,  89. 


James  Baxter  v.  William  Little. 
The  Same  v.  Joseph  Harris,  Jr. 

(6  Metcalf,  7.     Supreme  Court  of  Massachusetts,  March,  1843.) 

Paper  overdue.  Set-off.  —  Wiien  the  first  indorsee  of  a  promissory  note  negotiates  it 
after  it  is  dishonored,  and  the  second  indorsee  brings  an  action  thereon  against  the 
maker  or  first  indorser,  the  defendant  cannot  set  off  any  claim  which  he  has 
against  the  first  indorsee,  except  such  as  existed  at  the  time  of  the  transfer  of  the 
note  to  tlie  i)laintiff,  although  he  had  no  notice  of  such  transfer  when  he  acquired 
Ills  claim  against  the  first  indorsee. 

The  Jirst  of  these  actions  was  by  the  indorsee  against  the  maker 
of  a  promissory  note  for  $330,  dated  March  1,  1837,  payable  to 
Joseph  Harris,  Jr.,  in  four  months,  and  by  him  indorsed.  The 
action  was  commenced  October  4,  1889. 

At  the  trial  before  the  Cliief  Justice,  the  signatures  of  the 
maker  and  indorse.r  were  admitted  by  the  defendant,  and  he  relied 
upon  a  set-off  of  notes  against  the  Franklin  Bank,  upon  the 
ground  that  the  note  in  suit  was  held  by  that  bank,  after  it  was 
due,  and  that  he  had  a  right  to  make  the  same  defence  against  the 
plaintiff,  as  if  the  action  were  brought  by  the  bank. 

In  order  to  present  the  question  of  law,  it  was  mutually  con- 
ceded, that  the  note  was  discounted  by  the  Franklin  Bank,  in  the 
due  course  of  business ;  that  it  was  held  by  the  bank,  when  it  be- 
came due ;  that  afterwards,  and  after  the  bank  had  stopped  pay- 
ment, in  pursuance  of  a  vote  of  the  directors  to  pay  the  debts  of 
the  bank  in  sucli  securities  as  they  liad,  the  note  in  question,  on 
the  twentieth  of  December,  1837,  was  delivered  to  the  plaintiff,  or 
to  the  person  under  whom  the  plaintitT  claims  title,  in  excliange  for 
bills  of  said  bank,  at  par,  which  bills  were  then  at  a  discount  in 
the  market :  That  before  this  action  was  brought  —  upon  notice 


272  HOLDER    FOR   VALUE. 

of  the  plaintiffs'  attorneys  that  they  had  such  a  note,  and  de- 
manded ])ayment  thereof,  but  without  notice  to  the  defendant  that 
the  note  had  been  transferred  by  the  bank,  —  the  defendant  ten- 
dered to  said  attorneys,  in  satisfaction  of  the  note,  lulls  of  the 
Franklin  Bank,  which  they  declined  to  accept ;  that  the  defend- 
ant has  ever  since  had  said  bills,  and  has  filed  them  in  offset  in 
this  action,  and  now  relies  upon  that  tender  and  set-off. 

The  second  of  these  actions  was  by  the  indorsee  against  the  in- 
dorser  of  tlie  same  note,  and  all  the  facts  stated  in  the  previous 
case  were  agreed  to  in  this.  The  defendant  further,  in  this  case, 
relied  upon  a  balance  due  to  him  from  the  Franklin  Bank,  by  way 
of  set-off  to  the  note.  And  it  was  further  agreed  by  the  parties, 
that  on  the  fifth  of  June,  1838,  there  was  due  to  the  defendant,  on 
the  books  of  said  bank,  a  balance  of  $293.63,  and  that  he  had  no 
notice  of  the  transfer  of  the  note  to  the  plaintiff,  until  this  suit 
was  commenced ;  that  within  a  month  or  two  after  the  twentieth  of 
December,  1837,  when  the  note  was  passed  out  of  the  bank,  notice 
was  given  to  the  defendant  by  the  cashier,  that  it  was  so  passed 
out ;  that  the  balance  above  mentioned,  due  to  the  defendant,  on 
the  fifth  of  June,  1839,  arose  from  post  notes  deposited  on  that 
day,  except  $12.88,  which  previously  stood  to  his  credit ;  and  that 
the  deposit  then  made  cancelled  all  demands  which  the  bank  had 
against  him,  and  left  the  above  balance. 

It  was  agreed  in  each  case,  that  judgment  should  be  entered 
for  the  plaintiff,  if  in  the  opinion  of  the  Court  he  was  entitled  to 
recover  ;  otherwise,  that  the  plaintiff  should  become  nonsuit. 

Shaw,  C.  J.  When  a  negotiable  note  is  indorsed  and  trans- 
ferred after  it  is  due,  and  the  defendant  relies  upon  matter  of  set- 
off which  he  may  have  against  the  promisee,  he  can  avail  himself 
only  of  such  matter  of  defence  as  existed  between  himself  and  tiie 
promisee,  at  the  time  of  the  actual  indorsement  and  transfer  of 
the  note  to  the  holder.  A  note  does  not  cease  to  be  negotiable, 
because  it  is  overdue.  The  promisee,  by  his  indorsement,  may 
still  give  a  good  title  to  the  indorsee.  Notes  or  other  matters  of  set- 
off, acquired  by  the  defendant  against  the  promisee,  after  such  trans- 
fer, cannot  be  given  in  evidence  in  defence  to  such  note,  although 
the  maker  had  no  notice  of  such  transfer,  at  the  time  of  acquiring  his 
demand  against  the  promisee.  Having  made  his  promise  negoti- 
able, he  is  liable  to  any  bona  fide  holder  and  actual  indorsee  ;  and 


BAXTER   V.    LITTLE.  273 

therefore,  even  after  the  note  has  become  due,  in  making  payments 
to  the  original  promisee,  or  in  further  dealings  l>y  whicli  he  gives 
him  a  credit,  he  lias  no  right  to  presume,  without  proof,  that  the 
promisee  is  still  the  holder  of  the  note.  Besides,  in  case  of  pay- 
ment of  a  negotiable  note,  or  of  a  credit  which  the  maker  intends 
shall  operate  by  way  of  payment,  he  has  a  right  to  have  his  note 
given  up,  if  paid  in  full,  or  to  see  the  payment  indorsed,  if  partial. 
Should  he  insist  on  this  rigiit,  in  the  case  proposed,  he  would  at 
once  perceive  that  the  person  to  whom  he  is  making  payment  or 
giving  credit,  is  no  longer  the  holder  of  the  note.  And  this  ap- 
pears to  us  to  be  the  true  distinction  between  the  indorsement  of  a 
note  overdue,  and  the  assignment  of  a  chose  in  action.  In  the 
latter  case,  notice  of  the  assignment  must  be  given  by  the  as- 
signee to  the  debtor,  to  prevent  him  from  making  payment  to  the 
assignor.  Without  such  notice,  he  has  no  reason  to  presume 
that  the  original  creditor  is  not  still  his  creditor  ;  and  payment  to 
him  is  according  to  liis  contract  and  in  the  due  and  ordinary 
course  of  business.  The  assignee  takes  an  equitable  interest  only, 
which  must  be  enforced  in  the  name  of  the  assignor ;  and,  until 
notice,  he  has  no  equity  against  the  debtor,  which  can  be  recog- 
nized and  protected  by  a  court  of  law  or  equity.  The  indorsee  of 
a  note  overdue  takes  a  legal  title  ;  but  he  takes  it  with  notice  on 
its  face  that  it  is  discredited,  and  therefore  subject  to  all  payments 
and  offsets  in  the  nature  of  payment.-  The  ground  is,  that  by  this 
fact  he  is  put  upon  inquiry,  and  therefore  he  shall  he  bound  by  all 
existing  facts,  of  which  incpiiry  and  true  information  would  ap- 
prise him ;  but  these  could  only  apprise  him  of  demands  then 
acquired  by  the  maker  against  the  payee. 

We  are  aware  that  in  the  marginal  note  to  Sargent  v.  South- 
gate,  5  Pick.  312,  which  is  the  leading  case  on  this  subject,  it  is 
stated,  that  "  in  an  action  by  the  indorsee  against  the  maker  of  a 
negotiable  note  indorsed  when  overdue,  the  defendant  may  file  in 
set-off  a  negotiable  note  made  to  him  by  the  payee  before  he  had 
notice  that  the  note  in  suit  was  assigned."  And  the  point  is  so 
stated  in  Minot's  Digest,  640.  No  such  decision  was  called  for 
in  that  case,  because  all  the  demands,  relied  uj)on  by  way  of  set- 
off, were  acquired  by  the  defendant,  whilst  the  original  payee  was 
holder  of  the  note.  But  further;  on  a  careful  examination  of  the 
opinion,  we  think  it  will  not  be  found  that  there  is  any  such 
dictum  in  regard  to  notice.     The  inadvertence,  in  extracting  the 

18 


274  HOLDER  FOR   VALUE. 

marginal  note  from  the  case,  probably  arose  from  the  very  obvious 
analogy  between  the  case  of  the  indorsement  of  a  note  overdue, 
and  the  assignment  of  a  chose  in  action,  especially  as  there  was 
nothing  in  the  facts  or  the  argument  to  call  for  a  distinction  be- 
tween the  two  cases.  The  opinion  of  the  Court  in  that  case, 
therefore,  is  not  an  autliority  opposed  to  the  ground  of  decision 
adopted  in  this,  namely,  that  this  right  of  set-off  must  be  con- 
fined to  those  demands  against  the  payee  or  prior  holder,  which 
accrued  to  the  defendant,  whilst  such  payee  or  prior  holder  was 
the  actual  holder  of  the  note,  and  will  not  extend  to  demands 
which  accrued  afterwards,  although  no  notice  of  the  indorsement 
was  given  to  the  debtor. 

The  defendant  Little,  the  maker  of  the  note  now  in  suit,  not 
having  shown  that  he  held  the  bills  of  the  Franklin  Bank  at  the 
time  that  his  note  was  transferred  to  the  plaintiff,  he  cannot  set 
them  off  in  this  suit.  In  a  case  in  New  York,  it  was  held  that 
bills  of  a  bank,  held  by  the  defendant  when  his  note  became  due, 
could  not  be  set  off  in  an  action  brought  on  the  note  by  receivers 
appointed  previously.     Haxtun  v.  Bishop,  3  Wend.  13. 

The  English  rule,  in  allowing  set-off  in  an  action  upon  a  note, 
is  somewhat  more  limited  than  our  own,  confining  such  defence 
to  equities  arising  out  of  the  same  note,  or  transactions  connected 
with  it.  Burrough  v.  Moss,  10  Barn.  &  C.  558.  Here,  it  has 
been  held,  that  an  independent  demand  may  be  set  off,  where  in 
other  respects  the  party  is  entitled  to  go  into  that  defence.  Sar- 
gent V.  Southgate,  5  Pick.  312  ;  Ranger  v.  Gary,  1  Met.  369,  375. 

Since  the  decision  in  Sargent  v.  Southgate,  the  principle  de- 
cided by  it  has  been  confirmed,  and  the  whole  subject  of  set-off 
placed,  by  the  Rev.  Sts.  c.  96,  upon  grounds  more  distinct  and 
satisfactory  than  it  was  under  the  former  statutes. 

The  principles  already  stated  apply  a  fortiori  to  the  case  of 
Harris,  the  defendant  in  the  second  action,  who  was  indorser  of  the 
same  note.  The  note  was  transferred  to  the  plaintiff  by  the  Frank- 
lin Bank,  in  December,  1837,  soon  after  which,  the  defendant  had 
actual  notice  of  it  from  tlie  cashier ;  and  it  is  found  that  the  de- 
posit to  the  credit  of  the  defendant,  upon  whicli  he  relies  by  way 
of  set-off,  was  made,  and  the  credit  obtained,  in  June,  1838.  It  is 
stated  indeed,  that  prior  to  that  time  there  was  a  small  balance  to 
his  credit,  on  deposit  of  $12.88,  but  there  were  other  demands 
of  the  bank,  at  that  time,  against  tlie  defendant,  exceeding  that 


BAXTER   V.    LITTLE,  ^  (  O 

deposit ;  so  that  tlic  whole  of  the  defendant's  demand  against  the 
bank,  oirered  in  set-off",  accrued  subsequently  to  tiio  transfer  (;f  the 
note,  which  is  now  in  suit,  to  the  plaintiff. 

Ji(i.l(jment,  in  both  rases,  for  the  jylaintiff. 

This  qiu'stiun  is  discussed  and  decided  in  Britton  v.  Bishop,  11  Vt.  70.  The 
facts  in  the  case  will  sudicieiitly  appear  in  the  opiiiion  of  the  Court  by 

RKDriKLD,  J.  The  only  (piestion  presented  lor  the  consideration  of  this  Court, 
arises  upon  the  third  and  foin-tli  pleas  of  the  defendant.  These  pleas  are  sub- 
stantially the  same,  and  amount  to  nothing  more  than  an  alleffed  agreement  on  the 
part  of  Ballou,  the  original  payee  of  the  note  in  suit,  to  apply  a  lesser  note,  given 
by  him  to  the  firm  of  Buskirk  and  Proudfit,  and  by  them  indorsed  to  the  defend- 
ants, upon  the  note  now  sued.  It  is  alleged  that  this  agreement  was  made  on  the 
twenty-ninth  of  August,  1S37,  and  that  at  that  time,  and  for  a  long  time  thereaf- 
ter, to  wit,  twenty  ilays,  Ballou  was  the  owner  of  the  note  now  sued  in  the  name 
of  plaint ilV.  The  latter  note  lell  due  on  the  first  day  of  September,  1837,  and 
the  above  allegation  is  by  no  means  equivalent  to  an  allegation  that  Ballou  nego- 
tiated the  note  to  the  plaintiff  when  the  same  was  overdue.  For  the  allegation 
by  way  of  a  continuendo,  being  under  the  videlicet,  is  immaterial,  and  the  whole 
allegation  is  satisfied  by  proof  that  the  payee  of  the  note  retained  it  till  the  twenty- 
ninth  day  of  August.  It  is  to  be  taken,  then,  that  the  note  was  negotiated  while  it 
was  still  current,  and  the  signers  cannot,  as  a<:ainst  this  plaintiff,  avail  them- 
selves of  the  defence  attempted,  without  showing  notice  of  such  agreement 
brought  home  to  the  plaintiff  at  the  time  of  receiving  the  note.  The  pleas  in 
controversy  contain  no  such  allegation,  and  are  therefore  bad. 

But,  as  the  counsel  seem  to  understand  the  fact  in  the  case  to  be  that  the  note 
was  negotiated  to  the  plaintiff  when  overdue,  and  desire  a  derision  upon  the 
merits  of  the  question  thus  presented,  the  Court  have  passed  upon  it. 

There  can  be  no  doubt  that,  at  common  law,  the  holder  of  a  negotiable  bill 
or  note  who  receives  it  from  the  payee  after  it  falls  due,  takes  it  subject  to  all 
defences  which  attach  to  the  note  or  bill  in  the  hands  of  the  indorser. 

It  was  first  doubted  whether  a  bill  or  note,  overdue,  could  be  so  negotiated 
as  to  enable  the  indorsee  to  sue  it  in  his  own  name.  But,  upon  the  opinion 
of  merchants,  the  Court  of  King's  Bench  decided  such  action  would  lie. 
Mitlbrd  V.  Wallicot,  1  Salk.  129.  But  in  Brown  v.  Davies,  3  T.  R.  80,  and 
Tayler  v.  Mather,  il).  84,  it  is  expressly  decided  that  the  indorsee,  in  such  case, 
takes  the  bill  or  note  subject  to  all  defences.  In  the  former  case  some  stress  is 
laid  upon  the  fact  that  the  bill  had  been  noted  for  non-payment,  but  in  the  latter 
case  that  was  considered  of  no  importance.  This  is  the  well-settled  doctrine  of 
the  couunon  law.  In  the  case  of  Sargent  v.  Southgate,  5  I'ick.  312.  it  was 
holden  that  the  maker  of  a  note  or  bill  negotiated  when  overdue,  and  sued  in  the 
name  of  the  indorsee,  might  in  his  defence  plead  any  matter  in  set-off,  which  he 
could  have  pleaded  if  the  suit  had  been  in  the  name  of  the  payee.  This  was 
allowed  by  an  ecjuitable  construction  of  the  Massachusetts  statute  of  set-offs. 
No  English  decision  has  gone  that  length.  The  case  of  Burrough  v.  ]Moss,  decided 
in  the  King's  Bench,  1830,  reported  in  10  Barn.  &  C.  O.J8,  and  in  2)  Eiig.  C.  L. 
128,  puts  this  question  upon  the  true  ground.     The  Court  there  held  that  the 


276  HOLDER    FOR   VALUE. 

indorsee  of  an  overdue  promissory  note  is  liable  to  all  equities  arising  out  of 
the  note  transaction  itself,  and  to  the  application  of  demands  due  the  maker  from 
the  payee,  when  there  was  an  agreement,  either  express  or  implied,  to  that  effect. 
That  rule  would  clearly  enable  the  defendants  in  the  present  case  to  avail  them- 
selves of  the  note  mentioned  in  the  third  and  fourth  pleas,  for  the  purpose  of 
reducing  damages,  even  after  judgment  or  default. 

The  recent  American  cases  hold  substantially  the  same  doctrine.  Barlow  v. 
Scott,  12  Iowa,  63 ;  10  id.  208.  All  defences  as  between  the  original  parties,  so 
far  as  the  note  is  concerned,  are  equally  available  against  the  indorsee  who  re- 
ceives the  paper  when  overdue.  Bates  v.  Kemp,  12  Iowa,  99.  But  a  set-ofif 
against  the  holder  of  paper  taken  before  maturity  is  not  an  admissible  defence, 
even  when  known  to  the  purchaser  at  the  time  of  the  indorsement  to  him.  Bar- 
ker V.  Valentine,  10  Gray,  341  ;  Flint  v.  Flint,  6  Allen,  ?A.  But  an  agreement 
to  accept  payment  by  application  upon  other  outstanding  notes  due  the  maker  from 
the  payee  will  be  a  valid  defence  in  such  case.  Staley  v.  Mathers,  id.  937.  So 
where  a  promissory  note,  negotiable  but  not  indorsed,  was  given  for  stock  sub- 
scribed in  a  railway  corporation,  and  at  the  time  of  its  execution  and  being  secured 
by  mortgage,  the  company  gave  the  maker  a  counter  contract,  guaranteeing  him 
against  loss  upon  the  stock,  such  counter  contract  will  be  a  defence  against  a 
bill  for  foreclosure  of  the  mortgage,  the  stock  having  become  worthless.  Peck  v. 
Bligh,37  111.317. 

An  interesting  and  important  question  arose  in  Oulds  v.  Harrison,  28  Eng.  L. 
&  Eq.  524.  It  was  there  held  that  the  right  of  an  indorsee  of  an  overdue  bill  of 
exchange  to  sue  the  acceptor  is  not  defeated  by  the  existence  of  a  debt  due  from 
the  drawer  to  the  acceptor,  and  notice  by  the  latter  to  the  drawer,  before  indorse- 
ment, of  his  election  to  set  off  the  amount  against  the  Vjill ;  nor  is  the  indorsee 
of  such  overdue  bill  of  exchange  affected  by  the  existence  of  a  right  of  set-off  as 
between  the  acceptor  and  the  drawer,  although  the  bill  was  indorsed  without 
value  and  for  the  purpose  of  defeating  the  set-off.  Parke,  B.,  said  :  "  This  plea, 
though  inaccurately  stated,  we  think  amounts  to  an  averment  that  both  the 
indorser  and  indorsee  knew  that  there  was  a  debt  due,  and  that  the  defendant 
would  probably  set  it  off,  if  the  action  were  brought  by  the  indorser  against  the 
defendant,  knowing  there  would  probably  be  a  set-off  (because  it  was  not  quite 
certain  that  the  debt  would  still  remain  due)  ;  but  knowing  there  would  probably 
be  a  set-off,  they  fraudulently,  so  far  as  it  was  a  fraud  in  law,  and  no  further, 
agreed  that  the  bill  should  be  indorsed ;  and  it  was  therefore  indorsed  without 
value  to  the  plaintiff.  .  .  The  holder's  power  to  circulate  it  is  not  restrained 
simply  by  the  existence,  at  the  time,  of  a  debt  of  equal  value,  and  his  circulating 
it  is  no  infringement  of  any  existing  right  of  the  defendant.  .  .  .  Does  it  become 
a  fraud  in  defeating  the  title,  if  he  actually  intends  to  do  that  which,  under  the 
circumstances,  would  be  the  necessary  result  of  this  act  ?  and  would  it  become 
so,  if  he  communicates  that  intention  to  the  indorsee,  and  the  latter  agi-ees  to 
assist  him  ?     This  we  think  is  no  fraud,  and  does  not  avoid  the  transaction." 

This  doctrine  proceeds  on  the  ground  that  set-off,  strictly  so  called,  is  not 
such  an  equity  as  can  be  interposed  against  the  indorsee  of  commercial  paper, 
whether  taken  before  or  after  maturity.  Whitehead  v.  Walker,  10  Mees.  &  W. 
696  ;  Way  v.  Lamb,  15  Iowa,  79  ;  Arnot  v.  Woodburn,  35  Mo.  99. 


knight8  v.  putnam.  277 

William  Knights  v.  Samuel  Putnam. 

(3  Pickering,  184.     Supreme  Court  of  Massachusetts,  September,  1825.) 

Usury.  When  maker  can  set  up  this  defence. —  Commercial  paper  which  is  valid  in  its 
inception  cannot  be  tainteil  with  usury  afterwards,  except  as  between  the  imme- 
diate parties  ;  and,  therefore,  the  maker  of  a  note,  valid  when  executed,  cannot 
raise  the  defence  against  an  indorsee  that  the  latter  purchased  the  note  of  the  payee 
at  a  usurious  rate  of  interest. 

Assumpsit  upon  a  promissory  note  made  by  the  defendant,  pay- 
able to  W.  Putnam  or  order,  and  by  him  indorsed  to  the  plaintiff. 
Plea,  the  general  issue. 

At  the  trial  before  Putnam,  J.,  the  defendant  offered  the  indorser 
as  a  witness,  to  prove  that  the  consideration  of  the  indorsement 
was  usurious  ;  but  he  was  rejected  as  incompetent,  on  the  author- 
ity of  Manning  v.  Wheatland,  10  Mass.  502. 

The  indorser  had  released  to  the  defendant  all  liis  claims  upon 
the  note,  and  the  defendant  offered  to  prove  by  him  that  the  note 
was  pledged  to  the  plaintiff'  as  collateral  security  for  a  debt  much 
less  than  the  amount  of  it,  contending  that  the  plaintiff  ought  not 
to  recover  more  than  the  amount  of  such  debt.  This  evidence  was 
considered  as  irrelevant,  and  was  rejected. 

A  verdict  was  returned  for  the  plaintiff",  but  if  either  of  these 
determhiations  was  incorrect,  a  new  trial  was  to  be  granted. 

"Wilde,  J.  As  to  the  question  of  usury,  the  case  of  Manning 
V.  Wheatland  ^  is  directly  in  point.  But  the  authority  of  that  case 
has  been  questioned,  and  the  objection  to  the  doctrine,  as  it  was 
there  laid  down,  is  entitled  to  great  consideration. 

The  witness  was  held  to  be  incompetent,  not  because  he  was  in- 
terested, but  on  the  ground  of  legal  policy,  which  will  not  permit 
one  who  has  transferred  a  negotiable  security  as  valid,  to  invali- 
date it  by  his  testimony .^  But  in  that  case,  as  in  this,  there  was 
no  illegality  in  the  original  contract,  and  no  usury  except  in  the 
transfer,  in  which  the  plaintifif  himself  was  the  guilty  party.  No 
deception  therefore  was  practised  on  him.     The  note  was  a  valid 

1  10  Mass.  602. 

'■*  This  subject  is  considered  under  Evidence  ;xw^ 


278  HOLDER   FOR   VALUE. 

contract ;  precisely  what  he  supposed  it  to  be  at  the  time  of  tlie 
transfer. 

But  notwithstanding  these  objections,  we  arc  of  opinion  that 
the  case  of  Manning  v.  Wheatland  was  rightly  decided.  For  if  the 
witness  was  competent,  we  consider  the  point  to  which  he  was  called 
to  testify  as  immaterial,  and  that  consequently  his  testimony  was 
properly  excluded.  We  are  aware  there  are  conflicting  opinions 
and  contradicting  decisions  on  this  point,  but  after  examining  all 
the  cases,  we  are  satisfied  that  the  defendant  cannot  avail  himself 
of  the  defence  of  usury,  and  that  a  note,  valid  in  its  inception, 
may  be  recovered  against  the  maker  by  an  indorsee,  although  dis- 
counted by  him  at  a  rate  exceeding  legal  interest. 

It  is  a  well-established  principle  that,  if  a  note  or  security  is 
valid  when  made,  no  usurious  transaction  afterwards  between  the 
parties  or  privies  will  affect  its  validity.  Ferrall  v.  Shaen,  1  Saiind. 
295,  Williams's  note. 

But  it  is  objected  that,  as  the  transfer  is  usurious,  the  plaintiff's 
title  fails,  although  the  original  contract  remains  good, 'and  that  he 
cannot  derive  title  from  an  illegal  transaction  in  which  he  was  a 
guilty  party.  This  objection  would  have  weight  if  a  usurious 
contract  were  malum  in  se  or  merely  void.  But  it  has  been  fre- 
quently held  that  a  contract  contaminated  with  usury  is  only  void- 
able by  the  party  injured  or  tliose  claiming  under  him. 

Now  it  is  manifest  that  the  maker  of  a  note  is  not  affected  by  a 
usurious  agreement  between  the  indorser  and  indorsee.  He  is 
liable  on  his  contract,  and  it  is  immaterial  to  him  whether  the 
action  be  brought  in  the  name  of  the  indorser  or  in  that  of  the 
indorsee.  But  I  hold  further,  that  the  transfer  of  a  note  on  a 
usurious  consideration  is  neither  void  nor  voidable.  So  far  as  the 
indorsement  operates  as  the  transfer  of  the  note  it  is  an  executed 
contract,  and  the  statute  against  usury  is  not  applicable.  It  only 
applies  to  the  implied  promise  or  guaranty  of  the  indorser,  which 
being  an  executory  contract  may  be  avoided.  But  in  no  case  can 
an  executed  contract  be  set  aside  on  the  plea  of  usury.  It  is 
not,  however,  necessary  to  insist  on  tliis  distinction  for  tlie  purpose 
of  sustaining  the  present  verdict.  It  is  sufficient  for  this  purpose, 
that  the  transfer  is  voidable  only,  and  that  it  is  not  competent  for 
the  defendant,  he  not  being  a  party  to  the  transfer,  to  avoid  it. 
The  note  being  free  from  usury  between  the  immediate  parties  to 
it,  no  after  transaction  with  another  person  can,  as  respects  those 
persons,  invalidate  it. 


KNIGHTS   V.    PUTNAM.  279 

In  New  York,  this  principle  is  fully  established  by  repeated  de- 
cisions. The  cases  of  Bush  v.  Livingston,  2  Caincs's  Cas.  in  Err. 
60,  and  Braman  v.  Hess,  13  Jojins.  52,  and  Munn  v.  Commission 
Co.  15  Johns.  44,  are  directly  in  point.  The  only  case  which 
has  been  decided  on  a  contrary  doctrine  is  that  of  Lloyd  v.  Keach, 
2  Conn.  175.  It  is  somewhat  remarkable  that  in  this  case  and 
in  the  case  of  Munn  r.  Commission  Co.  it  is  said  the  point 
under  consideration  was  too  clear  to  be  questioned,  although  the 
two  decisions  are  directly  contradictory.  Tlie  cases  referred  to  by 
Gould,  J.,  as  establishing  tiie  principle  laid  down  in  the  case  of 
Lloyd  I'.  Keach,  do  not  ajtpear  to  me  at  all  decisive.  It  is  true,  in 
those  cases  the  law  seems  to  be  taken  for  granted  as  it  is  laid  down 
by  the  learned  judge  in  the  case  of  Lloyd  v.  Keach.  But  he  does 
not  appear  to  have  taken  into  consideration  an  important  distinc- 
tion in  relation  to  these  cases  between  notes  or  bills  given  on  a 
valuable  consideration  and  in  the  usual  course  of  business,  and 
accommodation  notes  or  bills,  made  for  the  purpose  of  raising 
money,  and  not  existing  as  valid  contracts  before  they  are  dis- 
counted. The  distinction  is  noticed  and  the  law  correctly  stated 
by  Spencer,  J.,  in  the  case  of  Munn  v.  Commission  Co.  He  says : 
"  It  is  clear  that,  if  a  bill  or  note  be  made  for  the  [iurpose  of  rais- 
ing money  upon  it,  and  it  is  discounted  at  a  higher  premium  than 
the  legal  rate  of  interest,  and  where  none  of  the  parties  whose 
names  are  on  it  can,  as  between  themselves,  maintain  a  suit  on  the 
bill  when  it  becomes  mature,  provided  it  had  not  been  discounted  ; 
that  then  such  discounting  of  the  bill  would  be  usurious,  and  the 
bill  would  be  void."  The  reason  of  the  distinction  is  obvious. 
In  the  case  supposed,  the  bill  or  note  is  mere  waste  paper  before  it 
is  discounted  ;  it  is  then  that  it  first  exists  as  a  contract,  and  if 
tainted  with  usury  it  is  voidable  even  in  the  hands  of  a  bona  fide 
holder.  The  case  of  Jones  v.  Brooke,  4  Taunt.  464,  and  the  case 
of  Churchill  v.  Sutcr,  cited  by  Gould,  J.,  fall  within  this  class  of 
cases,  and  wliethcr  the  other  cases  referred  to  were  business  notes 
or  bills,  or  were  made  for  the  purpose  of  raising  money,  does  not 
appear.  Besides,  these  are  nisi  j}rii(s  cases,  and  not  at  all  decisive, 
nor  can  opinions  incidentally  expressed,  and  in  support  of  which 
no  reasons  are  given,  be  entitled  to  much  weight  of  authority. 

In  the  case  of  Parr  v.  Eliason,  1  East,  92,  it  was  decided  that 
a  l)ill  free  from  usury  in  its  concoction,  may  be  sold  at  a  discount 
greater  than  the  legal  rate  of  interest,  without  avoiding  the  bill  in 


280  HOLDER   FOR  VALUE. 

the  hands  of  a  bona  fide  holder.  That  was  an  action  of  trover, 
and  it  seems  to  be  implied  that,  if  it  had  been  brought  against  the 
immediate  indorsee,  wlio  was  a  party  to  the  usurious  transfer,  it 
might  have  been  maintained.  But  this  is  decided  only  by  infer- 
ence, and  it  was  a  point  not  involved  in  the  decision  of  that  case. 
But  if  the  inference  be  admitted  to  be  just,  it  does  not  follow  that 
the  maker  of  the  bill  can  take  advantage  of  the  usury.  If  the 
transfer  was  voidable  only,  and  Lord  Kenyon  clearly  so  con- 
siders it,  for  he  likens  it  to  a  sale  which  is  fraudulent  against  cred- 
itors, I  see  no  legal  reason  why  the  maker  of  the  note  should  be 
allowed  to  avoid  it.  If,  however,  the  transfer  is  merely  void,  as 
Crould,  J.,  contends,  then  the  case  of  Parr  v.  Eliason  cannot  be 
supported,  for  the  bona  fide  holder  in  that  case  had  no  right  to  the 
bill.  The  transfer  being  void  is  a  mere  nullity,  and  it  was  imma- 
terial whether  the  holder  was  or  was  not  a  party  to  the  usurious 
transfer.  This  is  the  necessary  legal  consequence  of  considering 
the  transfer  as  absolutely  void  ;  it  is  opposed  to  the  current  of  the 
English  authorities,  and  cannot  be  maintained  either  on  principle 
or  authority.  Judgment  according  to  verdict. 

A  very  full  citation  of  authorities   upon  the  points  discussed  in  this  case  will 
be  found  in  Perkins's  edition  of  3  Pickering. 


4 


Holmes  et  al.  v.  Williams. 

(10  Paige,  326.     Court  of  Chancery  of  New  York,  1843.) 

Usury.  —  Where  the  holder  and  apparent  owner  of  negotiable  securities  sells  them  at 
a  discount,  to  a  bo7ia  fide  purchaser,  who  has  no  knowledge  of  the  purpose  for 
which  such  securities  were  made,  the  holder  representing  such  securities  to  belong 
to  himself,  and  to  be  business  paper,  the  transaction  is  not  usurious,  as  between  the 
vendor  and  purchaser,  though  the  representations  of  the  vendor  were  false,  the 
paper  having  been  made  to  be  sold  at  usurious  discount  in  the  market. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Gridley,  V.  C.  The  two  first-named  complainants  constituted 
a  mercantile  firm  in  Utica,  and  were  indebted  to  the  defendant  in 
a  large  sura  of  money.     In  the  month  of  December  last,  S.  Holmes, 


nOLME3    V.    WILLIAMS.  281 

one  of  the  said  firm,  had  in  his  liands  a  draft  for  82500  drawn  upon 
the  house  of  Morgan,  Cutler,  c^-  Co.,  of  New  York,  hy  Ford  and  Smith, 
D.  Vanderbilt,  and  F.  C.  Chapman,  and  indorsed  in  blank  by  L. 
Harvey,  which  draft  at  the  time  had  never  been  accepted  or  nego- 
tiated, but  was  acconunodation  paper,  belonging  to  the  drawers, 
made  and  indorsed  to  raise  money  on,  for  their  benefit,  and  placed 
in  the  hands  of  Holmes  for  that  purpose  alone.  This  draft  Holmes 
negotiated,  sold,  and  transferred  by  indorsement  to  the  defendant, 
at  a  sum  considerably  below  the  amount  due  by  its  terms,  and 
applying  a  portion  of  the  consideration  upon  an  existing  demand  of 
the  defendant,  and  receiving  the  remainder  in  cash  ;  Holmes  rep- 
resenting to  Williams  at  the  time  that  the  draft  was  business  paper, 
and  was  the  property  of  himself  or  himself  and  partners.  In  Jan- 
uary following,  the  drawers  api)lied  to  Holmes  for  the  re-delivery  of 
the  draft ;  whereupon  he  applied  to  the  defendant  to  take  \ip  the 
draft,  which  was  effected  under  the  following  agreement :  That  the 
two  Holmeses,  with  Kellogg  as  surety,  should  give  the  defendant 
their  note,  due  on  May  4th,  1839,  for  the  amount  due  on  the  draft, 
and  that  a  suit  should  be  commenced  against  the  Holmeses,  upon 
which  they  should  give  a  cognovit,  upon  which  judgment  should  be 
entered  and  execution  issued  and  levied  on  the  property  of  the  two 
Holmeses,  returnable  at  the  next  term  thereafter.  The  bill  prays 
that  the  defendant  may  be  perpetually  enjoined  from  prosecuting 
the  judgment  execution,  and  that  the  same  may  be  decreed  to  be 
satisfied  of  record,  by  the  said  defendant ;  and  that  he  also  may  be 
decreed  to  deliver  up  the  note  to  be  cancelled. 

The  first  question  material  to  be  decided  is  whether  the  purchase 
of  the  draft  was  usurious  so  that  it  was  a  void  security  in  the 
defendant's  hands.  Were  this  a  new  question  of  construction  to 
be  settled  under  the  statute,  I  confess  I  should  think  it  was  not. 
There  is  a  good  legal  reason  why  a  security,  actually  tainted  with 
an  original  act  of  usury,  should  be  held  void  in  the  hand  of  a  bona 
fide  and  innocent  holder.  For  the  statute  has  declared  it  so  in 
terms,  and  in  all  such  cases  as  of  notes  given  in  violation  of  the 
statute  against  gaming,  horse-racing,  &c.  Courts  have  uniformly 
held  the  securities  void  not  merely  against  the  payees  and  holders, 
with  notice,  but  against  holders  receiving  them  for  value,  and  before 
maturity  and  without  notice.  But  to  hold  a  security  purchased  as 
this  draft  was,  tainted  with  usury  and  void  in  the  hands  of  the 
purchaser,  the  purchase  must  be  decreed,  pro  hac  vice,  a.  loan,  —  a 


282  HOLDER   FOR   VALUE. 

mere  contract  of  borrowing  and  lending.  It  is  true  that  a  contract 
of  purchase  in  words  is  very  properly  held  to  be  in  construction  of 
law  a  contract  of  loan,  when  such  a  -device  is  resorted  to  to  cover  a 
transaction  which  is  really  a  loan.  But  how  is  such  a  transaction 
to  be  regarded  as  a  loan  upon  principle  when  the  purchase  is  bona 
fide  ?  Suppose  the  contract  to  be  written  out,  describing  A,  the 
owner  of  a  bond  made  by  B,  and  setting  out  the  sale  of  it  for  a  sum 
less  than  the  amount  due  on  its  face,  and  providing  that  a  portion 
should  be  applied  on  a  demand  due  from  the  seller  to  tlie  purchaser 
and  the  residue  paid  in  money ;  and  suppose,  farther,  that  on  the 
part  of  the  purchaser  it  is  a  bona  fide  purchase,  and  not  intended  by 
him  as  a  cover  for  a  loan,  there  being  nothing  in  the  law  making 
such  a  purchase  (if  real)  unlawful ;  it  would  seem  to  be  doing  vio- 
lence to  the  contract  as  it  is  set  forth  in  words,  and  also  as  under- 
stood in  the  minds  of  the  parties,  especially  of  the  purchaser,  to 
hold  it  a  loan  and  not  a  purchase.  Was  there  ever  an  agreement 
to  loan  money  in  the  case  supposed,  either  in  fact  or  intent  ?  Did 
two  minds  ever  meet  and  assent  in  fact  or  intent  upon  any  such 
contract,  and  does  not  the  law  by  its  potent  power  of  construction, 
when  it  declares  such  a  purchase  usurious,  annihilate  the  actual 
agreement  of  the  parties,  and  substitute  another  in  its  stead  totally 
different  from  it,  thus  changing  an  act  in  itself  lawful  into  one 
which  is  declared  to  be  a  violation  of  a  penal  statute  ?  When  one 
intentionally  takes  eight  instead  of  seven  per  cent,  though  he  may 
not  intend  to  be  guilty  of  usury,  he  is  nevertheless  guilty,  for  he 
intends  to  do  what  he  does,  but  mistakes  the  law.  Here,  however, 
he  buys  a  security  which  turns  out  to  be  accommodation  paper,  but 
he  never  agreed  to  buy  any  such  paper ;  he  contracted  to  buy  it  as 
being  business  paper.  He  was  mistaken  in  the  fact,  not  in  the 
law.  Nevertheless,  it  is  the  settled  doctrine  of  the  courts  that  such 
a  transaction  is  usurious.  See  2  Johns.  Cas.  (jQ,  206,  2d  ed.  ;  15 
Johns.  44,  355 ;  7  Wend.  569.  The  consequence  of  this  doc- 
trine as  applied  to  this  case  is,  that  the  draft  was,  in  the  hands  of 
the  defendant,  so  far  as  respects  his  right  to  maintain  an  action  on 
it,  tainted  witli  usury  and  void. 

The  next  question  is  whether  the  note  made  by  the  complainants 
to  secure  the  amount  due  upon  the  draft  when  such  draft  was 
taken  up,  is  also  usurious  and  void.  Tiie  complainant's  counsel 
insists  that  it  is  a  new  security,  substituted  in  the  place  of  an  usu- 
rious one,  and  therefore  is  itself  tainted  with  usury.     And  such  is 


IIOLMKS    V.    WILLIAMS.  283 

uiidciiiahly  tlie  true  doctrine  as  a|)j)lied  to  ordinary  cases  of  new 
securities  substituted  in  the  place  of  usurious  ones,  and  is  illus- 
trated by  the  case  of  renewals  of  a  usurious  note  ;  and  I  apprehend 
that  a  change  of  a  part,  or  even  all  of  the  names  njjon  the  |)aper, 
would  not  alter  the  legal  rule.  The  defendant's  counsel  admits  the 
existence  of  this  rule,  but  maintains  that  it  is  not  a[)plicable  to  a 
case  where  the  holder  of  the  tainted  security  is  innocent  of  the 
usury  in  fact ;  and  that  the  defendant  in  this  case,  though  his  pur- 
chase of  tl\e  draft  was  technically  usurious,  is  entitled  under  this 
rule  to  stand  in  the  })lace  of  an  innocent  holder. 

What  then  is  the  rule  as  to  securities  given  in  the  place  of 
usurious  ones,  to  secure  the  amount  to  an  innocent  holder  of  the 
latter  ?  In  Cuthbert  et  al.  v.  Haley,  8  Durnford  &  East,  390,  the 
plaintiff  brought  del)t  on  a  bond  for  £2080,  conditioned  to  pay 
c£l-j-iO  with  interest,  and  the  defendant  pleaded  tiiat  the  bond  was 
given  for  securing  money  lent  by  one  Plank  to  the  defendant  upon 
a  usurious  contract  between  Plank  and  the  defendant,  &c.  On  the 
trial,  it  appeared  that  Plank  discounted  eighteen  promissory  notes 
of  the  defendants,  amounting  to  <£lo44  2s.  3f/.,  and  took  usurious 
interest  on  them.  Plank  afterwards  carried  them  to  the  plaintiffs, 
his  l)ankcrs,  wlio  gave  him  credit  for  them.  When  the  notes  fell 
due,  the  jilaintiff  applied  for  payment,  and  the  defendant  paid  him 
£44  2s.  '6d.  in  money,  and  gave  the  bond  in  question  for  the  res- 
idue. Lord  Ke)ujijii  was  of  opinion  that  the  plaintiff  should  recover, 
and  so  ruled,  allowing  a  rule  to  show  cause.  On  the  argument  of 
the  cause  at  bar,  the  defendant's  counsel  strenuously  urged  that  the 
bond  in  (piestion  was  but  a  sul)stituted  security,  and  cited  various 
cases  in  which  such  securities  had  been  held  usurious.  The 
Judges,  however,  were  unanimously  of  opinion  that  this  rule, 
though  they  fully  admitted  its  existence,  and  its  application  in  or- 
dinary cases,  did  not  apply  to  a  case  where  the  substituted  secu- 
rity was  given  to  an  innocent  holder.  So,  too,  in  Powell  v.  Waters, 
8  Cowen,  669,  690,  691,  692,  Chancellor  Jones  (after  having  said 
that  Parish,  who  discounted  the  first  note,  knew  it  was  not  business 
paper,  and  that  his  knowledge  affected  his  partners),  declares  that 
the  note  then  before  the  Court  was  a  substituted  security  for  the 
first,  and  therefore  void  ;  and  adds  that  such  substituted  security, 
given  to  an  innocent  holder,  would  l)c  valid.  He  says  that  a  new 
security  taken  by  such  a  meritorious  holder  of  the  usurious 
note  has  a  just  claim   to   jirotection.     The   rule   then   is  clearly 


284  HOLDER  FOR  VALUE. 

established,  that  an  innocent  holder  of  paper  substituted  for 
usurious  paper  will  be  protected,  and  that  the  ordinary  principle, 
which  declares  that  a  new  security  is  infected  with  the  same  usury 
which  tainted  that  for  which  it  is  substituted,  is  inapplicable  to  an 
innocent  holder  of  usurious  paper. 

Is  the  defendant  to  be^regarded  as  an  innocent  holder  of  the  draft 
in  question  in  this  suit  ?     It  is  true  that  by  a  series  of  decisions, 
which  I  have  already  cited,  the  act  of  purchasing  the  draft  (though 
he  erroneously  supposed  it  to  be  business  paper,  and  therefore  a 
lawful  article  of  sale  and  purchase),  was  technically  legally  usurious. 
But  was  he  guilty  in  intent  and  in  fact  ?    Could  he  have  been  pun- 
ished by  an  indictment  under  the  Act  of  1837  ?     On  the  contrary, 
was  he  not  the  innocent  purchaser  of  this  paper,  and  the  victim  of 
the  civil  disabilities  incurred  under  the  act  by  the  most  flagrant 
false  pretences  of  one  of  the  individuals  who  now  asks  a  court  of 
equity  to  visit  upon  him  the  consequences  which  flow  from  such 
fraudulent  misrepresentations  ?     Though  this  draft  be  held  void  in 
the  defendant's  hands,  yet,  could  he  not  sustain  an  action  against 
S.  Holmes  for  the  loss  he  suffered  by  reason  of  his  false  affirmation 
that  the  draft  in  question  was  his  own  property,  and  therefore  a 
lawful  subject  of  purchase,  when  it  was  not ;  by  reason  of  which 
the  very  act  of  purchasing  rendered  the  purchase  void  ?    Could  he 
not  also  recover  in  an  action  for  money  had  and  received,  the 
money  he  advanced  upon  this  purchase  ;  which  was  valueless,  solely 
by  reason  of  the  fraudulent  concealment  and  misrepresentation  of 
a  fact  in  relation  to  the  draft  ?     Can  a  man  by  the  grossest  fraud, 
amounting,  as  I  think,  to  the  offence  of  obtaining  money  by  false 
pretences,  get  another's  money  (without  any  intentional  fault  on 
the  part  of  that  other),  and  not  be  responsible  for  it  at  law  ?     I 
think  not.     I  think  S.  Holmes  was  liable  to  the  defendant  for  the 
^money  he  obtained  from  him  by  the  fraudulent  transfer  of  paper 
which  he  falsely  declared  to  be  his  own,  and  which,  if  it  had  been 
so,  would  have  been  a  valid  and  available  security  in  the  defendant's 
hands.     If,  then,  this  money  was  really  due  and  recoverable  from 
Holmes,  would  not  a  note  given  by  S.  Holmes  alone,  to  secure  it, 
be  good  and  available  against  him  ?     Suppose  that  the  defendant 
had,  while  he  held  the  draft,  learned  that  it  was  not  the  property 
of  Holmes,   and   that   by  Holmes's   false  representation   he  had 
parted  with  his  money  under  circumstances  which  rendered  the 
draft  void  in  his  hands,  and  had  called  on  Holmes  and  charged 


HOLMES   V.    WILLIAMS.  285 

liim  with  tlie  fraud,  and  Holmes  had  tlien  taken  up  the  draft  and 
given  his  own  note  instead  of  it  ;  could  Holmes  defend  himself 
against  a  suit  on  such  note  on  the  ground  of  usury  ?  Would,  it  not 
be  allowing  him  to  succeed  in  a  defence  founded  on  his  own  fraud 
instead  of  the  fraud  of  his  antagonist  ?  Suppose  he  had  transferred 
a  forged  note,  or  a  note  infected  witli  exiting  usury,  or  void  for 
any  other  cause,  affirming  it  to  be  good,  and  denying  the  facts  which 
rendered  it  void,  would  he  not  be  liable  ?  And  if  he  had  got  l)ack 
the  void  paper  and  given  bis  own  note  in  its  stead,  could  he  defend 
himself  in  a  suit  upon  such  note  ?  I  think  the  merits  of  his  defence 
would  be  the  same  in  all  the  cases  I  have  supposed.  If  the  new  se- 
curity then  would  have  been  free  from  objection  for  usury,  if  exe- 
cuted by  S.  Holmes  alone,  it  must  be  so  notwithstanding  others 
signed  the  note  as  sureties.  In  Cram  v.  Hendricks,  7  Wend.  569, 
584,  the  chancellor,  in  commenting  on  the  case  of  Munn  v.  Ruggles, 
15  Johns.  57,  says  in  express  terms,  that  the  l)roker  who  sold  the 
bill  to  the  purchaser  was  liable  to  him  for  the  money  advanced, 
though  the  note  might  be  void  in  the  hands  of  such  purchaser,  he, 
like  the  defendant  in  this  case,  supposing  that  the  agent  owned  the 
bill.  Tiiis  opinion  of  the  chancellor,  though  not  necessary  to  the 
decision  of  that  case,  is  entitled  to  great  weight  as  tlie  opinion  of  a 
learned  jurist ;  and  the  weight  of  that  authority  I  think  is  somewhat 
strengthened  by  the  fact  that  the  chancellor  was  for  holding  the 
doctrine  impeaching  securities  for  usury  with  greater  strictness  and 
rigor  than  a  majority  of  the  court  in  the  case  then  before  them.  I 
am  not  prepared  to  say  that  Holmes  would  have  been  responsible 
for  more  than  the  money  he  advanced,  especially  in  an  action  for 
money  had  and  received  or  money  paid  ;  though  he  probably  might 
be  for  the  full  amount  of  the  draft  in  an  action  on  the  case.  But 
however  that  may  be,  I  do  not  think  that  embracing  in  the  new 
note  the  whole  amount  of  the  draft  would  render  that  note  usurious, 
provided  it  would  not  otherwise  be  so.  If  the  false  affirmation  had 
been  true,  the  draft  would  have  been  available  to  the  defendant  for 
the  whole  amount  of  it,  and  if  Mr.  Holmes  had  chosen  to  indemnify 
him  by  giving  him  a  note  for  that  amount,  I  do  not  see  that  it 
would  be  usurious ;  or  even  that  he  could  in  a  suit  upon  this  note 
have  set  up  a  defence  as  to  the  excess.  To  sustain  this  bill,  how- 
ever, the  note  must  be  adjudged  void  for  usury,  which,  for  the  rea- 
sons before  stated,  I  am  of  opinion  cannot  be  maintained.  To 
sustain  it  would  be  to  make  the  Court  the  organ  of  great  mjustice  ;  I 


286  HOLDER   FOR   VALUE. 

do  not  mean  merely  by  enforcing  the  statute  against  usury  even  in 
its  utmost  rigor,  severe  as  that  statute  is ;  for  he  who  will  know- 
ingly violate  the  statute  must  not  complain  if  he  is  compelled  to 
suffer  the  extreme  penalties  of  the  act ;  but  it  would  present  Mr. 
Holmes  in  the  attitude  of  fraudulently  obtaining  the  defendant's 
money  for  worthless  paj^r,  and  after  receiving  back  the  paper  and 
giving  his  own  note  as  an  equivalent,  then  asking  the  Court  of 
Ciiancery  to  make  his  fraud  successful,  and  to  protect  him  in  tlic 
possession  of  its  fruits,  by  declaring  the  note  thus  given  void  for 
usury.  1  cannot  but  think  that  to  carry  the  principle  to  such  an 
extent  would  be,  in  the  language  of  Lord  Kenyon  in  the  case  before 
cited  from  Durnford  k  East,  extending  it  further  than  policy  or  the 
words  of  the  act  require.  I  have  already  remarked  that  in  my 
judgment  the  securities  must  stand  or  fall  with  tliis  principle,  that 
if  this  note  would  be  good  if  made  by  Sylvanus  Holmes  alone,  it 
must  be  adjudged  good  though  others  unite  with  him  in  secur- 
ing a  demand  due  from  and  legally  collectible  of  him. 

The  conclusion  to  which  this  view  of  the  subject  brings  me, 
without  examining  the  other  questions  raised  and  discussed  by  the 
counsel,  is  that  the  bill  should  be  dismissed  with  costs. 

Walworth,  Chancellor,  said  that  he  concurred  in  the  opinion 
of  the  vice-chancellor,  that  where  the  holder  and  apparent  owner 
of  negotiable  securities  sells  them  at  a  discount  to  a  bona  fide  pur- 
chaser who  has  no  knowledge  of  the  purpose  for  which  such  secur- 
ities were  made,  the  holder  representing  such  securities  to  belong 
to  himself,  and  to  be  business  paper,  the  transaction  was  not  usu- 
rious as  between  the  vendor  and  the  vendee ;  although  the  repre- 
sentation of  the  vendor  was  false,  and  the  securities  were  in  fact 
made  for  the  sole  purpose  of  being  sold  at  an  usurious  discount 
in  the  market. 

Decree  affirmed  with  costs. 


CAMERON   V.    CHAPPELL.  287 

Cameron  v.  Chappkll  et  al. 

(24  Wendell,  94.     Supreme  Court  of  New  York,  May,  1840  ) 

«i 
f  'sitri/.  —  Acceptance  of  a  bill  in  consideration  tliat  a  shipment  of  wheat  shall  be  made 
to  the  drawee  by  the  drawer  does  not  make  the  bill  accommodation  paper  between 
the  parties ;  and  such  bill  is  not  tainted  with  usury  by  the  fact  that  the  drawer 
afterwards  procured  it  to  be  discounted  at  a  rate  of  interest  beyond  tliat  allowed 
by  law. 

This  was  an  action  on  Ijill  of  exchange,  for  8797,  drawn  by 
Joseph  Strangliam,  on  the  defendants,  dated  12th  December,  1836, 
payable  to  his  own  order  five  months  after  date.  The  defendants 
accepted  the  draft  in  consideration  of  a  promise  on  the  part  of 
Strangham,  to  send  the  acceptors  600  bushels  of  wheat,  to  be 
shipped  on  the  opening  of  navigation  at  Buffalo.  The  wheat  was 
in  Canada,  and  the  acceptors  resided  at  Rochester.  Strangham, 
before  maturity  of  the  bill,  had  it  discounted  by  an  agent  of  the 
Commercial  Bank  of  Upper  Canada,  who  charged  him  beyond  the 
legal  rate  of  interest  of  Canada,  one  per  cent  for  agency,  in  collect- 
ing, (fee.  The  defendants  insisted,  by  way  of  defence,  that  the  bill 
was  accepted  merely  for  the  accommodation  of  Strangham,  and  that 
consequently  it  having  no  legal  inception  until  negotiated  to  the 
bank,  they  could  avail  themselves  of  the  usury.  Witnesses  were 
examined  on  the  part  of  the  defendants  to  establish  the  facts 
alleged  by  them,  and  that  not  any  wheat  was  received  by  the  de- 
fendants from  Strangham.  The  cause  was  heard  by  a  referee,  who 
reported  in  favor  of  the  defendants.  The  plaintiff,  in  whose  name 
the  suit  was  prosecuted,  for  the  benefit  of  the  bank,  moved  to  set 
aside  the  report  and  for  a  re-hearing. 

Nelson,  C.  J.  The  only  question  made  in  the  case  is  whether 
the  defendants  are  to  be  regarded  as  accommodation  acceptors, 
and  standing  in  the  light  of  sureties  upon  the  paper,  or  as  having 
parted  with  it  to  Strangham  for  value,  to  wit,  on  an  engagement 
upon  his  part  to  i)ay  the  amount  at  maturity  in  wheat.  If  the 
former  is  the  true  exposition  of  the  case,  then  the  accc{)tance  had 
no  inception  till  the  negotiation  with  the  agent  of  the  bank,  and, 
therefore,  is  tainted  with  usury  ;  if  the  latter,  it  is  to  be  regarded 

t 


288  HOLDER   FOR   VALUE. 

as  business  paper  in  the  hands  of  Strangham,  and  the  transfer 
by  him  valid  witliin  the  case  of  Cram  v.  Hendricks,  7  Wend. 
669. 

No  doubt  the  promise  thus  to  pay  would  be  binding  and  consti- 
tute a  good  consideration  for  the  acceptance  of  the  draft,  and  the 
taking  of  it  up  by  the  defendants  would  be  but  the  payment  of 
their  own  debt,  and  not  money  paid  for'  the  use  of  the  drawer. 
This  is  abundantly  settled  in  the  cases  of  cross  notes  or  accept- 
ances for  the  mutual  accommodation  of  tlie  parties ;  they  are 
respectively  considerations  for  each  other.  Rolfe  v.  Caslon,  2 
H.  Bl.  570  ;  Cowley  v.  Dunlop,  7  T.  R.  565 ;  Buckler  v.  Buttivant, 
3  East,  72  ;  Rose  v.  Sims,  1  B.  <fe  A.  521  ;  Rice  v.  Mather,  3 
Wend.  62  ;  Byles,  Bills  of  Exch.  62 ;  Chitty,  Bills,  443.  Mr. 
Byles  lays  down  the  proposition  thus :  If  a  man  gives  his  accept- 
ance to  another,  that  will  be  a  good  consideration  for  a  protnise,  or 
for  another  bill,  though  such  acceptance  be  unpaid. 

I  have  looked  attentively  into  the  facts  of  the  case  as  disclosed 
by  the  three  witnesses  who  were  present  at  the  arrangement 
between  the  parties,  and  am  of  opinion  that  the  preponderance  is 
decisively  in  favor  of  the  conclusion,  that  the  undertaking  of 
Strangham  to  deliver  wheat  in  the  spring,  constituted  the  consid- 
eration of  the  acceptance.  His  own  account  of  it  is  express  and 
precise,  that  he  was  to  deliver  600  bushels,  to  be  shipped  at  Buf- 
falo. The  other  two  are  less  distinct,  but  in  the  main,  rather  con- 
firm than  weaken  this  view  of  the  transaction.  They  do  not 
recollect  that  this  precise  quantity  was  fixed  upon,  but  agree  that 
it  was  the  understanding  to  pay  in  wheat ;  and  one  states  that  he 
thinks  the  price  was  not  to  exceed  10s.  6d.,  which  would  bring  the 
quantity  about  as  stated  by  Strangham  himself. 

Again  :  what  affords  a  strong  corroborative  circumstance  of 
Strangham's  account,  and  that  he  was  not  the  mere  agent  of  the 
acceptors,  as  contended,  is,  that  neither  of  the  two  witnesses  pre- 
tend that  the  acceptance  was  not  to  be  used  except  in  the  purchase 
of  wheat.  On  the  contrary,  Alleyn  states  that  it  was  understood 
if  wheat  could  not  be  purchased  on  satisfactory  terms,  then  Strang- 
ham was  to  put  the  acceptors  in  funds  to  take  up  the  draft  at 
maturity  ;  impliedly  conceding  the  right  to  use  it  as  his  own  for 
any  purpose,  and  that  the  acceptors  would  look  exclusively  to  his 
personal  responsibility  for  the  liabilities  they  had  assumed. 

In  all  the  cases  to  which  I  have  referred  in  respect  to  counter 


CAMERON   V.    CnAPI'ELL,  289 

bills  or  notes,  it  is  conceded  that  there  can  be  no  reraedy  npon  tlie 
implied  promise  of  indemnity  as  in  the  case  of  principal  and 
surety,  or  principal  and  agent,  because  the  party  had  assumed  his 
liability  in  consideration  of  a  delivery  of  notes  or  acceptances  to 
an  equivalent  amount,  and  therefore  he  must  seek  his  remedy 
upon  them ;  that  the  implied  promise  was  negatived  by  the  facts, 
and  could  not  be  raised  ultra  the  bills  or  notes.  This  ground  is 
very  fully  and  satisfactorily  examined  by  Lawrence,  J,,  in  Cowley 
V.  Dunlop,  and  Lord  EllcnburoKgh  in  Buckler  v.  Buttivant. 

So  here,  the  defendants  trusted  to  the  undertaking  to  purchase 
and  deliver  the  wheat  as  the  consideration  for  the  acceptance,  and 
will  be  obliged  to  look  to  that  for  their  remedy  in  case  of  failure 
to  perform.  They  made  the  paper  their  own  by  the  arrangement, 
and  in  taking  it  up  they  but  pay  their  own  debt. 

Upon  the  whole  1  am  satisfied  the  referee  has  mistaken  the  legal 
effect  of  the  proof,  and  therefore  the  report  must  be  set  aside,  costs 
to  abide  the  event. 

We  have  inserted  the  foregoing  cases  upon  the  law  of  usury,  as  affecting  bills 
and  notes,  because  they  embrace  some  of  the  most  essential  and  controlling 
questions  upon  that  subject ;  and  we  scarcely  felt  at  liberty  wholly  to  ignore  all 
questions  of  that  character  which  not  many  years  since  occupied  so  large  a  space 
in  the  reported  oases  upon  our  general  subject,  and  are  still  of  interest  upon  all 
questions  of  illegality  in  the  consideration  of  bills  or  notes.  But  the  present 
state  of  legislation,  in  most  of  the  States,  upon  the  subject  of  usury,  seems  to 
give  a  very  decided  indication,  that  there  will  soon  be  little  occasion  to  discuss 
these  questions  in  court.  We  shall  therefore  occupy  no  further  space  in  regard 
to  them. 


19 


290  PRESENTMENT   AND   DEMAND   FOR   PAYMENT. 


PRESENTMENT    AND    DEMAND   FOR    PAYMENT. 


Michael  Musson  and  George  O.  Hall,  surviving  partners 
of  William  Noll,  v.  William  A.  Lake. 

(4  Howard,  262.     Supreme  Court  of  the  United  States,  December,  1845.) 

Necessity  of  presentment.  —  The  notary  should  present  the  paper  when  he  demands  pay- 
ment ;  and  this  rule  has  not  been  changed  by  statute  in  Louisiana.  Even  if  it  had 
been  there  changed,  as  the  defendant's  contract  was  to  be  performed  in  Mississippi 
where  the  law  merchant  prevails  in  this  particular,  presentment  could  not  be  dis- 
pensed with. 

Protest,  how  far  evidence.  —  A  protest  which  only  states  that  payment  was  demanded,  is 
not  evidence  to  prove  presentment. 

The  case  is  stated  in  the  opinion  of  the  Court. 

M'KiNLEY,  J.  The  plaintiffs  brought  an  action  of  assumpsit,  in 
the  Circuit  Court  of  the  United  States  for  the  Southern  District  of 
Mississippi,  against  the  defendant,  as  indorser  of  a  bill  of  exchange, 
drawn  at  Vicksburg,  in  said  State,  by  Steele,  Jenkins,  &  Co.,  for 
86133,  payable  twelve  months  after  the  first  day  of  February,  1837, 
to  R.  H.  and  J.  H.  Crump ;  and  addressed  to  Kirkman,  Rosser,  & 
Co.,  at  New  Orleans,  .and  by  them  afterwards  accepted,  and  in- 
dorsed by  the  payees  and  the  defendant. 

On  the  trial  of  the  cause,  the  plaintiffs  offered  to  read  as  evidence 
to  the  jury  a  protest  of  the  bill  of  exchange,  to  the  reading  of  which 
the  defendant  objected ;  because  it  did  not  appear  in  the  protest 
that  the  notary  had  presented  the  bill  to  the  acceptors,  or  either  of 
them,  when  he  demanded  payment  thereof.  And  upon  the  ques- 
tion, whether  the  protest  ought  to  be  read  to  the  jury  as  evidence 
of  a  presentment  of  the  bill  to  the  acceptors  for  payment,  or  as 
evidence  of  the  dishonor  of  the  bill,  the  judges  were  opposed  in 
opinion.     "Which  division  of  opinion  they  ordered  to  be  certified  to 


MU8S0N    V.    LAKE.  291 

this  Court ;  and  upon  that  certificate  the  question  is  now  before  us 
for  determination. 

The  indorser  of  a  bill  of  exchange,  whether  payable  after  date  or 
after  sight,  undertakes  that  the  drawee  will  pay  it,  if  the  holder 
present  it  to  him  at  matnrity  and  demand  payment ;  and  if  he  re- 
fuse to  pay  it,  and  tho  holder  cause  it  to  be  protested,  and  due 
notice  to  be  given  to  tiie  indorser,  then  he  promises  to  pay  it.  All 
these  conditions  enter  into  and  make  part  of  the  contract  between 
these  parties  to  a  foreign  bill  of  exchange  ;  and  the  law  imposes 
the  performance  of  them  upon  the  holder,  as  conditions  precedent 
to  the  liability  of  the  indorser  of  the  bill,  A  presentment  to  and 
demand  of  payment  must  be  made  of  the  accejjtor  personally,  at 
his  place  of  business  or  his  dwelling.  Story,  Bills,  §  325.  Bank- 
ruptcy, insolvency,  or  even  the  death  of  the  acceptor  will  not  ex- 
cuse the  neglect  to  make  due  presentment ;  and  in  the  latter  case 
it  should  be  made  to  the  personal  representatives  of  the  deceased. 
Chitty,  Bills,  7th  London  ed.  246,  247  ;  Story,  Bills,  360  ;  5  Taunt. 
30;  12  Wend.  439;  2  Douglass,  515  ;  Warrington  v.  Furbor,  8 
East,  242,  245  ;  Esdaile  v.  Sowerby,  11  East,  117  ;  14  East,  500. 

The  reasons  why  presentment  should  be  made  to  the  drawee  are, 
first,  that  he  may  judge  of  the  genuineness  of  the  bill ;  secondly, 
of  the  right  of  the  holder  to  receive  the  contents  ;  and  thirdly,  that 
he  may  obtain  immediate  possession  of  the  bill  upon  paying  the 
amount.  And  the  acceptor  has  a  right  to  see  that  the  person 
demanding  payment  has  a  right  to  receive  it,  before  he  is  boui»d  to 
answer  whether  he  will  pay  it  or  not ;  for,  notwithstanding  his 
acceptance,  it  may  have  passed  into  other  hands  before  its  maturity. 
And  he,  as  well  as  the  drawee,  has  a  right  to  the  possession  of  the 
bill  upon  paying  it,  to  be  used  as  a  voucher  in  the  settlement  of 
accounts  with  the  drawer.  Story,  Bills,  §  361 ;  Hansard  v.  Robin- 
son, 7  Barn.  &  C.  90. 

Mr.  Justice  Storij  has  given  the  form  of  a  protest  now  in  use  in 
England,  in  his  treatise  on  Bills  of  Exchange,  by  which  it  will  be 
seen  that  the  words  "  did  exhibit  said  bill  "  are  used,  and  a  blank 
is  left  to  be  fdled  up  with  ''  the  presentment,  and  to  whom  made, 
and  the  reason,  if  Assigned,  for  non-payment."  Story,  Bills,  302, 
note.  This,  with  the  authorities  already  referred  to,  shows  that 
the  protest  should  set  forth  the  presentment  of  the  bill,  the  demand 
of  payment,  and  the  answer  of  the  drawee  or  acceptor.  The  holder 
of  the  bill  is  the  proper  person  to  make  the  presentment  of  it  for 


292  PRESENTMENT   AND   DEMAND   FOR   PAYMENT. 

payment  or  acceptance.  Story,  Bills,  §  360.  But  the  law  makes 
the  notary  his  agent  for  the  purpose  of  presenting  the  bill,  and 
doing  whatever  the  holder  is  bound  to  do  to  fix  the  liability  of  the 
indorser.  Every  thing,  tlierefore,  that  he  does  in  the  performance 
of  this  duty  must  appear  distinctly  in  his  protest.  He  is  the  officer 
of  a  foreign  government ;  the  proceeding  is  ex  parte ;  and  the  evi- 
dence contained  in  the  protest  is  credited  in  all  foreign  courts. 
Chitty,  Bills,  215;  Rogers  v.  Stevens,  2  T.  R.  713;  Brough  v. 
Parkings,  2  Ld.  Raym.  993  ;  Orr  v.  Maginnis,  7  East,  359 ;  Ches- 
mer  v.  Noyes,  4  Camp.  129.  The  evidence  contained  in  the  protest 
must,  therefore,  stand  or  fall  upon  its  own  merits.  It  rests  upon 
the  same  footing  with  parol  evidence ;  and  if  it  fails  to  make  full 
proof  of  due  diligence  on  the  part  of  the  plaintiff,  it  must  be  re- 
jected. 

But  the  counsel  for  the  plaintiffs  insists  that  the  statute  of  Lou- 
isiana, and  tlie  interpretation  given  to  it  by  the  Supreme  Court  of 
that  State  in  the  case  of  Nott's  Executor  v.  Beard,  16  Louisiana, 
308,  have  so  changed  the  law  merchant,  as  to  render  unnecessary 
the  presentment  of  a  foreign  bill  for  payment.  After  a  careful 
examination  of  the  opinion  of  the  Court  in  that  case,  we  are  unable 
to  perceive  any  intention  manifested  to  depart  from  the  settled 
usages  of  the  law  merchant ;  but,  on  the  contrary,  they  attempt 
by  argument  and  authority  to  bring  the  case  within  that  law.  The 
question  before  that  Court  was  the  identical  question  now  before 
us.  The  protest  was  objected  to  because  it  did  not  show  that  the 
bill  had  been  presented  by  the  notary  to  the  acceptors  for  payment. 
To  this  objection,  that  Court  said  it  might  perhaps  have  been  more 
specific,  if,  in  the  protest,  it  had  been  stated  that  the  bill  was  pre- 
sented, and  payment  thereof  demanded.  And  they  admit  the  law 
is  well  settled,  that,  before  the  holder  of  an  accepted  bill  can  call 
on  the  drawer  for  payment,  he  must  make  a  presentment  for,  or 
demand  of  payment,  and  give  notice  of  the  refusal.  Here,  then, 
is  a  definite  proposition,  asserting  that  a  presentment  for  payment 
and  a  demand  of  payment  are  convertible  terms,  and  that  the  proof 
of  either  would  be  sufficient. 

To  support  this  proposition,  they  refer  to  Chitty  on  Bills,  and 
Bayley  on  Bills,  and  the  annotators  on  them.  And  as  further 
proof  and  illustration,  and  to  show  that  demand  of  payment  should 
be  preferred  to  presentment  for  payment,  they  refer  to  the  statute 
of  Louisiana,  passed  in  1827,  in  which  they  say  the  word  "  demand  " 


MDSSON   V.    LAKE.  293 

is  used  ill  it,  and  that  the  word  "  presentment "  is  not ;  and  they 
refer  to  the  statute,  also,  to  show  that  notaries  were  vested  witli 
certain  powers  by  it,  which  gave  authority  to  their  acts ;  and  tiiat 
they  being  public  officers,  the  presumption  of  law  is,  that  they  do 
their  duty  ;  and  therefore,  if  the  protest  wcrc^defective,  and  liable  to 
the  oljjection  urged  against  it,  this  presumption  of  law  would  cover 
all  sucii  defects.  This  is  substituting  presumption  for  j)roof,  in 
violation  of  all  the  rules  of  evidence. 

With  all  duo  respect  for  that  distinguished  tribunal,  we  are  con- 
strained to  dissent  from  the  general  proposition  they  have  laid  down 
on  the  subject  of  demand  and  presentment,  and  from  all  their  rea- 
soning in  support  of  it.  Due  diligence  is  a  question  of  law ;  and 
we  think  we  have  shown,  by  abundant  authority,  that  the  holder  of 
an  accepted  bill,  to  fix  the  liability  of  the  drawer  or  indorser,  must 
present  it  to  the  acceptor  and  demand  payment  thereof.  It  may 
be  well  here  to  repeat  what  Lord  Tenterden^  C.  J.,  said  on  this  Jsub- 
ject,  in  delivering  the  judgment  of  the  Court  of  King's  Bench,  in 
the  case  of  Hansard  v.  Robinson,  before  referred  to.  He  said  : 
"  The  general  rule  of  the  English  law  does  not  allow  a  suit  by  the 
assignee  of  a  chose  in  action.  The  custom  of  merchants,  consid- 
ered as  part  of  the  law,  furnishes  in  this  case  an  exception  to  the 
general  rule.  What,  then,  is  the  custom  in  this  respect?  It  is, 
that  the  holder  of  the  bill  shall  present  the  instrument,  at  its  matu- 
rity, to  the  acceptor,  demand  payment  of  its  amount,  and,  upon 
receipt  of  the  money,  deliver  up  the  bill.  The  acceptor  paying  the 
bill  has  a  right  to  the  possession  of  the  instrument  for  his  own 
security,  and  as  his  voucher  and  discharge  pro  tanto,  in  his  account 
with  the  drawer.  If,  upon  an  oiTer  of  payment,  the  holder  should 
refuse  to  deliver  up  the  bill,  can  it  be  doubted  that  the  acce})tor 
might  retract  his  offer,  or  retain  his  money  ?  "  This  extract,  we 
think,  furnishes  a  full  answer  to  all  that  has  been  said  by  the  Su- 
preme Court  of  Louisiana  to  prove  that  it  is  not  necessary  to  pre- 
sent the  bill  to  the  acceptor  for  payment ;  and  to  the  presumption 
of  law  relied  on  to  cure  the  defects  in  the  protest. 

But  to  show  that,  by  the  statute  of  Louisiana,  the  presentment 
of  a  bill  to  the  acceptor  for  payment  is  not  dispensed  with,  and  that 
the  presentment  is,  by  a  fair  construction  of  the  act,  as  much  within 
its  true  intent  and  meaning  as  the  demand,  we  proceed  to  examine 
its  provisions.  The  princii)al  object  of  the  legislature  in  passing 
this  statute  seems  to  have  been  to  give  authority  to  notaries  to  give 


294  PRESENTMENT   AND    DEMAND   FOR   PAYMENT. 

notices,  in  all  cases  of  protested  bills  and  promissory  notes  ;  and  to 
make  their  certificates  evidence  of  such  notices.  And,  therefore, 
all  that  is  said  on  the  subject  of  the  demand  and  the  manner  of 
making  it,  and  the  other  circumstances  attending  it,  was  not  in- 
tended as  a  new  enactment  on  these  subjects,  but  as  inducement  to 
the  powers  conferred  on  the  notary,  which  was  the  principal  object 
of  the  statute,  as  will  appear,  we  think,  by  reading  it.  That  part 
of  it  which  relates  to  this  subject  is  in  these  words :  "  That  all 
notaries,  and  persons  acting  as  such,  are  authorized,  in  their  pro- 
tests of  bills  of  exchange,  promissory  notes,  and  orders  for  the 
payment  of  nwney,  to  make  mention  of  the  demand  made  upon  the 
drawee,  acceptor,  or  person  on  whom  such  order  or  bill  of  exchange 
is  drawn  or  given,  and  of  the  manner  and  circumstances  of  such 
demand ;  and  by  certificate,  added  to  such  protest,  to  state  the 
manner  in  which  any  notices  of  protest  to  drawers,  indorsers,  or 
other  persons  interested  were  served  or  forwarded ;  and  whenever 
they  shall  have  so  done,  a  certified  copy  of  such  protest  and  cer- 
tificate shall  be  evidence  of  all  the  notices  therein  stated." 

It  seems  to  have  been  taken  for  granted  by  the  legislature,  that 
the  notaries  knew  how  to  make  out  a  protest,  and  therefore  they 
did  not  prescribe  the  form,  but  gave  the  substance  of  it,  to  which 
the  notary  was  required  to  add  a  certificate  ofthe  manner  in  which 
he  had  given  notices,  and  when  done,  according  to  the  statute,  a 
certified  copy  of  the  protest  and  certificate  should  be  evidence,  not 
of  the  demand  and  manner  and  circumstances  of  the  demand,  but 
of  the  notice  only.  This  shows  that  the  intention  of  the  legisla- 
ture, in  passing  this  part  of  the  statute,  was  merely  to  authorize 
the  notaries  to  give  notices,  and  to  make  the  copy  of  the  protest, 
and  the  certificate  added  to  it,  evidence  of  notice  in  the  courts  of 
Louisiana.  But  independent  of  this  view  of  the  subject,  we  think 
the  language  employed  in  this  statute  includes  the  presentment  of 
the  bill  for  payment,  and  for  all  other  purposes,  as  fully  as  it  does  the 
demand  of  payment.  In  giving  construction  to  the  act,  the  phrase, 
"  and  of  the  manner  and  circumstances  of  such  demand,"  cannot 
be  rejected,  but  must  receive  a  fair  interpretation.  When  taken  in 
connection  with  other  parts  of  the  statute,  what  do  these  words 
mean  ?  The  manner  of  making  a  demand  of  payment,  we  have 
seen,  is  by  presenting  the  bill  to  the  drawee  or  acceptor ;  and  so 
important  is  this  part  of  the  proceeding,  that  the  omission  to  pre- 
sent the  bill  to  the  acceptor  will  justify  his  refusal  to  pay  it,  al- 


MUSSON   V.    LAKE.  295 

though  payment  be  demanded.  The  legislature  cannot  be  presumed 
to  iiave  intended  to  make  so  important  a  change  in  the  law  mer- 
chant as  tiiat  ascribed  to  them  by  the  counsel  for  the  plaintiffs, 
witliout  at  the  same  time  providing  some  other  mode  of  obtaining 
the  acceptance  and  payment  of  l)ills  of  exchange,  and  of  holding 
drawers  and  indorsers  to  their  liabilities.  It  is  but  reasonaljle, 
therefore,  to  give  to  the  phrase  before  referred  to  such  construction, 
if  practicable,  as  will  leave  the  law  merchant  as  it  stood  before  the 
passage  of  tlie  statute,  and  carry  into  effect  the  main  intention  of 
the  legislature.  This,  we  think,  may  fairly  be  done  without  doing 
any  violence  to  the  intention  or  the  language  of  the  statute. 

The  manner  of  the  demand  must,  therefore,  mean  the  present- 
ment of  the  bill  for  either  acceptance  or  payment ;  and  the  cir- 
cumstances of  the  demand,  we  think,  means  the  place  where  the 
presentment  and  demand  is  made,  and  the  person  to  whom  or  of 
whom  it  is  made,  and  the  answer  made  by  such  person.  It  is  very 
clear,  that  bills  payable  at  sight,  and. after  sight,  are  within  the 
meaning  of  tlie  statute  ;  because  it  provides  for  a  demand  of  pay- 
ment of  the  acceptor  of  a  bill.  Now,  how  can  therG  be  an  acceptor 
of  a  bill,  without  a  presentment  for  acceptance  ?  Until  the  bill 
become  due,  payment  cannot  be  demanded  of  the  drawee.  This 
shows,  that  without  the  word  presentment  and  the  word  demand 
also,  the  plain  meaning  of  the  statute  could  not  be  carried  into 
effect.  A  bill,  payable  at  a  fixed  period  after  its  date,  need  not  be 
presented  for  acceptance  ;  it  is  sufficient  to  present  it  and  demand 
payment  when  it  arrives  at  maturity  ;  but  a  bill  payable  at  sight, 
or  after  sight,  can  never  become  due  until  after  it  has  been  accepted. 
How  is  the  holder  or  the  notary  to  obtain  the  acceptance  of  such  a 
bill,  under  the  decision  of  the  Supreme  Court  of  Louisiana  ?  Will 
it  be  sufficient  to  demand  payment  of  the  bill  ?  That  would  be  a 
nugatory  act,  because  it  is  not  due  ;  then  it  must  be  admitted,  tliat, 
by  fair  and  necessary  construction,  the  word  presentment  is  within 
the  plain  meaning  and  intention  of  the  statute,  and  that  the  bill 
may  be  presented  for  acceptance  or  for  payment,  and  therefore 
neither  the  statute  nor  the  decision  of  the  Supreme  Court  of  Lou- 
isiana has  changed  the  law  merchant  in  any  of  these  respects. 

There  is,  however,  another  question,  entirely  independent  of  the 
statute  and  the  decision  of  the  Supreme  Court  of  Louisiana,  which 
may  be  decisive  of  the  case  before  this  Court ;  and  that  question 
is,  Wliether  the  contract  between  the  holder  and  indorser  of  the  bill 


296         PRESENTMENT  AND  DEMAND  FOR  PAYMENT. 

ill  controversy  is  to  be  governed  by  the  law  of  Louisiana,  where  the 
bill  was  payable,  or  by  the  law  of  Mississippi,  where  it  was  drawn 
and  indorsed.  The  place  where  the  contract  is  to  be  performed  is 
to  govern  the  liabilities  of  the  person  who  has  undertaken  to  per- 
form it.  The  acceptors  resided  at  New  Orleans  ;  they  became  par- 
ties to  the  bill  by  accepting  it  there.  So  far,  therefore,  as  their 
liabilities  were  concerned,  they  were  governed  by  the  law  of  Lou- 
isiana. But  the  drawers  and  indorsers  resided  in  Mississippi ;  the 
bill  was  drawn  and  indorsed  there ;  and  their  liabilities,  if  any, 
accrued  there.  The  undertaking  of  the  defendant  was,  as  before 
stated,  that  the  drawers  should  pay  the  bill ;  and  that  if  the  holder, 
after  using  due  diligence,  failed  to  obtain  payment  from  them,  he 
would  pay  it,  with  interest  and  damages.  This  part  of  the  contract 
was,  by  the  agreement  of  the  parties,  to  be  performed  in  Mississippi, 
where  the  suit  was  brought,  and  is  now  depending.  The  construc- 
tion of  the  contract,  and  the  diligence  necessary  to  be  used  by  the 
plaintiffs  to  entitle  them  to  a  recovery,  must,  therefore,  be  governed 
by  the  laws  of  the  latter  State.  Story,  Bills,  §  366  ;  4  Peters,  123  ; 
2  Kent's  Comm.  459  ;  13  Mass.  4  ;'  12  Wend.  439  ;  Story,  Bills, 
§  76  ;  4  Johns.  119  ;  12  Johns.  142  ;  5  East,  124  ;  3  Mass.  81 ;  3 
Cowen,  154 ;  1  Cowen,  107  ;  5  Cranch,  298. 

Whatever,  therefore,  may  have  been  the  intention  of  the  legisla- 
ture in  passing  the  statute,  and  of  the  Supreme  Court  of  Louisiana 
in  the  decision  of  the  case  referred  to,  neither  can  affect,  in  the 
slightest  degree,  the  case  before  us.  In  Mississippi,  the  custom  of 
merchants  has  been  adopted  as  part  of  the  Common  Law  ;  and  by 
that  law  and  their  statute  law,  this  case  must  be  governed.  We 
think,  therefore,  the  protest  offered  by  the  plaintiff,  as  evidence  to 
the  jury,  ought  not  to  have  been  received  as  evidence  of  present- 
ment of  the  bill  to  the  acceptors  for  payment,  nor  as  evidence  of 
the  dishonor  of  the  bill ;  which  is  ordered  to  be  certified  to  the 
Circuit  Court  accordingly. 


McLean  and  Woodbury,  JJ.,  dissented  as  to  the  effect  of  the  protest,  regard- 
ing it  as  sufficient  evidence  of  presentment.  They  agreed  with  the  majority  as  to 
the  necessity  of  presentment,  — the  point  intended  to  be  illustrated  here. 

The  principal  case  is  supported,  as  to  the  necessity  of  presentment,  by  Ar- 
nold V.  Dresser,  8  Allen,  435  ;  Shaw  v.  Reed,  12  Pick,  132 ;  Freeman  v.  Bojii- 
ton,  7  Mass.  483 ;  Whitwell  v.  Johnson,  17  Mass.  449  ;  Gilbert  v.  Dennis,  3  Met. 
495. 

The  loss  of  negotiable  commercial  paper  will  not  dispense  with  the  necessity 


RENNER  V.    THE  BANK  OF  COLUMBIA.  297   " 

of  due  presentment  and  the  subsequent  proceedings  necessary  in  ordinar}-  cases 
to  charge  prior  parties.  Presentment  in  such  case  can  be  easily  made  upon  a 
copy,  if  a  new  bill  cannot  be  obtained,  and  will  be  sufBcient.  Hinsdale  v.  Miles, 
6  Conn.  331;  Dehers  v.  Harriot,  1  Show.  lG-1;  Wain  v.  Bailey,  10  Adol.  & 
Ellis,  616;  Charnley  r.  Grundy,  2;3  Eng.  L.  &  Eq.  318;  Story,  Bills  of  Ex- 
change, §  348;  Kyd,  Bills,  139  (3d.  ed.)  ;  2  Parsons,  Notes  and  Bills,  260. 

If  the  lost  paper  was  not  negotiable,  no  presentment  would  be  necessary  in  the 
case  of  a  note,  as  there  would  be  no  one  to  charge  by  notice ;  but  in  the  case  of 
a  bill  it  would  be  necessary  to  make  the  presentment,  in  order  to  charge  the 
drawer.     Sec  Lost  Bills  and  Notks,  j)ost. 

If  the  holder  or  notary  has  the  paper  with  him  when  he  makes  the  demand, 
but  does  not  present  it,  yet  so  describes  it  as  to  leave  no  doubt  that  the  payor 
may  understand  of  what  paper  payment  is  demanded,  this  is  sufficient.  Etheridge 
V.  Ladd,  44  Barb.  60. 


Renner,  Plaintiff  in  Error,  v.  The  President,  Directors, 
&c.,  OF  the  Bank  of  Columbia,  Defendants  in  Error. 

(9  Wheaton,  581.     Supreme  Court  of  the  United  States,  February,  1824.) 

WTien  demand  should  be  made.  Usage  of  hanks.  —  A  custom  of  all  the  banks  of  the  Dis- 
trict of  Columbia  to  demand  payment  and  give  notice  to  indorsers  of  commercial 
paper  on  the  fourth  day  after  the  day  of  payment  named,  which  has  been  uniformly 
followed  for  upwards  of  twenty  years,  and  whicli  was  known  to  and  understood  by 
the  defendant  when  he  indorsed  the  paper,  is  to  be  considered  as  entering  into  the 
contract,  so  that  demand  and  notice  on  the  fourth  day  are  sufficient  to  charge  the 
indorscr. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Thompson,  J.  This  case  comes  up  on  a  writ  of  error  to  tlie  Cir- 
cuit Court  of  the  District  of  Columbia  ;  and  by  the  record  it  appears 
that  the  action  in  the  Court  below  was  prosecuted  against  Renner, 
the  plaintiff  in  error,  as  indorser  of  a  promissory  note,  drawn  by 
James  Poyles,  and  discounted  at  the  Bank  of  Columbia.  The 
note  bears  date  on  the  ninth  day  of  January,  1817,  for  four  thou- 
sand six  hundred  dollars,  and  .is  payable  sixty  days  after  date. 
In  the  declaration  it  is  averred,  that  demand  of  payment  of  the 
maker  was  made  on  the  fourteenth  of  March,  wliich  was  ou  the 
fourth  day  after  tlie  expiration  of  the  sixty  days,  which  the  note 
had  to  run. 


298         PRESENTMENT  AND  DEMAND  FOR  PAYMENT. 

Several  questions,  arising  out  of  the  record,  have  been  presented 
for  the  consideration  of  the  Court,  The  principal  one,  however, 
is  that  which  relates  to  the  time  of  demand  of  payment  of  the 
maker  of  the  note,  and  grows  out  of  a  bill  of  exceptions  taken 
upon  the  trial.  This  has  been  pressed  upon  the  Court  as  a  ques- 
tion of  great  importance,  and  the  decision  of  which,  in  its  appli- 
cation to  the  concerns  of  the  bank,  will  have  a  very  wide  and 
extensive  effect. 

We  shall  proceed  to  the  consideration  of  this  point,  in  the  first 
place,  leaving  the  others,  which  are  of  minor  importance,  to  be 
noticed  hereafter. 

The  testimony  given  at  the  trial  was  for  the  purpose  of  showing 
that  the  Bank  of  Columbia  had,  from  its  first  establishment,  in 
1793,  adopted  the  practice  of  demanding  the  payment  of  notes 
discounted  by  it,  on  the  fourtli  day  after  the  time  limited  for  the 
payment  thereof,  according  to  the  express  terms  of  the  note.  And 
that  such  was  the  universal  custom  of  all  the  banks  in  Washing- 
ton and  Georgetown.  That  this  custom  was  well  known  and 
understood  by  the  defendant,  when  he  indorsed  the  note  in  ques- 
tion. After  this  testimony  had  been  received,  without  objection, 
the  counsel  for  the  defendant  below  called  upon  the  Court  to  in- 
struct the  jury,  that  upon  the  evidence  so  given  by  the  plaintitfs, 
of  a  demand  upon  the  maker  of  the  note,  on  the  fourth  day  after 
the  time  limited  by  the  note  for  the  payment,  the  defendant  was 
not  liable  on  his  indorsement ;  which  instruction  the  Court  re- 
fused to  give,  and  a  bill  of  exceptions  was  thereupon  taken; 

This  Court  must,  therefore,  assume  as  established  facts  (and, 
looking  at  the  evidence  before  the  jury,  no  doubt  could  be  enter- 
tained on  the  subject),  that  the  custom  of  the  Bank  of  Columbia, 
and  all  the  other  banks  in  Washington  and  Georgetown,  from  their 
first  institution,  had  been,  to  demand  payment  of  notes  due  them, 
on  the  fourth  day  after  the  time  limited  therein  ;  and  that  this 
custom  was  known  and  well  understood  by  the  defendant,  Renner, 
when  he  indorsed  the  note  in  question  ;  and  it  may  be  added,  with 
full  knowledge  and  expectation,  that  this  note  was  to  be  dealt  with 
in  the  same  way ;  for  it  was  a  renewal  of  a  discount,  continued 
for  a  considerable  time  before,  on  other  notes  similarly  drawn  and 
indorsed,  some  of  which  had  been  demanded  in  like  manner,  and 
protested,  and  afterwards  paid  and  taken  up  by  himself.  Under 
such  circumstances,  it  would  seem,  that  nothing  short  of  some 


RENNER  V.    THE  BANK  OF  COLUMBIA.  299 

positive  and  unbending  principle  of  law,  could  shield  the  defendant 
from  responsil)ility.  But,  so  far  from  trenching  upon  any  such 
princij)le,  \vc  think  his  liability  completely  established,  by  well- 
settled  rules  of  law. 

It  seems  to  be  assumed  as  the  settled  law  of  promissory  notes, 
yiat  in  order  to  charge  an  indorser,  demand  of  the  maker  must  be 
made  on  the  third  day  after  that  limited  in  the  note  ;  and  that  this 
is  so  stubborn  a  rule,  that  parties  are  not  permitted  to  violate  it, 
even  by  their  mutual  agreement. 

We  admit,  in  the  most  unqualified  manner,  that  the  usage  of 
making  the  demand  on  the  third  day  of  grace,  has  become  so  gen- 
eral, that  courts  of  justice  will  notice  it  ex  officio ;  and  in  the  ab- 
sence of  any  proof  to  the  contrary,  will  presume  that  such  was 
the  understanding  of  all  parties  to  a  note,  when  they  put  their 
names  upon  it.  But  that  this  rule  has  any  attributes  so  inviolable 
as  not  to  l)e  touched  by  the  parties  to  negotiable  paper,  cannot  be 
admitted.  It  has  its  origin  in  custom,  and  that  custom,  too,  com- 
paratively, of  recent  date ;  and  is  not  one  of  those,  to  the  contrary 
of  which  the  memory  of  man  runneth  not,  and  which  contributed 
to  make  up  the  common-law  code,  which  is  so  justly  venerated. 
So  far  from  this,  that  the  allowance  of  any  days  of  grace,  is  in 
derogation  of  the  common-law  rule,  applicable  to  other  contracts. 
They  are,  emphatically,  the  mere  creatures  of  usage,  varying  in 
different  countries,  to  suit  the  views  and  convenience  of  men  in 
business,  originally  gratuitous,  and  not  binding  on  the  holder. 
The  common  law  would  require  payment  on  the  last  day  limited 
by  the  contract,  and  would  also  give  to  the  maker  the  whole  of 
that  day.  It  is  a  settled  principle  of  the  common  law,  applicable 
to  all  contracts,  that  a  party  has  until  the  last  day  limited  by  his 
agreement,  to  perform  his  engagement,  and  even  until  the  last 
hour  of  the  day.  The  common  law  knows  of  no  fractions  of  a 
day ;  custom,  however,  and  that  introduced,  too,  principally  by 
banks,  has  limited  the  day  to  a  few  hours  of  business.  But  this, 
and  whatever  other  rules  have  been  adopted  by  consent,  and 
merely  for  the  convenience  of  commercial  men,  arc  departures 
from  the  common-law  doctrine.  When,  therefore,  the  allowance 
of  only  three  days  of  grace,  is  said  to  be  the  law  of  the  contract, 
by  bills  of  exchange  and  promissory  notes,  nothing  more  can  be 
intended,  than  that  custom  has  so  long  sanctioned  this  rule,  that 
all  dealers  in  paper  of  this  description,  are  understood  to  govern 


300  PRESENTMENT    AND    DEMAND    FOR    PAYMENT. 

themselves  by  it.  The  law  of  the  contract,  properly  speaking,  is 
to  pay  when  due ;  and  that  time  is  to  be  ascertained,  either  from 
the  contract  j»er  se,  or  that  taken  in  connection  with  some  known 
custom,  which  the  parties  are  presumed  to  have  tacitly  consented 
should  be  made  a  part  of  the  contract.  And  it  is  in  this  view 
only,  that  three  days  of  grace  are  allowed,  where  the  custom  is 
recognized  as  the  rule ;  for  a  note,  which  upon  its  face  has  sixty 
days  to  run,  is  in  truth  and  in  fact  a  contract  for  sixty-three  days, 
and  interest  is  taken  for  that  time.  And  how  is  it  ascertained  that 
it  is  a  note  for  sixty-three  days,  but  l)y  looking  out  of  the  contract, 
and  fniding  what  was  the  understanding  of  the  parties  ?  Where 
the  custom  has  existed  for  a  long  time,  and  has  become  general, 
courts  of  justice,  as  before  observed,  will  notice  it  ex  officio  ;  and 
where  it  has  not,  it  is  matter  of  proof.  If  this  is  not  the  light  in 
which  these  transactions  are  to  be  considered,  all  banks  are  charge- 
able with  usury ;  for  all  take  interest  beyond  what  is  allowed  by 
law,  if  time  is  to  be  determined  by  the  note  itself.  The  general 
rule  of  law  is,  that  demand  of  payment  must  be  made  of  the 
maker  when  the  note  falls  due  ;  and  that  time,  as  now  settled,  is 
on  the  last  day  of  grace ;  and  even  this  rule  is  of  recent  date,  for 
in  the  King's  Bench  in  England,  as  late  as  the  year  1791,  about 
coeval  with  the  institution  of  this  bank,  and  the  custom  established 
by  it,  we  find  Leftley  v.  Mills,  3  T.  R.  370,  Lord  Kenyon  and  Mr. 
Justice  Buller  differing  on  this  very  point ;  the  former  holding  that, 
by  analogy  to  other  contracts,  the  acceptor  of  a  bill  of  exchange 
had  the  whole  of  the  third  day  of  grace  to  pay  the  bill,  and  that  a 
demand  on  the  fourth  day  was  not  too  late.  Mr,  Justice  Buller 
thought  the  demand  ought  to  be  made  on  the  third  day  of  grace ; 
that  the  nature  of  the  acceptor's  undertaking,  was  to  pay  the  bill 
on  demand,  on  any  part  of  the  third  day  of  grace  ;  and  he  inferred 
this  from  its  having  been,  as  he  said,  the  practice  to  make  the 
demand  on' that  day.  If  it  was  a  doubtful  question  in  England,  so 
late  as  the  year  1791,  whether  the  demand  ought  to  be  made  on 
the  third  day  of  grace,  or  the  day  after,  this  bank  is  not  chargeable 
with  any  culpable  innovation  upon  long-established  rules  of  law 
or  usage,  by  adopting  the  practice  of  making  the  demand  on  the 
fourth  day. 

It  is  said,  however,  that  the  effect  of  this  testimony  is,  to  alter 
and  vary,  by  parol  evidence,  the  written  contract  of  the  parties. 
If  this  is  the  light  in  which  it  is  to  be  considered,  there  can  be  no 


RENNER  V.    THE  BANK  OF  COLUMBIA.  301 

doubt  that  it  ought  to  Ijo  laid  entirely  out  of  view ;  for  there  is  no 
rule  of  law  l)ctter  settled,  or  more  salutary  in  its  application  to 
contracts,  than  that  which  precludes  the  admission  of  parol  evi- 
dence, to  contradict  or  substantially  vary  the  legal  import  of  a 
written  agreement.  Evidence  of  usage  .or  custom  is,  however, 
never  considered  of  this  character ;  hut  is  received  for  the  purpose 
of  ascertaining  the  sense  and  understanding  of  parties  by  their 
contracts,  which  are  made  with  reference  to  such  usage  or  custom ; 
for  the  custom,  then,  becomes  a  part  of  the  contract,  and  may  not 
improperly  be  considered  the  law  of  the  contract;  and  it  rests 
upon  the  same  principle  as  the  doctrine  of  the  lex  loci.  All  con- 
tracts are  to  be  governed  by  the  law  of  the  place  where  they  are 
to  be  performed  ;  and  this  law  may  be,  and  usually  is,  proved  as 
matter  of  fact.  The  rule  is  adopted,  for  the  purpose  of  carrying 
into  ellect  the  intention  and  understanding  of  the  |)arties.  That 
the  note  in  question  was  to  be  paid  at  the  Bank  of  Columbia,  and 
to  be  governed  by  the  regulations  and  custom  of  the  institution, 
and  so  understood  by  all  parties,  cannot  admit  of  a  doubt. 

It  would  be  a  waste  of  time,  to  go  very  much  at  large  into  an 
examination  of  the  various  usages  and  customs,  that  are  admitted 
in  evidence  and  recognized  in  courts  of  justice,  both  in  England 
and  in  this  country,  in  almost  every  branch  of  business,  and 
especially  in  commercial  transactions,  for  the  purpose  of  ascertain- 
ing the  meaning  and  interpretation  of  contracts.  A  few  only  will 
be  noticed,  that  are  somewhat  analogous  to  the  present  case. 

In  the  case  of  Cutter  v.  Powell,  6  T.  R.  320,  where  was  brought 
under  consideration  the  legal  effect  of  a  promissory  note,  given  to 
the  mate  of  a  ship  for  a  certain  sum  of  money,  provided  he  pro- 
ceeded on  her  voyage,  and  continued  to  do  duty  to  the  port  of 
destination.  The  legal  construction  to  be  given  to  this  note  was 
clear,  and  so  considered  by  the  Court,  that  nothing  was  due,  im- 
less  the  mate  continued  to  do  duty  to  the  port  of  destination.  He 
having  died,  however,  on  the  voyage,  the  Court  directed  an  imjuiry 
into  the  usage  of  merciiants  in  such  cases,  declaring  that  if  it 
sanctioned  an  allowance  for  the  time  the  service  was  performed, 
the  plaintiff  should  recover  according  to  such  usage. 

No  intimation  is  here  given,  that  such  proof  would  be  repugnant 
to  the  contract,  although  it  was  against  the  legal  import  of  the 
note,  if  construed  without  reference  to  the  usage ;  and  although 
the  usage  related  to  trade,  it  was  very  limited  in  its  application. 


302         PRESENTMENT  AND  DEMAND  FOR  PAYMENT. 

So  in  Noble  v.  Kennovvay,  2  Doug.  511,  usage  of  trade  was  ad- 
mitted in  evidence,  to  explain  the  understanding  of  parties,  in  a 
policy  of  insurance,  although  the  usage  had  not  existed  three 
years.  Lord  Mansfield  said,  the  usage  could  only  l)e  known  by 
proof,  and  must  be  tried  by  a  jury ;  that  underwriters  must  be 
presumed  to  be  acquainted  with  the  practice  of  the  trade  they 
insure,  whether  recently  established  or  not.  If  it  were  necessary, 
cases  miglit  be  multiplied  almost  without  end,  sliowing  the  same 
principle  and  same  recognition  of  local  and  particular  usages,  in 
almost  every  branch  of  business. 

We  liavc  also  in  the  State  courts  in  our  own  country,  the  deci- 
sions of  very  enlightened  judges,  adopting  the  same  principles, 
and  governing  themselves  by  the  same  rules ;  and,  in  many  cases, 
not  unlike  the  one  before  us. 

In  Jones  v.  Fales,  4  Mass.  245,  252,  the  same  doctrine  as  to  usages 
of  banks,  was  fully  sanctioned ;  and  although  that  particular  usage 
might  have  been  found,  in  practice,  inconvenient,  and  not  to  meet 
public  approbation,  yet  the  principle  which  governed  the  decision 
of  the  Court,  is  not  thereby  weakened  ;  viz.,  that  the  usage  with 
which  the  defendant  was  conversant,  was  proper  evidence  to  be 
submitted  to  a  jury,  to  infer  from  it  the  agreement  of  the  party. 
And  although,  as  suggested  at  the  bar,  this  custom  was  altered  by 
the  banks,  we  do  not  find  the  courts  of  justice  in  that  State  at- 
tempting to  control  it,  in  its  application  to  notes  made  in  reference 
to  the  usage. 

The  doctrine  of  this  case  was  again  fully  recognized  in  tlie  Lin- 
coln and  Kennebeck  Bank  v.  Page,  9  Mass.  155,  where  it  was 
held,  that  bank  usages,  established  respecting  demands  on  makers 
of  promissory  notes,  and  notices  to  indorsers,  being  known  to 
dealers  in  the  banks,  they  were  bound  by  them,  and  that  the  usage 
was  proper  evidence  to  be  submitted  to  a  jury.  These  cases  are 
not  referred  to  for  the  purpose  of  approving  the  particular  usages, 
but  to  show  that  evidence  of  such  usage  was  never  considered  as 
contradicting  the  written  contract. 

Halsey  v.  Brown  and  others,  8  Day,  346,  is  a  very  strong  case 
on  this  subject.  The  question  was  as  to  the  liability  of  ship- 
owners, for  the  loss  of  money  taken  on  freight  by  tlie  captain. 
The  defence  set  up  was,  that  the  master,  according  to  established 
custom,  was  permitted  to  take  money  on  freight,  as  a  perquisite  to 
himself,  and  the  owners  discharged  from  responsibility ;  and  the 


RENNER  V.    THE  BANK  OF  COLUMBIA.  303 

question  directly  presented  to  the  Court  was,  wlietlicr  a  particular 
custom  or  usage  could  be  given  in  evidence,  to  control  the  general 
law.  And  the  Court  says,  it  is  a  principle,  that  the  general  com- 
mon law  may  he,  and  in  many  instances  is,  controlled  by  special 
custom.  So  the  general  commercial  law  may,  l)y  tlie  same  reason, 
be  controlled  by  a  special  local  usage,  so  far  as  that  usage  extends, 
wliich  will  operate  upon  all  contracts  of  this  nature,  made  in  view 
of,  or  with  reference  to,  such  usage. 

In  Smith  v.  Wrigiit,  1  Caines,  43,  this  general  principle  is  laid 
down  ;  the  true  test  of  a  commercial  usage  is,  its  having  existed 
long  enough  to  have  become  generally  known,  and  to  warrant  a 
presumption  that  contracts  are  made  in  reference  to  it. 

In  the  case  of  The  Bank  of  Utica  v.  Smith,  18  Johns.  230,  a 
note,  payable  at  the  Mechanics'  Bank  in  New  York,  was  presented 
and  })ayment  demanded,  fifteen  minutes  after  ])ank  hours,  and  this 
was  held  sufficient ;  it  appearing,  that  although  it  was  a  quarter  of 
an  hour  after  the  usual  time  of  closing  the  bank  as  to  other  busi- 
ness, it  was  within  bank  hours,  it  appearing  that,  according  to  the 
general  course  of  doing  business  at  this  bank,  these  fifteen  minutes 
were  the  usual  and  accustomed  time  for  these  presentments,  and 
of  this  course  of  business  the  defendant  ought  to  have  informed 
himself. 

It  is  unnecessary  to  pursue  this  subject  farther  by  particular 
reference  to  decisions  in  the  State  courts.  The  same  doctrine,  as 
to  the  effect  of  particular  usages  in  controlling  the  general  law, 
will  be  found  to  accompany  the  administration  of  justice,  wherever 
the  sul))ect  is  brought  under  consideration.  Wiiether  these  usages 
are,  in  all  instances,  wise  and  beneficial,  may,  perhaps,  be  ques- 
tionable, but  where  they  do  exist,  they  are  considered  as  regu- 
lating and  controlling  contracts,  made  under  and  in  reference 
thereto. 

The  same  principle  is  recognized  by  this  Court,  in  the  case  of 
Yeaton  v.  The  Bank  of  Alexandria,  5  Cranch,  49 ;  2  Cond.  18G. 
Tiic  Chief  Justice,  in  speaking  of  the  effect  of  usage  upon  the 
legal  o])ligation  of  parties,  observes,  if  the  case  showed  that  such 
was  the  usage  of  the  bank,  and  such  the  understanding  under 
which  notes  were  discounted,  this  Court  is  not  prejiared  to  say 
that  the  undertaking  created  by  the  indorsement,  would  not  be  so 
fashioned  as  to  give  effect  to  the  real  intention  of  the  parties. 

These  cases  are  sufficient  to  show,  in  the  most  satisfactory  man- 


304  PRESENTMENT  AND   DEMAND    FOR   PAYMENT. 

ner,  the  light  in  which  courts  of  justice  consider  contracts,  made 
in  reference  to  any  particular  usage,  and  the  effect  that  such  usage 
is  to  have  upon  them.  And  no  good  reason  is  perceived  why 
these  principles  should  not  be  applied  to  the  case  before  us.  The 
custom,  under  which  this  banii;  has  transacted  business  for  five 
and  twenty  years,  of  demanding  payment  of  the  drawers  of  notes 
on  the  fourth  instead  of  the  third  day  after  the  time  limited  for 
payment,  is  not  unreasonable  or  repugnant  to  any  principles  of 
general  policy.  It  does  not  stand  alone,  but  is  in  accordance  with 
the  usage  of  every  other  bank  in  Washington  and  Georgetown. 
The  defendant  indorsed  the  note  in  question,  with  full  knowledge 
of  the  custom.  A  demand  on  the  fourth  day  is  in  perfect  harmony 
with  the  principles  of  the  common  law,  if  applied  to  the  contract, 
the  maker  having  the  whole  of  the  third  day  to  pay  his  note,  and 
not  being  in  default  until  the  fourth.  The  inconveniences  sug- 
gested on  the  argument  growing  out  of  a  usage  here,  differing 
from  that  which  is  in  practice  in  other  places  on  this  subject,  are 
not  of  great  public  concern.  If  they  exist,  they  affect  the  banks 
and  their  customers  only.  And  if  felt  to  the  prejudice  of  either 
the  one  or  the  other,  we  may  rest  assured  it  would  be  altered. 
Their  private  interest  is  a  sure  guaranty  for  this. 

But,  admitting  the  practice  to  be  inconvenient,  and  that  a  uni- 
formity, in  this  respect,  with  other  parts  of  the  country  .would  be 
desirable,  the  remedy  is  not  in  the  hands  of  courts  of  justice, 
whose  business  it  is  to  judge  of  contracts  as  made  by  parties 
themselves,  and  not  to  prescribe  the  manner  in  which  they  shall 
be  made.  We  are,  accordingly,  of  opinion  that  the  Court  below 
did  not  err  in  refusing  to  instruct  the  jury  that  the  demand  upon 
the  maker  of  the  note,  on  the  fourth  day  after  the  time  limited  for 
payment  thereof,  discharged  the  defendant  from  liability  on  his 
indorsement. 

One  of  the  minor  points,  which  has  been  alleged  as  error,  ap- 
pearing on  the  face  of  the  record  is,  that  the  demand  on  the 
maker  of  the  note  should,  at  all  events,  have  been  laid  on  the 
third  day  after  the  time  limited  by  the  note  for  payment,  and  not 
on  the  fourth.  This  objection  cannot  be  sustained  at  this  time. 
Whether  the  declaration  would  not  have  been  bad  on  demurrer, 
not,  however,  because  the  demand  is  laid  on  a  wrong  day,  but  be- 
cause it  does  not  aver  the  usage,  is  a  question  not  necessary  now 
to  decide.     But  if,  as  we  have  determined,  the  demand  was  prop- 


RKNNER  V.    THK  BANK  OF  COLUMBIA.  305 

erly  made  on  the  fourth  day,  it  would  have  been  bad  if  laid  at  an 
earlier  day,  because  the  maker  would  have  l^eeu  under  no  ob^ga- 
tion  to  pay,  and,  of  course,  not  in  default.  If,  therefore,  the  cause 
should  be  sent  back  to  the  Court  below,  no  amendment  in  this 
respect  ought  to  be  made.  T4ie  want  of  an  averment,  so  as  to  let 
in  the  proof  of  usage,  cannot  now  be  objected  to  the  record.  The 
evidence  was  admitted  without  objection,  and  now  forms  a  part  of 
the  record,  as  contained  in  the  bill  of  exceptions.  Had  an  objec- 
tion been  made  to  the  admission  of  the  evidence  of  usage,  for  the 
want  of  a  proper  averment  in  the  declaration,  aiid  the  evidence 
had,  notwithstanding,  been  received,  it  would  have  presented  a 
very  different  question. 

The  time  of  the  demand,  as  laid  in  the  declaration,  is  according 
to  the  legal  effect  of  the  note.  If  made  at  an  earlier  day,  it  would 
have  given  no  cause  of  action  against  the  indorser,  for  he  was  not 
bound  to  pay  until  the  default  of  the  maker,  and  he  was  not  in 
default  until  the  fourth  day.  It  is  a  general  rule,  in  declaring  as 
to  time,  that  it  must  l)e  laid  after  the  cause  of  action  accrues. 

The  case  of  Rushton  v.  Aspinall,  2  Doug.  679,  does  not  apply. 
The  bill  of  exchange,  ui)on  which  that  suit  was  founded,  was 
dated  on  the  twenty-seventh  of  November,  in  the  year  1778,  pay- 
able three  months  after  date.  The  declaration  stated  that  the  bill 
was  presented  for  acceptance  on  the  day  of  the  date  thereof,  and 
duly  accepted,  and  afterwards,  on  the  same  day,  the  acceptor  was 
requested  to  pay,  &c.,  but  neglected  and  refused,  &c.,  and  then 
goes  on  to  state  the  liability  of  the  defendant,  as  indorser,  and  that 
be,  on  the  same  day,  assumed  and  promised  to  pay,  &c.  It  ap- 
pears, therefore,  that  the  refusal  of  the  acceptor,  and  the  assump- 
tion of  the  indorser,  are  laid  on  the  day  of  the  date  of  the  note, 
which  was  three  months  before  it  fell  due.  The  plaintiff,  there- 
fore, by  his  own  showing,  had  no  cause  of  action  when  he  com- 
menced his  suit.  This  was  a  defect  which  no  verdict  could  cure. 
He  had  not  set  forth  his  cause  of  action  defectively,  but  shown 
that  he  had  no  cause  of  action ;  and  this  was  the  ground  on  which 
it  was  placed  by  the  Court.  A  cause  of  action,  defectively  or  in 
accurately  set  forth,  is  cured  by  the  verdict,  because,  to  entitle  the 
plaintiff  to  recover,  all  circumstances  necessary  in  form  or  in  sub- 
stance, to  make  out  his  cause  of  action,  so  imperfectly  stated,  must 
bo  proved  at  the  trial ;  but  when  no  cause  of  action  is  stated,  none 
can  be  presumed  to  have  been  proved. 

20 


306  PRESENTMENT  AND   DEMAND  FOR  PAYMENT. 

This  case  is  not  to  be  considered  as  if  before  us  on  demurrer  to 
the^declaration.  Tlicrc  being  no  averment  of  the  special  custom 
as  to  the  demand  on  the  fourth  day,  and  the  general  rule  being 
that  the  demand  must  be  made  on  the  third,  if  tlie  declaration 
alleges  it  to  have  been  made  on  the*  fourth,  the  joinder  in  demur- 
rer admits  the  fact,  and,  of  course,  that  the  demand  was  too  late. 
But  had  the  declaration  contained  an  averment  of  the  special  cus- 
tom, it  must  allege  a  demand  on  the  fourth  day.  That  is  according 
to  the  legal  effect  of  the  note ;  and  a  demand  laid  on  any  other 
day  would  have  been  bad.  We  must  now  consider  the  case  as  if 
the  declaration  had  contained  a  special  averment  of  the  custom, 
the  proof  liaving  been  before  the  Court  and  jury  without  objection, 
and  now  making  a  part  of  this  record. 

Judgment  affirmed. 

But  the  rule  in  the  principal  case  respecting  usage  applies  only  in  the  case  of 
paper  discounted  by  the  banks.  Cookendorfer  v.  Preston,  4  How.  317.  In  this 
case  Mr.  Justice  McLean,  in  delivering  the  opinion  of  the  Court,  said:  "  In  the 
Bank  of  Washington  v.  Triplett  and  Neale,  1  Pet.  25,  this  Court  sanctions  the 
usage  to  make  the  demand  of  payment  of  a  note,  which  was  left  in  the  bank  for 
collection,  on  the  day  after  the  last  day  of  grace,  placing  such  notes,  in  this 
respect,  on  the  same  footing  as  notes  discounted  by  the  bank.  And  that  such 
was  the  usage  in  1817,  when  payment  on  the  note  or  bill  in  question  Avas  de- 
manded, was  proved  in  that  case.  But  it  was  also  proved,  as  appears  from  the 
record,  that  the  usage  was  changed  in  1818,  by  all  the  banks  of  Washington  and 
Georgetown,  so  as  to  conform  to  the  general  commercial  usage  of  demanding 
payment  on  the  last  day  of  grace.  This  referred  to  notes  or  bills  sent  to  the 
banks  for  collection,  and  of  course  embraces  all  notes  not  negotiated  in 
bank.    .  .  . 

"  Now  if  the  usage,  as  sanctioiied  in  the  cases  above  cited,  governs  this  case,  it 
is  clear  that  such  diligence  has  not  been  used  as  to  charge  the  indorser.  For, 
under  that  usage,  the  demand  should  have  been  made  on  the  day  after  the  third 
day  of  grace,  when  it  was  in  fact  made  on  the  third  day  of  grace.  This  objec- 
tion is  met  by  the  defendant  in  error  by  the  proof  of  the  usage  as  stated,  which 
he  nsists  governs  all  notes  not  discounted  by  the  banks  of  the  District.  The 
note  in  question  was  not  discounted  by  the  Bank  of  Washington,  it  being  merely 
left  there  for  collection.  But  it  is  insisted  that  this  usage  cannot  be  shown  to 
overthrow  that  which  has  been  sanctioned  by  judicial  decisions.  A  local  usage 
may  be  changed  in  the  same  mode  by  which  it  was  established.  But  parol  evi- 
dence is  not  admissible  to  show  that  the  usage  was  dilfercnt,  at  the  time,  from 
what  the  courts  have  solemnly  adjudged  it  to  be.  The  law  merchant  is  founded 
upon  custom,  and  every  modification  of  it,  by  local  usage,  shows  that,  like  other 
laws,  it  may  be  changed. 

"  The  usage  proved  in  this  case,  except  in  Bank  of  Washington  v.  Triplett  and 
Neale,  and  that  is  explained  by  the  evidence  cited,  does  not  conflict  wiih  tliat 


RENNER  V.    THE  BANK  OP  COLUMBIA.  "07 

decided  by  this  Court,  if  the  latter  be  limited  to  notes  discounted  by  the  banks, 
and  the  former  applies  to  all  other  notes  payable  in  the  District.  In  other  words, 
that  the  law  merchant  should  l)e  modified  by  the  usage  as  to  demand  and  notice 
on  notes  discounted  by  the  Ijanks.  And  it  would  seem  from  I  he  decision  above 
cited,  tiie  usage  to  ilemaiid  payment  tiie  day  after  the  third  day  of  grace,  had  its 
origin  with  tiie  banks,  and  has  not  been  extended,  since  1818,  to  pajM-r  not  dis- 
counted by  them.  On  all  other  paper  a  demand  is  made  on  the  tiiird  day  of 
grace,  and  the  usage  is  to  extend  the  protest  on  the  day  on  which  the  notice  is 
given,  stating  the  demand  to  have  been  made  on  the  last  day  of  grace,  and  the 
protest  to  be  dated  the  same  day  on  which  tlie  notice  is  dated.  Now  a  demand 
and  protest  on  the  last  day  of  grace,  and  a  notice  on  the  following  day,  come 
strictly  within  the  law  merchant.  And  this  was  the  diligence  used  in  the  present 
case,  except  the  formal  date  of  the  protest  on  the  day  of  the  notice.  No  con- 
fusion can  therefore  arise  from  this  general  commercial  usage,  as  it  conforms  to 
the  established  law.  No  inconvenience  has  arisen,  it  is  supposed,  from  the  bank 
u.sage  in  the  District,  which  has  been  so  long  and  so  firmly  established."  See, 
also,  upon  the  subject  of  the  usage  of  banks  in  the  District  of  Cohimhia,  Raborg 
V.  Bank  of  Columbia,  1  Harris  it  (J.  2:51;  Hank  of  Columbia  v.  Fitzhngh,  ib. 
239;  Bank  of  Columbia  v.  Magruder,  6  Harris  &  J.  172;  Adams  r.  Otterback, 
16  How.  .".39. 

Days  of  grace  are  allowed  only  to  promissory  notes  and  bills  of  exchange 
proper.  Checks  and  notes  payable  on  demand  are  not  entitled  to  grace. 
Barbour  r.  Bayon,  5  La.  An.  303;  Chitty,  Bills,  377;  Story,  Bills  of  Exchange, 
§  312. 

There  was  formerly  some  doubt  as  to  -whether  bills  payal)le  at  siuht  were  en- 
titled to  days  of  grace.  In  Beawes,  Lex  ]Mercatoria,  PI.  2.06,  it  is  said  that  they 
are  not,  though  days  of  grace  would  be  allowed  if  the  bill  were  payable  one  day 
after  sight.  Kyd,  Bills,  10,  expresses  the  same  view.  But  it  may  now  be  con- 
sidered as  settled  that  days  of  grace  enter  into  such  bills,  and  that  in  this  respect 
they  dilfer  from  pa[)er  payable  on  demand ;  though  the  reason  for  any  such  dis- 
tinction is  ntt  apparent.  See  Dehers  r.  Harriot,  1  Show.  163;  Coleman  v.  Sav- 
er, 1  Barnanliston,  303  ;  Chitty,  Bills,  377  ;  Story,  Promissory  Notes,  §  224  ;  Oridge 
I'.  Sherborne,  11  Mees.  &  W.  37-i.  In  tJanson  l\  Thomas,  3  Doug.  -121  (1784), 
it  was  held  that  a  bill  of  exchange,  payable  at  sight,  was  not  a  bill  payable  on 
demand  within  the  exception  of  the  statute  of  22  Geo.  3,  c.  49.  Bidler,  J., 
in  this  case  says  that,  upon  the  point  respecting  days  of  grace  there  is  doubt, 
but  that  the  question  was  not  new;  "for  in  a  case  before  Willis,  C.  J.,  in  16 
Geo.  2,  a  special  jury  (of  merchants)  certified  that  on  bills  at  sight  three  days 
were  allowed."  Mr.  Justice  Slor;/,  as  above  cited,  says:  "lu  England,  davs  of 
grace  are  allowed  on  all  notes,  whether  they  are  payable  at  a  certain  time  alter 
date,  or  after  sight,  or  even  at  sight.  As  to  the  latter,  there  has  been  some 
diversity  of  opinion  among  the  profession,  as  well  as  among  the  eleineiitarv  wri- 
ters. But  the  doctrine  seems  now  well  established  both  in  England  ami  .\meriea, 
tluat  days  of  grace  are  allowable  on  bills  and  notes  payable  at  siiflit.  And  the 
same  rule  has  been  applied,  as  in  strict  analojxy  it  should  apply,  to  bank  post- 
notes  payable  after  sight ;  for  they  diller   in   nothing   from   ordinary  bills  of  ex- 


308  PRESENTMENT  FOR   DEMAND    AND   PAYMENT. 

change.  The  same  rule  seems  to  apply  to  bills  payable  by  instalments  ;  and  the 
days  of  grace  are  allowed  on  the  falling  due  of  each  instalment."  Upon  the 
last  point  mentioned  see  Oridge  v.  Sherborne,   11  Mees.  &  W.  374. 

It  was  formerly  held  doubtful  also  in  some  of  our  own  courts,  whether  days  of 
grace  could  be  extended  to  inland  bills  and  promissory  notes  ;  and  as  to  the  lat- 
ter it  was  a  vexata  questio  in  England  until  the  decision  of  Brown  v.  Harraden, 
4  T.  R.  148,  in  1791,  settled  the  question  in  favor  of  allowing  days  of  grace. 
The  doubt  in  both  cases,  in  England  and  America,  has  been  removed,  and  there 
is  now  no  doctrine  more  firmly  settled  than  that  both  inland  bills  of  exchange 
and  promissory  notes  are  subject  to  days  of  grace.  See  1  Parsons,  Notes  and  Bills, 
393,  and  note ;  Bank  of  Washington  v.  Triplett,  1  Peters,  25 ;  Wood  v.  Corl,  4 
Met.  203. 

With  regard  to  the  question  of  usage  respecting  days  of  grace,  presented  in 
the  principal  case,  a  further  step  was  taken  in  the  subsequent  case  of  Mills  v. 
Bank  of  the  United  States,  11  Wheat.  431,  post ;  and  it  was  there  held  that  where 
commercial  paper  is  made  payable  or  negotiable  at  a  bank  whose  invariable  usage 
it  is  to  demand  payment  on  the  fourth  day  of  grace,  the  parties  are  bound  by 
that  usage,  being  presumed  to  agree  to  be  bound  by  it,  though  they  do  not  in 
fact  know  it.  Story,  J.,  in  delivering  the  opinion  of  the  Court,  says  that  the 
decision  is  made  "  upon  the  principles  and  reasoning"  of  the  principal  case. 

This  doctrine  respecting  usage  has  been  denied  in  New  York.  In  Woodruff 
I).  Merchants'  Bank,  25  Wend.  673,  Nelso?i,  C.  J.,  said:  "The  effect  of  the 
proof  of  usage,  as  given  in  this  case,  if  sanctioned,  would  be  to  overturn  the 
whole  law  on  the  subject  of  bills  of  exchange  in  the  city  of  New  York.  We 
need  scarcely  add,  even  if  the  witnesses  were  not  mistaken,  and  the  usage  pre- 
vails there  as  testified  to,  it  cannot  be  allowed  to  control  the  settled  and  acknowl- 
edged law  of  the  State  in  respect  to  this  description  of  paper."  This  was  in  the 
Supreme  Court  of  New  York,  in  1841 ;  and  the  decision  was  unanimously  af- 
firmed in  the  Court  of  Appeals,  6  Hill,  174,  in  1843.  The  principle  is  reaffirmed 
in  Brown  v.  Newell,  4  Seld.  190.  But  this  case  occurs  again  in  the  Court  of 
Appeals  in  3  Kern.  290,  on  appeal  from  2  Duer,  584,  where  it  is  held  that  the 
law  of  the  place  where  a  draft  is  made  payable  governs  as  to  its  being  payable 
with  or  without  days  of  grace ;  and  the  draft  in  this  case  being  drawn  upon  a 
bank  in  Connecticut,  payable  on  a  specified  day,  and  it  being  proved  that  days  of 
grace  were  not  allowed  on  such  paper  in  that  State,  it  was  held  that  the  defend- 
ants were  liable  on  presentment  and  notice  on  the  day  designated,  though  the 
law  in  New  York,  where  the  bill  was  drawn  and  indorsed,  allowed  days  of  grace. 
From  this  case  it  would  seem  that  the  ground  of  the  decision  in  4  Seld.  190,  was 
that  the  usage  was  not  satisfactorily  proved.  The  former  cases  then  seem  to  be 
virtually  overruled. 

The  general  rule  undoubtedly  is,  that  the  law  of  the  place  where  the  paper  is 
payable  will  govern  respecting  the  days  of  grace ;  and  the  origin  of  the  indul- 
gence being  in  usage,  it  seems  consistent  with  reason  that  proof  of  the  particular 
custom  should  be  received.  See  Kilgore  r.  Bulkley,  14  Conn.  362;  Bryant 
V.  Edson,  8  Vt.  325;  Ripley  v.  Greenleaf,  2  Vt.  129;  Vidal  v.  Thompson, 
11  Mart.  La.  23 ;  Goddin  v.  Shipley,  7  B.  Mon.  575 ;  1  Parsons,  Notes  and  Bills, 
399. 


RENNER  V.   THE  BANK  OF  COLUMBIA.  309 

If  commercial  paper  fall  due  on  Sunday,  or  on  a  lioliday,  it  is  payable  tlie  day 
before  ;  and  evidence  will  be  received  to  show  usage  respecting  what  are  holi- 
days, in  the  absence  of  statutory  provision.  City  Bank  v.  Cutter,  3  Pick.  41 -i. 
In  this  case  the  question  was  whether  comniencenient  day  at  Harvard  College 
could  be  deemed  a  holiday.  Parker,  C.  J.,  u\Hm  this  i)oint,  said  :  "  It  is  not  in  the 
language  of  the  conunou  law  a  holiday,  though  it  is  a  day  of  festivity  and  amuse- 
ment in  the  neighborhood  of  the  I'niversity.  But  it  is  a  fit  subject  of  a  usage 
which  will  bind  all  those  dealing  with  a  bank  which  has  adopted  it  as  a  day  when 
business  is  not  to  be  done.  It  is  found  to  have  been  the  usage  of  the  City  Bank 
to  regard  it  in  this  light,  and  the  report  finds  that  the  defendants  had  express 
knowledge  of  this  usage." 

But  proof  of  four  instances  within  two  years  in  which  a  bank  departed  from 
the  law  merchant  as  to  the  time  ol'  giving  notice  to  an  indorser,  is  not  sufficient 
to  establish  a  usage  binding  on  the  indorser.  Adams  r.  Otterback,  lo  How.  539. 
Per  McLean,  J. :  "To  constitute  a  usage,  it  must  apply  to  a  place  rather  than 
to  a  particular  bank.  It  must  be  the  rule  of  all  the  banks  of  the  place,  or  it 
cannot  consistently  be  called  a  usage.  If  every  bank  could  establish  its  own 
usage,  the  confusion  and  uncertainty  would  greatly  e.xceed  any  local  convenience 
resulting  from  the  arrangement."'  This  reasoning  is  not  at  variance  with  that  of 
Parker,  C.  J.,  above,  as  it  is  predicated  of  a  case  in  which  the  defendant  had 
no  knowledge  of  the  alleged  usage.  See  also  Dabney  r.  Campbell,  9  Humph. 
680. 

The  reasonable  rule  and  the  result  of  the  cases  seem  to  be  that,  to  give  a 
usage  in  respect  to  days  of  grace  the  force  of  law,  it  must  at  least  be  so  general 
and  have  such  a  notoriety  that  an  inference  may  be  drawn  that  the  parties  con- 
tracted in  reference  to  it ;  or  if  it  is  not  thus  general  and  notorious,  that  the 
defendant  had  knowledge  of  the  usage,  or  acquiesced  in  the  particular  instance. 

Mr.  Justice  Story  mentions  another  important  rule  respecting  days  of"  grace. 
It  is  that  the  days  of  grace  are  all  to  be  counted  consecutively  and  in  direct  suc- 
cession, no  deduction  being  allowed  by  reason  of  the  circumstance  that  a  Sunday 
or  holiday  intervenes  between  the  first  and  last  day  of  grace  ;  or,  he  migiit  have 
added,  though  the  first  day  of  grace  falls  on  Sunday  or  a  holiday.  Story,  Bills 
of  Excliange,  §  337. 


olo  presentment  and  demand  for  payment. 

Ephraim  Dana  v.  Samuel  H.  Sawyer. 

(22  Maine,  244.     Supreme  Court,  April,  1843.) 

At  ii-hat  tiivc  of  day  presentment  should  he  made.  —  When  a  bill  or  note  is  not  payable  at  a 
place  where  there  are  established  business  hours, presentment  for  payment  maybe 
made  at  any  reasonable  hour  of  the  day  ;  but  presentment  to  the  maker  at  near 
midnight,  after  he  had  retired  to  rest,  is  not  a  reasonable  hour,  and  will  not  charge 
an  indorser  on  notice,  unless  there  was  a  waiver  of  any  objection  as  to  the  time,  or 
unless  it  appear  that  payment  would  not  have  been  made  upon  a  demand  at  a 
reasonable  hour. 

This  case  was  submitted  on  the  following  statement  of  facts. 
The  action  is  on  a  promissory  note,  signed  by  T.  Sawyer  &  Co., 
dated  Dec.  24,  1838,  for  $202.50,  on  four  months,  payable  to  and 
indorsed  by  the  defendant. 

It  is  agreed  that  on  the  day  the  note  fell  due,  George  W.  Smith 
came  to  the  house  occupied  by  said  Thorndike  Sawyer  and  Samuel 
H.  Sawyer,  the  defendant,  in  the  evening,  between  eleven  and  twelve 
o'clock,  called  up  said  T.  Sawyer  from  his  bed,  and  presented  the 
note  to  him  for  payment,  which  he  did  not  pay,  and  left  with  him  a 
notice  and  demand  for  payment,  and  delivered  another  notice  of 
non-payment  by  the  makers  of  the  note,  directed  to  said  S.  H. 
Sawyer,  and  demand  of  payment  to  said  T.  Sawyer  for  said  Samuel, 
wJiich  said  Thorndike  did  not  deliver  to  said  Samuel.  Said  Samuel 
was  then  in  the  house,  but  was  in  bed.  He  had  his  residence  in 
the  same  house. 

The  Court  were  to  enter  a  nonsuit  or  default,  as  they  might 
determine  to  be  the  law  in  the  matter. 

Shepley,  J.  This  case  is  presented  upon  an  agreed  statement  of 
facts,  from  which  it  appears  that  a  demand  for  payment  was  made 
upon  the  maker  of  the  note,  between  eleven  and  twelve  o'clock  at 
night  on  the  day  that  it  became  payable,  by  calling  him  from  his 
bed  ;  and  that  he  did  not  pay  it.  There  is  no  further  statement  of 
any  thing  else  said  or  done,  except  that  a  notice  and  demand  for 
payment  was  left  with  him.  When  a  bill  or  note  is  payable  at  a 
banking-house,  or  other  place,  where  it  is  well  known  that  business 
is  transacted  only  during  certain  hours  of  the  day,  the  law  presumes 
that  the  parties  intended  to  conform  to  such  established  course  of 
business,  and  requires  that  a  demand  should  be  made  during  those 


DANA    V.    SAWYER.  311 

business  hours.  Parker  v.  Gordon,  7  East,  385.  The  cases  of 
Garuett  v.  Woodcock,  1  Stark.  475,  and  of  Henry  v.  Lee,  2  Chitty, 
124,  may  show  an  exception  to  this  rule  that,  when  a  person  is 
found  at  such  place  after  business  liours,  authorized  to  give  an 
answer,  the  demand  will  be  good.  While  it  may  be  difficult  to 
reconcile  those  cases  with  the  case  of  Elford  v.  Teed,  1  M.  &  S.  28. 
When  the  lull  or  note  is  not  payable  at  a  place  where  there  are 
established  business  hours,  a  presentment  for  {)ayincnt  may  be 
made  at  any  reasonable  hour  of  the  day.  Leftley  v.  Mills,  4  T.  R. 
174;  Barclay  v.  Bailey,  2  Camp.  527;  Triggs  v.  Newnliam,  10 
Moore,  24<i ;  Wilkins  r.  Jadis,  2  Barn.  &  Adol.  188.  What  hour  may 
be  a  reasonable  one  has  come  under  consideration  in  those  cases. 
In  the  first  of  them  Mr.  Justice  Buller  observes,  that  "  to  say  that 
the  demand  should  be  postponed  till  midnight,  would  be  to  establish 
a  rule  attended  with  mischievous  consequences."  In  the  second, 
Lord  EUenhorough  said,  "  if  the  presentment  had  been  during  the 
hours  of  rest,  it  would  have  been  altogether  unavailing."  h\  the 
third,  this  remark,  among  others,  is  quoted  and  approved  by  C.  J. 
Beat.  In  the  fourth,  Lord  Tenterden  remarked,  that  "  a  i)resent- 
ment  at  twelve  o'clock  at  night,  when  a  person  has  retired  to  rest, 
would  1)0  unreasonable."  Those  observations,  so  just  and  so  appli- 
cable to  this  case,  authorize  the  conclusion,  that  the  demand  was 
not  made  at  a  reasonable  hour,  unless  the  fact  that  the  maker  was 
seen  and  actually  called  upon  at  that  time  should  make  a  difference. 
Perhaps  in  analogy  to  the  exception  already  noticed,  it  might  be 
proper  to  admit  of  one  in  this  and  the  like  cases,  if  it  should  appear 
from  the  answer  made  to  the  demand,  that  there  was  a  waiver  of 
any  objection  as  to  the  time,  or  that  payment  would  not  have  been 
made  upon  a  demand  at  a  reasonable  hour.  But  there  is  nothing 
in  this  agreed  statement  to  show  that  payment  might  not  have  been 
refused  because  the  demand  was  made  at  such  an  hour,  that  the 
maker  did  not  choose  to  be  disturl)ed,  or  because  he  could  not  then 
have  access  to  funds  prepared  and  deposited  elsewhere  for  safety. 

Plaintiff  nonsuit. 

The  general  rule  respecting  the  proper  time  of  day  at  which  presentment  for 
payment  shouM  be  made,  —  that  it  must  be  made  within  reasonable  hours,  —  is 
the  same  as  in  the  case  of  presentment  for  acceptaiue.  Story,  Bills  of  Ex- 
change, §  :U9;  Chitty,  Bills,  :W7. 

What  is  a  reasonable  hour  will  depend  partly  on  the  ])lai'e  of  business  or  dom- 
icile of  the  maker,  and  partly  on  the  usage  of  trade  where  the  paper  is  payable  ; 


312  PRESENTMENT   AND    DEMAND   FOR   PAYMENT. 

and  in  the  case  of  paper  payable  at  bank,  while  it  must  in  general  be  presented 
during  banking  hours,  still  it  may  be  presented  after  such  hours,  provided  a  per- 
son be  stationed  there  by  the  bank  to  return  answers,  or  if  there  is  a  custom  of 
the  bank  which  allows  a  certain  length  of  time  after  closing  for  transacting  such 
business.  Bank  of  Utica  v'.  Smith,  18  Johns.  230;  Chitty,  Bills,  387;  Story, 
Promissory  Notes,  §  226  ;  Story,  Bills  of  Exchange,  §  349. 

If  the  presentment  is  made  at  unseasonable  hours,  either  too  early  or  too  late, 
at  a  bank  or  banker's,  or  at  the  counting-house  or  dwelling-house  of  the  maker, 
and  there  is  no  person  there  authorized  to  act,  or  ready  to  act,  for  the  maker ;  if 
the  presentment  is  made  before  the  counting-house  is  open  or  after  it  is  shut ; 
in  these  cases  the  presentment  will  be  a  mere  nullity.  Story,  Promissory 
Notes,  §  226;  Story,  Bills  of  Exchange,  §§  236,  349. 

But  in  the  case  of  presentment  after  the  maker  or  acceptor  has  retired  to  rest, 
it  is  worthy  of  note  that  the  rule  in  the  principal  case  applies  only  when  the 
party  has  retired  at  the  usual  or  proper  time.  If  he  has  retired  at  an  unusual 
hour,  a  presentment  before  it  has  become  unseasonably  late  will  be  good. 
Farnsworth  v.  Allen,  4  Gray,  453. 

In  this  case,  presentment  was  made  at  nine  o'clock  in  the  evening,  in  the 
month  of  August,  when  it  was  found  that  the  maker  of  the  note  had  retired  to 
rest ;  and  as  it  appeared  that  he  lived  ten  miles  distant  from  the  residence  of  the 
holder,  and  due  diligence  had  been  used  to  find  him,  the  presentment  was  held 
to  have  been  made  at  a  reasonable  hour.  And  it  would  seem  that  the  same  rule 
should  apply  where  the  presentment  is  made  in  the  morning  at  a  reasonable  hour, 
and  the  maker  has  not  arisen.  See  Lunt  v.  Adams,  17  Maine,  230,  holding  pre- 
sentment at  eight  o'clock  in  the  morning  too  early. 

With  the  above  qualification  it  is  undoubtedly  true,  as  stated  by  Cotcen,  J., 
in  Cayuga  County  Bank  v.  Hunt,  2  Hill,  635,  that,  except  where  paper  is  due 
from  a  bank,  proper  hours  of  business  range  through  the  whole  day  down  to 
bedtime;  citing  Chitty,  Bills,  421,  Am.  ed.  1839,  and  cases  there  cited. 

It  is  held  also  in  England  that  presentment  between  oight  and  nine  o'clock  in 
the  evening,  at  the  house  of  a  trader  or  merchant,  is  sufficient.  Triggs  v.  Newn- 
ham,  10  Moore,  249 ;  s.  c,  1  Car.  &  P.  631.  And  this,  too,  though  the  house  be 
shut,  and  no  one  there  to  give  an  answer.  Wilkins  v.  Jadis,  2  Barn.  &  Adol. 
188,  cited  in  the  principal  case.     See  Chitty,  Bills,  388. 

So  In  Morgan  v.  Davison,  1  Stark.  114,  In  which  the  paper  was  presented  at 
a  trader's  between  six  and  seven  o'clock  in  the  evening,  when  no  one  was  present 
but  a  girl  taking  care  of  the  counting-house.  Lord  Ellenhoroiigh  held  that  the 
hour  was  a  proper  one,  and  that  the  holder  might  reasonably  expect  to  find  the 
payor  there. 

In  Barclay  v.  Bailey,  2  Camp.  527,  the  distinction  between  paper  payable  at 
bank  and  elsewhere  Is  again  observed.  Lord  Ellenhoroiigh  said:  "  I  think  this 
presentment  sufficient ;  a  common  trader  is  different  from  bankers,  and  has  not 
any  peculiar  hours  for  paying  or  receiving  money ;  if  the  presentment  had  been 
during  the  hours  of  rest,  it  would  have  been  altogether  unavailing ;  but  eight  in 
the  evening  cannot  be  considered  an  unseasonable  hour  for  demanding  payment 
at  the  house  of  a  private  merchant  who  has  accepted  a  bill." 


taylor  v.  snyder.  813 

Taylor  v.  Snyder. 

(3  Denio,  145.     Supreme  Court  of  New  York,  May,  1846.) 

Where  to  be  made.  —  Tlie  place  of  date  of  a  promissory  note  payable  generally,  is  only 
prima  facie  tlie  place  of  payment ;  and  though  a  note  be  made  and  dated  in  New 
York,  if  the  maker  tlien  resided  in  Florida,  and  the  holder  knew  this  at  the  time  the 
note  was  executed,  and  tiie  maker  hii.s  not  changed  his  residence  since  that  time, 
demand  must  be  made  of  the  maker  in  Florida  in  order  to  charge  an  indorser. 

The  case  is  stated  in  tlic  opinion  of  the  Court. 

Beardsley,  J.  As  the  note  bears  date  at  Troy,  it  is  presumed 
to  have  been  made  at  that  place,  although  the  maker  then  resided 
in  Florida,  as  was  well  known  to  tJie  original  bolder,  Morris,  and 
to  Stevenson,  to  whom  it  was  subsequently  transferred.  The  resi- 
dence of  the  maker  had  not  been  changed  when  the  note  fell  due, 
his  domicile  still  being  in  Florida. 

The  indorser  resided  in  Troy.  It  was  not  shown  that  he  ever 
owned  the  note,  or  was  under  any  other  obligation  for  its  payment 
than  that  of  an  ordinary  indorser ;  and  it  may  fairly  be  inferred 
from  the  case  that  the  note  was  given  for  a  debt  due  from  the 
maker  to  Morris,  and  was  indorsed  for  his  benefit  at  the  request  of 
the  maker. 

Some  months  before  the  note  fell  due,  the  indorser  had  been 
asked  by  the  then  holder,  Morris,  if  it  would  be  paid  at  maturity, 
to  which  he  replied  that  it  would  be  ;  that  his  brother,  the  maker, 
would  send  the  money  to  him,  and  he  should  see  the  note  was  paid. 
But  on  being  requested  to  stipulate,  absolutely,  to  pay  the  note 
himself,  he  declined  to  do  so.  It  does  not  appear  that  on  this  or 
any  other  occasion,  any  thing  was  said  as  to  the  place  where  pay- 
ment would  be  made,  or  where  the  note  should  be  presented  for 
payment  at  maturity. 

Upon  the  evidence  as  stated  in  the  case,  I  think  it  (jannot  be  said 
that  any  thing  has  been  done  by  the  indorser  to  change  or  affect 
bis  original  liability  or  his  rights,  in  tiiat  character.  He  had  not 
designated  any  particular  place  in  Troy,  or  that  city  at  large,  as 
the  place  at  which  the  note  would  be  paid,  or  where  demand  should 
be  made,  nor  had  he  been  requested  to  designate  any  place  for 


t 
314  PRESENTMENT    AND    DEMAND    FOR    PAYMENT. 

that  purpose.  And  althongh  he  certainly  gave  a  strong  assurance 
that  the  maker  would  remit  the  money  to  him,. and  therefore  that 
the  note  would  be  duly  paid,  he  at  the  same  time  refused  to  bind 
himself  absolutely  for  its  payment.  He  chose  to  leave  his  own 
responsibility  where  his  contract  and  the  law  had  placed  it ;  and 
no  one  had  a  right  to  understand  from  what  he  said,  that  he  in- 
tended to  assume  any  new  obligation,  or  to  dispense  with  the  per- 
formance of  any  act  which  the  law  required  the  holder  of  the  note 
to  perform.  It  does  not  appear  to  have  been  suggested  on  the 
trial,  that  the  action  was  to  be  sustained  on  any  such  ground,  nor 
was  the  judge  requested  to  submit  the  question  of  a  waiver  of 
demand  of  payment,  by  the  indorser,  to  the  jury.  It  was  doubt- 
less then  urged,  as  it  was  on  the  argument  at  bar,  that  this  note 
was  by  law  payable  at  Troy,  and  therefore  the  defendant  had  been 
duly  charged  as  indorser,  and  not  that  he  had  in  any  manner 
waived  a  demand  at  the  proper  place. 

What,  then,  is  this  case  ?  A  debtor,  whose  residence  is  in  Florida, 
being  at  Troy,  makes  a  note,  which  he  dates  at  that  place,  to  his 
creditor,  a  resident  of  this  State,  for  an  amount  due  to  him,  and 
procures  a  friend  residing  at  Troy  to  indorse  the  same.  No  place 
of  payment  is  specified  in  the  note,  nor  is  there  any  thing  to  indi- 
cate a  place,  unless  that  follows  fiom  the  note  bearing  date  at  Troy. 
The  holder  knows  the  residence  of  the  maker  to  be  in  Florida,  but 
when  the  note  falls  due,  instead  of  making  demand  of  the  maker 
personally,  or  at  his  residence  or  place  of  business  in  Florida,  pay- 
ment is  demanded  at  Troy  and  not  elsewhere.  Was  this  a  sufficient 
demand  as  respects  the  indorser  ?  It  clearly  was,  if  the  note  was 
by  law  payable  at  that  place,  and  it,  as  clearly,  was  not,  if  the  note 
was  payable  elsewhere.    This  is  the  only  question  to  be  determined. 

The  date  of  a  note  at  a  particular  place  does  not  make  that  the 
place  of  payment,  or  at  which  payment  should  be  demanded  for  the 
purpose  of  charging  the  indorser.  This  was  expressly  adjudged  in 
the  case  of  Anderson  v.  Drake,  14  Johns.  114.  That  was  an  ac- 
tion against  the  indorser  of  a  promissory  note,  bearing  date  in  the 
city  of  New  iTork,  but  not  made  payable  at  any  particular  place. 
When  the  note  was  made,  the  maker  lived  in  New  York  ;  but  before 
it  fell  due  he  removed  to  Kingston  in  the  county  of  Ulster.  The 
counsel  for  the  plaintiff  insisted  "  that  as  the  note  was  dated  in 
New  York,  and  the  parties  resided  there  at  the  time  it  was  made, 
it  must  be  presumed,  no  particular  place  being  designated  for  the 


TAYLOR    V.    SNYDER.  315 

payment,  that  it  was  payable  in  New  York ;  that  the  removal  of 
the  maker  from  New  York  to  any  other  place  did  not  render  it 
necessary  for  the  holder  to  follow  him  for  the  purpose  of  demand- 
ing payment."  But  the  Court  thought  otherwise,  and  held  that  a 
demand  of  the  maker  personally,  or  at  his  residence  or  pfcice  of 
business  in  Kingston,  as  in  ordinary  cases,  was  necessary,  and  that 
the  indorser  could  not  be  charged  upon  a  demand  made  in  the  city 
of  New  York,  although  the  note  Ijoro  date  at  that  place.  Tiiis  I 
understand  to  be  the  settled  and  invariable  rule  where  the  maker 
has  not  removed  from  the  State,  but  has  a  known  residence  within 
its  limits.  Where,  after  a  note  has  been  given,  the  maker  absconds, 
removes  into  another  State  or  country,  or  is  without  a  fixed  resi- 
dence anywhere,  other  principles,  as  we  shall  see,  apply :  but  in 
no  case  does  the  date  of  a  note,  of  itself,  make  that  the  place 
where  payment  should  be  demanded  in  order  to  charge  the  in- 
dorser. 

It  has  been  supposed  that  the  case  of  Stewart  v.  Eden,  2  Gaines, 
121,  countenances  a  different  doctrine.  Livingston^  3.^  there  said, 
"  the  note  being  dated  in  New  York,  the  maker  and  indorser  are 
presumed  to  have  resided,  and  contemplated  payment  there."  This 
remark  was  in  part  strictly  correct,  for  the  date  of  the  note  was 
presumptive  evidence  of  residence;  and  in  a  general  sense  it  may 
also  be  true  that  the  date  raises  a  presumption  that  the  parties 
contem])latcd  payment  at  that  place.  Judge  Livingston  did  not  say 
that  the  note  was  by  law  payable  at  the  place  of  its  date ;  on  the 
contrary,  the  form  of  expression  conclusively  repels  that  idea.  He 
was  not  speaking  of  what  the  parties  were  bound  to  do  by  the  terms 
of  the  note,  of  their  legal  obligations  flowing  from  their  engage- 
ments as  maker  and  indorser,  but  simply  of  what  they  were  pre- 
sumed to  have  contemplated.  If  the  learned  judge  intended  to 
affirm  that  a  note,  when  no  particular  place  of  payment  is  otherwise 
indicated,  is  by  law  payal)le  at  the  place  where  dated,  he  would 
have  said  so  in  direct  terms,  and  would  not  have  said  it  was  to  be 
presumed  payment  at  that  place  was  contemplated.  -This  would 
have  been  absurd.  But  in  truth  the  question  whether  the  note  in 
that  case  was  payable  where  it  bore  date,  was  not  before  the  Court, 
nor  was  it  tliere  pretended  that  payment  had  not  been  duly  de- 
manded. It  was  an  action  against  the  representatives  of  a  deceased 
indorser,  and  although  an  objection  was  taken  to  the  form  in  which 
the  presentment  for  payment  was  alleged  in  the  declaration,  it  was 


316  PRESENTMENT   AND    DEMAND    FOR    PAYMENT. 

not  pretended  by  any  one  that  the  demand  of  payment  had  not 
been  strictly  correct.  The  main  question  in  the  case  was,  as  to  the 
suflficiency  of  the  notice  to  the  indorser,  and  the  remark  of  the  judge 
was  made  in  discussing  that  point.  I  admit  that  upon  the  question 
of  du%diligence  in  giving  notice  to  an  indorser,  it  may  have  been 
very  pertinent  and  proper  to  say  that  the  parties  are  presumed  to 
have  contemplated  payment  at  the  place  where  the  note  was  given 
and  was  dated,  although  such  a  remark  would  be  altogether  out 
of  place  in  deciding  upon  the  construction  of  an  agreement,  and 
whether  the  parties  by  its  terms,  were  bound  to  make  payment  at 
a  particular  place.  There  is  nothing  therefore  in  this  remark  of 
Judge  Livingston  which  can  be  made  to  countenance  the  idea  that 
a  note,  when  no  other  place  of  payment  is  specified,  is  by  law  pay- 
able at  the  place  of  its  date.  Anderson  v.  Drake,  supra;  Bank  of 
America  v.  Woodworth,  18  Johns.  315,  322. 

Where  a  promissory  note  is  not  made  payable  at  any  particular 
place,  the  general  rule  of  law  is,  that  in  order  to  charge  the  indors- 
er payment  must  be  demanded  of  "  the  maker  personally,  or  at 
his  dwelling-house,  or  other  place  of  abode,  or  at  his  counting- 
house  or  place  of  business."  Story,  Promissory  Notes,  §  235 ; 
Bank  of  America  v.  Woodworth,  18  Johns.  315  ;  s.c,  in  error,  19 
id.  391.  But  although  such  is  the  general  rule,  yet,  under  various 
circumstances,  a  demand  in  any  form  or  manner  may  be  dispensed 
with.  It  is  a  question  of  diligence,  and  if  a  demand  is  found  to  be 
impracticable,  proper  efforts  for  that  purpose  having  been  made, 
the  indorser  will  still  be  held  liable,  due  notice  having  been  given 
to  him  by  the  holder. 

Thus  where  the  maker  has  absconded,  that  will  ordinarily  excuse 
a  demand,  and  notice  of  the  fact  is  sufficient  to  hold  the  indorser. 
1  Ld.  Raym.  443,  743 ;  3  Kent,  5th  ed.  96 ;  Putnam  v.  Sullivan, 
4  Mass.  45,  53 ;  Lehman  v.  Jones,  1  Watts  &  S.  126  ;  Chitty, 
Bills,  10th  Am.  ed.  354,  n.  1 ;  Story,  Promissory  Notes,  §  237. 

Where  the  maker  is  a  seaman  on  a  voyage,  having  no  domicile  in 
the  State,  the  indorser  is  liable  without  a  demand  being  made. 
Barrett  v.  Wills,  4  Leigh,  114.  But  although  the  maker  may  be 
absent  on  a  voyage,  if  he  has  a  domicile  in  the  State,  payment  must 
be  demanded  there.  Dennie  v.  Walker,  7  N.  Hamp.  199 ;  Whit- 
tier  V.  Grafifam,  3  Greenl.  82. 

And  in  every  case  where  the  maker  has  no  known  residence  or 
place  at  which  the  note  can  be  presented  for  payment,  the  holder 


TAYLOR    V.    SNYDER.  317 

will  in  like  maimer  be  excused  from  making  any  demand  whatever. 
Story,  Promissory  Notes,  §  287  ;  Whittier  v.  Graffam,  supra;  Put- 
nam c.  Sullivan, sj/^^ra  ;  Duncan  v.  McCullough,4Serg.  &Rawle,480. 
But  in  all  such  cases,  the  reason  for  not  making  a  demand  must  be 
shown  on  the  trial  of  the  cause.  It  must  a})pear  that  the  %naker 
had  absconded,  was  at  sea,  or  had  no  known  domicile  or  place  where 
the  note  should  be  presented.  The  rule  is  strict,  that  a  demand 
must  be  made,  or  a  proper  excuse  shown  for  its  omission. 

There  is  a  further  exception  to  the  rule  requiring  a  demand  to 
be  made  of  the  maker,  or  at  his  domicile  or  place  of  business ;  for 
where  a  note  is  made  by  a  resident  of  the  State,  who,  before  it  is 
payable,  removes  from  the  State  and  takes  up  a  permanent  res- 
idence elsewhere,  the  holder  need  not  follow  him  to  make  demand, 
but  it  is  sufficient  to  present  the  note  for  payment  at  the  former 
place  of  residence  of  the  maker.  M'Gruder  v.  Bank  of  Washing- 
ton, 9  Wlieat.  .")98  ;  ^  Anderson  v.  Drake,  supra ;  Dennie  i*.  Walker, 
supra;  Gillespie  v.  Hannahan,  4  M'Cord,  503;  Reid  v.  Morrison, 
2  Watts  k  S.  401;  8  Kent,  90.  And  this  is  just :  for  it  is  but 
reasonable  to  suppose  that  neither  party,  when  the  note  was  given, 
looked  for  a  change  of  residence  to  a  foreign  country,  and  that 
each  contracted  upon  the  supposition  that  no  such  change  would 
take  place.  Nevertheless,  as  was  said  in  Dennie  v.  Walker,  supra, 
"  this  is  an  exception  to  the  general  rule,  and  must  be  construed 
strictly."  "  We  think,"  say  the  Court  in  M'Gruder  v.  Bank  of 
Washington,  supra,  "  that  reason  and  convenience  are  in  favor  of 
sustaining  the  doctrine  that  such  a  removal  is  an  excuse  from 
actual  demand.  Precision  and  certainty  are  often  of  more  impor- 
tance to  the  rules  of  law,  than  their  abstract  justice.  On  this 
point,  there  is  no  other  rule  that  can  be  laid  down,  which  will  not 
leave  too  much  latitude  as  to  place  and  distance.  Besides  which, 
it  is  consistent  with  analogy  to  other  cases,  that  the  indorser  should 
stand  committed,  in  this  respect,  by  the  conduct  of  the  maker. 
For  his  absconding  or  removal  out  of  the  kingdou),  the  indorser  is 
held,  in  England,  to  stand  committed." 

These  exceptions  to  the  general  rule,  it  will  l)e  seen,  all  rest  on 
peculiar  reasons.  In  one,  the  maker  has  absconded;  in  another, 
he  is  temporarily  absent,  and  has  no  domicile  or  place  of  business 
within  the  State  ;  in  a  third,  his  residence,  if  any  he  has,  cannot 
be  ascertained ;  while  in  the  fourth,  he  has  removed  out  of  the 

Post. 


318  PRESENTMENT    AND    DEMAND    FOR    PAYMENT. 

State  and  taken  up  his  residence  in  another  country.  In  each  of 
these  instances,  let  it  be  observed,  the  fact  constituting  the  excuse, 
occurs  subsequently  to  the  making  and  indorsement  of  the  note  ; 
and  it  is  this  new  and  changed  condition  of  the  maker,  and  that  only, 
by  whteh  the  indorser  stands  committed,  without  a  regular  demand. 

We  are,  then,  to  inquire  whether  these  exceptions  are  to  be 
multiplied,  and  extended  to  a  case  where  no  change  in  tlie  condi- 
tion of  either  party  has  taken  place  ;  where  the  maker,  when  the 
note  was  made  and  indorsed,  had  a  known  residence  in  another 
State,  and  which  had  remained  unchanged  at  the  maturity  of  the 
note.  It  is  palpable  that  this  exception,  if  made,  must  be  placed 
on  some  new  principle  ;  it  cannot  be  allowed  on  the  ground  which 
upholds  the  others.  The  facts  in  this  case  are  unchanged,  and  as 
the  reason  for  making  an  exception  does  not  exist,  the  exception 
itself  should  not  be  allowed.  Unless,  therefore,  the  general  posi- 
tion is  true,  that  one  who  indorses  for  a  maker  who  lives  in  another 
State  may  be  "  held  liable  without  any  demand  being  made  on  the 
maker,"  I  think  the  defendant  was  not  liable  in  the  case  at  bar. 
And  if  any  such  general  rule  of  law,  as  I  have  stated,  exists,  it 
certainly  may  be  shown  ;  but  that  it  has  no  existence,  is,  as  I  be- 
lieve, not  only  according  to  the  universal  understanding  amongst 
commercial  men,  but  also  according  to  the  settled  course  of  busi- 
ness in  the  commercial  world. 

The  indorsement  of  a  note  is  an  order  to  the  maker  to  pay  the 
amount  to  the  indorsee  or  holder,  as  is  specified  and  agreed  in  the 
note,  and  an  engagement  by  the  indorser  that  if  the  note  is  duly 
demanded  of  the  maker  and  not  paid,  or  if  it  shall  be  found  im- 
practicable to  make  a  demand,  the  indorser  will  himself,  on  re- 
ceiving due  notice,  pay  the  amount  to  the  indorsee  or  holder. 
Now,  where  such  an  order  is  drawn  upon  a  maker  who  resides  in 
another  State,  and  which  is  well  known  to  the  person  in  whose 
favor  the  order  is  drawn,  upon  what  principle  can  it  be  said  that 
a  demand  of  the  maker  is  unnecessary  ?  The  indorsee  volun- 
tarily consents  to  take  such  an  order,  and  why  should  he  not  per- 
form the' condition  on  which  the  ultimate  liability  of  the  indorser 
depends  ?  I  confess  I  see  no  reason  why  he  should  not.  Here  is 
no  mistake,  or  misapprehension  of  fact,  at  the  time  the  indorse- 
ment is  made.  The  indorsee  knows  where  the  maker  resides,  and 
that  it  is  in  another  State.  He  knows  that  by  law,  unless  the  in- 
tervention of  a  State  line  makes  a  difference,  the  maker  must  be 


TAYLOR    V.    SNYDER.  319 

sought  where  he  resides,  and  the  demand  must  be  made  there. 
When  the  time  for  payment  arrives,  the  maker  is  still  at  his  former 
residence  ;  the  facts  of  the  case  are  precisely  as  they  were  when 
the  order  was  drawn.  Why,  in  such  a  case,  should  the  State 
lino  make  a  dilTcrcnce  in  the  construction  and  legal  elllect  of  this 
contract  of  'the  indorsur  V  It  was  fairly  entered  into  between  the 
parties  ;  let  it  then  be  fairly  observed  and  performed  by  them. 

1  can  well  understand  why  such  an  order  made  by  an  indorser 
upon  the  maker  of  a  note  then  residing  loithin  this  *State,  but  who 
removes  into  another  State  before  the  note  Aills  due,  should  re- 
ceive a  different  construction,  and  that  it  would  be  unreasonable 
to  require  the  holder  to  follow  the  maker  to  his  new  residence  in 
order  to  demand  payment.  Here,  a  new  and  unlooked-for  event 
lias  occurred,  which,  like  the  absconding  of  a  maker,  or  an  ina- 
bility to  discover  his  residence,  may  very  reasonably  be  held  to 
excuse  a  demand.  In  these  respects,  the  indorser  should  be  held  to 
stand  committed  by  the  act  of  the  maker.  But  where  the  facts,  in 
reference  to  which  the  parties  contracted,  were  fully  known  to 
them,  and  are  in  no  respect  changed,  I  am  unable  to  discover  any 
principle  winch  will  excuse  the  maker  from  making  a  demand,  or 
using  proper  diligence  to  make  a  demand,  as  in  orcUnary  cases. 
The  intervention  of  a  State  line  has,  in  my  opinion,  no  possible 
bearing  on  the  question. 

I  admit  that  I  have  not  found  any  case  in  which  this  point  has 
been  expressly  adjudicated,  as  I  have  stated  it.  It  seems,  how- 
ever, to  have  been  taken  for  granted,  in  the  case  of  M'Gruder  i\ 
The  Bank  of  Washington,  already  referred  to.  The  case  of  Dun- 
can r.  McCuUough,  Adm'r,  &c.,  4  Serg.  &  Rawle,  480,  was,  in 
some  of  its  features,  nuich  like  the  one  at  bar.  It  was  an  action 
against  the  administrator  of  an  indorser  of  a  note  made  by  one 
Adams,  bearing  date  at  Baltimore,  in  Maryland,  June  4,  1814, 
payable  nine  months  from  date,  no  place  of  payment  being  speci- 
fied in  tlio  note.  It  did  not  appear  otherwise,  than  by  its  date, 
where  the  note  was  actiuiUy  made ;  and  it  may  be  inferred  from 
the  evidence,  that  Adams  was,  at  that  time,  a  resident  at  Green 
Village,  Pennsylvania.  It  did  not  appear  where  he  was  when  the 
note  fell  due,  and  no  demand  of  payment  had  been  made  any- 
where ;  nor  was  it  shown  that  any  search  for  the  maker  had  been 
made.  Here,  then,  was  a  note  dated  at  Baltimore,  no  [)lace  of 
payment  being  stated  in  it,  the  maker  living  in  another  State.     So 


320         PRESENTMENT  AND  DEMAND  FOR  PAYMENT. 

far  it  is  the  case  in  hand,  yet  it  was  not  even  suggested,  by  the 
counsel  or  the  Court,  that  a  demand  was  unnecessary,  or  that  Bal- 
timore was  the  proper  place  to  make  the  demand.  The  case  was 
disposed  of  on  other  grounds,  and  which  could  not  have  been  in 
any  respect  material,  if  a  demand  at  Baltimore  would  have  been 
proper,  or  if  none  whatever  was  necessary.  On  the  trial,  the 
Court  charged  that  the  plaintiff  was  bound  to  prove  a  demand  of 
payment  of  the  maker,  or  due  diligence  used  for  that  purpose,  and 
upon  this  part  of  the  case  the  final  opinion  of  the  Court  was  thus 
stated  by  Chief  Justice  TilgJiman  :  "  If  the'  plaintiff  had  proved 
that  Adams  had  absconded,  and  was  not  to  be  found  when  the 
note  fell  due,  a  demand  of  payment  would  have  been  dispensed 
with,  because  it  would  have  been  impossible  to  make  it.  But  no 
such  thing  was  proved,  and  therefore  a  demand  was  necessary. 
The  note  being  dated  at  Baltimore,  would  raise  a  presumption  that 
Baltimore  was  the  drawer's  place  of  residence,  as  was  decided  by 
the  Supreme  Court  of  New  York,  in  2  Caines,  127.  Baltimore, 
then,  was  the  place  at  which  inquiry  should  have  been  made.  The 
Court  laid  down  the  law  fairly.  A  demand,  or  at  least  due  dili- 
gence in  endeavoring  to  make  a  demand,  was  necessary."  All 
this  seems  to  me  very  just  and  proper.  A  demand  was  necessary  : 
the  note  was  dated  at  Baltimore,  and  if  the  residence  of  the  maker 
was  unknown,  Baltimore  was  the  place  where  the  inquiry  should 
have  been  made.  But  if,  as  is  now  urged,  Baltimore  was  the 
place  to  demand  payment,  or,  if  no  demand  was  required,  the  ar- 
gument of  counsel  in  the  case  referred  to  and  the  views  of  the 
Court  were  entirely  wide  of  the  mark.  And  here  let  me  observe, 
that,  although  the  date  of  a  note  does  not  make  it  payable  at  that 
place,  still  the  date  may,  in  one  respect,  be  very  important.  It 
raises  a  presumption  that  the  maker  resides  there,  although  it  is 
only  presumption.  3  Kent,  96,  97  ;  Lowery  v.  Scott,  24  Wend. 
358  ;  Galpia  v.  Hard,  3  M'Cord,  394.  And  where  it  becomes  a 
question  of  due  diligence  in  seeking  to  make  a  demand,  it  may  be 
all  important  to  show  that  inquiry  was  made  at  the  place  where 
the  note"bears  date.  But  here,  this  point  is  of  no  consequence, 
for  the  residence  of  the  maker  was  known  to  all  parties,  and  not 
the  least  effort  was  made  to  make  demand  of  him  where  he  lived, 
or  at  any  other  place  than  Troy,  where  the  indorser  resided,  the 
maker  then  being  at  his  home  in  Florida. 
I  am  aware  that  Judge  Story ^  in  his  treatise  on  Promissory  Notes, 


TAYLOR   V.    SNYDER.  321 

after  adverting  to  various  grounds  on  which  a  demand  of  payment 
may  be  excused,  says  :  "  It  seems  also,  tliat  if  the  maker  of  a 
promissory  note  resides  and  has  his  domicile  in  one  State,  and  act- 
ually dates  and  makes,  and  delivers  a  promissory  note  in  another 
State,  it  will  be  sufficient  for  the  holder  to  demand  payment  there- 
of at  the  place  where  it  is  dated,  if  the  maker  cannot  personally, 
upon  reasonable  inquiries,  be  found  within  the  State,  and  has  no 
known  place  of  business  there."  §  280.  For  this  he  refers  to  the 
case  of  Hepburn  v.  Tolcdano,  10  Mart.  La.  643.  It  will  be  observed 
that  Judge  Story  does  not  give  to  this  position  the  authority  of  his 
name  and  character ;  the  point  is  stated  doubtingly.  It  seems, 
he  says,  that  under  such  circumstances  the  maker  need  not  bg 
sought  in  the  State  where  he  resides,  and  hot  that  it  is  clear  this 
will  excuse  the  usual  demand.  The  learned  author  was  obviously 
doing  no  more  than  to  state  what  seemed  to  him  to  have  been  de- 
cided in  Louisiana,  and  he  does  it  in  a  manner  which  precludes 
the  idea  that  he  intended  to  adopt  the  principle,  or  give  to  it  any 
authority  beyond  that  of  the  elevated  and  able  tribunal  by  which 
the  case  was  determined.  I  have  looked  at  tlie  report  of  the  case 
of  Hepburn  v.  Tolcdano.  It  was  an  action  against  the  indorser  of 
a  promissory  note  dated  at  New  Orleans,  but  not  made  payable 
there.  When  the  note  was  payable  the  maker  resided  in  Ken- 
tucky ;  but  where  his  residence  was  when  the  note  was  given,  is 
not  expressly  stated.  The  only  question  in  the  case,  as  the  Court 
said,  was  whether  the  holder  was  obliged  to  go  out  of  the  State  to 
demand  payment ;  but  whether  that  question  arose  upon  a  note 
given  by  a  resident  of  Louisiana,  who  had  subsequently  removed 
to  Kentucky,  or  by  a  ])erson  who  lived  in  Kentucky  when  the  note 
was  made,  is  a  fact  upon  which  I  cannot  satisfy  myself  from  any 
thing  to  be  found  in  the  report  of  the  case.  We  have  already 
seen  that  where  the  maker  removes  from  one  State  to  another, 
after  the  giving  of  a  note,  the  holder  need  not  follow  him.  This  was 
said  in  Anderson  v.  Drake,  in  14  Johnson,  114,  upon  the  authority 
of  which  the  Louisiana  case  was  decided.  In  the  latter  case,  the 
Court  say  :  "  There  is  some  difficulty  as  to  the  place  where  demand 
is  to  be  made,  when  tiie  maker  of  a  note  or  acceptor  of  a  bill  has 
been  a  resident  of  the  State,  and  before  the  time  of  payment  had 
changed  his  domicile  ;  but  if  he  lives  in  another  country,  the  in- 
dorsees cannot  be  presumed  to  know  his  residence,  and  all  that  • 
the  law  requires  of  the  holder  is  due  diligence  at  that  place  where 

21 


322  PRESENTMENT   AND   DEMAND   FOR  PAYMENT. 

the  note  is  drawn.  Thus  in  the  case  cited  by  the  appellant,  14 
Johns.  116,  it  is  stated  by  the  Court  to  have  been  previously  de- 
cided, that,  where  a  note  was  dated  at  Albany,  and  the  drawer  of 
it  afterwards  removed  to  Canada,  the  demand  where  it  was  drawn 
was  sufficient  to  charge  the  indorser."  And  it  was  held  that  the 
demand  at  New  Orleans  was  sufficient.  I  must  say  that  my  im- 
pression upon  this  case  is  that  the  maker  of  the  note  had  re- 
moved from  Louisiana  after  the  giving  of  the  note  ;  but  if  the  fact 
were  otherwise,  I  think  the  decision  should  not  be  followed.  The 
case  is  not  strictly  authority,  although  harmony  in  the  decisions 
of  the  several  State  courts,  upon  such  a  point,  is  exceedingly  de- 
sirable. But  I  cannot  assent  to  the  principle  that  where  no  change 
has  taken  place  in  the  residence  of  the  maker,  between  the  mak- 
ing of  the  note  and  the  time  of  its  payment,  the  intervention  of  a 
State  line  dispenses  with  the  necessity  of  making  due  demand  of 
payment,  or  at  all  affects  the  question.  I  therefore  think  the  non- 
suit was  right,  and  a  new  trial  should  be  denied. 

New  trial  denied. 
See  following  case  and  note. 


Chicopee  Bank  v.  Philadelphia  Bank. 

(8  Wallace,  641.     Supreme  Court  of  the  United  States,  December,  1869.) 

Payable  at  hank.  Negligence  of  collecting  hank.  —  Though  commercial  paper  be  physi- 
cally in  the  bank  at  which  it  is  payable,  yet  if  the  bank  is  ignorant  of  tliis  by  rea- 
son of  the  fact  that  the  letter  in  which  it  was  sent  slipped  through  a  crack  in  the 
cashier's  desk  and  disappeared  before  it  had  been  seen  by  him,  then  there  is  no  pre- 
sentment, even  though  the  acceptor  liad  no  funds  there,  and  did  not  mean  to  pay 
the  bill.  And  such  a  disappearance  carries  a  presumption  with  it  of  negligence  in 
the  collecting  bank,  and  throws  the  burden  of  proof  upon  the  bank  to  repel  tliis 
presumption.  In  the  absence  of  such  proof,  the  bank  is  responsible  to  the  holder 
for  the  amount  of  the  bill  or  note. 

TfflS  was  a  suit  by  the  Seventh  National  Bank  of  Philadelphia 
against  the  Chicopee  Bank  of  Springfield,  Massachusetts,  founded 
upon  the  allegation,  that  by  reason  of  the  neglect  of  the  latter 
bank,  the  former  lost  its  remedy  against  the  prior  parties  on  a  bill 
of  exchange  ;  to  wit,  the  drawer  and  payee. 


CHICOPEE    BANK   V.    PHILADELPHIA    BANK.  323 

The  bill  was  drawn  by  one  Coglin,  of  Philadelphia,  on  Mon- 
tague, of  Springfield,  payable  to  one  Rhodes,  of  Philadelphia,  for 
$10,000,  and  accepted  by  Montague  specially  payable  at  the  Chico- 
pee  Bank.  The  day  of  payment  was  Saturday,  Feb.  18,  1865. 
On  the  loth,  Rhodes,  the  holder,  indorsed  the  bill  for  value  to  the 
Philadelphia  Bank,  which  sent  it  at  once  by  mail,  inclosed  in  a  let- 
ter to  the  Chicopee  Bank,  to  receive  payment.  The  course  of  the 
mail  between  Philadelphia  and  Springfield  is  two  days.  On  the 
loth,  this  letter,  with  other  letters  and  papers,  was  duly  delivered 
by  the  postman,  and  placed  on  the  cashier's  table ;  but  (as  was 
afterwards  ascertained)  this  letter  slipped  from  the  pile  through  a 
crack  in  the  table,  into  a  drawer  of  loose  papers,  and  its  presence 
in  the  bank  was  not  known  to  the  cashier,  and  as  the  two  banks 
had  no  previous  dealings,  he  was  not  expecting  any  thing  from  the 
other  bank.  On  the  18th,  Montague,  the  acceptor,  made  no  attempt 
to  pay  the  bill,  either  by  calling  for  it  or  depositing  funds,  and 
subsequently,  at  the  trial,  made  oath  that  he  intended  not  to  pay 
the  bill,  and  had  a  defence  against  it.  The  cashier  of  the  Piiiladel- 
phia  Bank,  not  receiving  on  the  17th  an  acknowledgment  of  the 
letter  which  he  had  sent  on  the  13th,  felt  somewhat  anxious  ;  and 
on  the  18th  consulted  the  president.  On  Monday,  the  20th,  he 
telegraphed  to  the  cashier  of  the  Chicopee  Bank  as  follows  :  — 

"  Did  not  you  receive  ours  of  13th  instant,  with  Montague's 
acceptance,  $10,000  ? " 

The  despatch  did  not  indicate  either  the  time  or  place  of  payment 
of  the  draft ;  and  the  reply  was  sent,  — 

"  Not  yet  received." 

This  despatch  was  received  by  the  cashier  of  the  Philadelphia 
Bank  at  noon  of  the  20th.  He  testified  at  the  trial  that  he  wrote 
to  Mr.  Rhodes  the  same  day,  informing  him  of  what  he  had  learned, 
that  he  had  no  recollection  of  writing  to  Coglin,  but,  as  he  knew 
they  were  jointly  concerned  in  dealings  in  petroleum  lands,  he 
presumed  Rhodes  would  inform  him.  This  was  the  only  step  the 
cashier  took  toward  charging  the  prior  parties.  They  both  did 
business  at  that  bank  ;  Coglin  was  a  director  ;  both  were  Irequently 
there,  and  well  known  to  the  cashier.  As  the  mail  required  two 
days,  and  the  19th  was  Sunday,  there  was  no  question  but  the 
cashier  had  until  and  including  the  24th,  to  give  notice  to  Rhodes 
and  Coglin.  After  the  receipt  of  the  reply  of  the  20th,  at  noon,  he 
took  no  steps,  by  post  or  telegraph,  to  ascertain  from  the  Chicopee 


324         PRESENTMENT  AND  DEMAND  FOR  PAYMENT. 

Bank  whether  the  acceptor  had  or  liad  not  been  ready  to  pay  on  the 
18th.  The  Pliiladelphia  Bank  brought  no  suit  against  Rhodes  or 
Coglin,but  sued  the  Chicopee  Bank  for  the  amount  of  the  note,  on 
the  ground  that,  by  its  negligence,  they  had  lost  the  power  to  charge 
the  ])rior  parties. 

Tlie  Court  below  instructed  the  jury  that  the  prior  parties  were 
absolutely  discharged  by  what  took  place  at  the  Chicopee  Bank,  on 
the  18tli  ;  that  wliere  a  bill  is  accepted  payable  at  a  particular  bank, 
the  bank  need  not  seek  the  acceptor,  but  that  there  must  still  be  a 
presentment,  in  order  to  charge  prior  parties  ;  that  the  presence  of 
the  bill  at  the  bank,  ready  to  be  delivered  to  the  acceptor  upon  his 
tendering  payment,  was  equivalent  to  a  presentment,  but  that  if  the 
bill  is  not  at  the  bank  on  the  day  of  payment,  ready  to  be  delivered 
as  aforesaid,  there  is  a  failure  of  presentment,  and  the  prior  parties 
are  discharged,  although  the  acceptor  made  no  attempt  to  pay  ;  that 
in  this  case,  therefore,  the  prior  parties  could  not  be  held  by  any 
notice  of  whatever  description,  whenever  or  by  whomsoever  given  ; 
and  that  if  the  loss  or  mislaying  of  the  bill  during  the  whole  of  the 
18th  was  owing  to  the  negligence  of  its  cashier,  the  Chicopee  Bank 
was  liable  for  the  amount  of  the  note. 

After  the  charge  was  fully  delivered,  the  Court  was  asked  by  the 
counsel  of  the  Cliicopee  Bank  to  instruct  the  jury  as  to  the  burden 
of  proof.  This  the  Court  refused  to  do,  considering  that  it  had 
already  sufficiently  instructed  the  jury. 

The  verdict  and  judgment  were  accordingly  for  the  plaintiifs. 

Nelson,  J.  The  case  was  put  to  the  jury,  whether  or  not  the 
loss  of  the  bill,  and  consequent  inability  of  the  collection  bank  to 
take  the  proper  steps  against  the  acceptors  to  charge  the  prior 
parties,  was  attributable  to  negligence,  and  want  of  care  on  the- 
part  of  the  Chicopee  Bank,  and  that,  if  it  was,  the  bank  was 
responsible.     The  jury  found  for  the  plaintiffs. 

In  cases  where  the  drawee  accepts  the  bill,  generally,  in  order  to 
charge  the  drawer  or  indorser,  the  holder  must  present  the  paper, 
when  due,  at  his  place  of  business  if  he  has  one,  if  not,  at  his 
dwelling  or  residence,  and  demand  payment ;  and,  if  the  money  is 
not  paid,  give  due  notice  to  the  prior  parties.  If  he  accepts  the 
bill,  payable  at  a  particular  place,  it  must  be  presented  at  that 
place,  and  payment  demanded.  In  these  instances,  as  a  general 
rule,  the  bill  must  be  present  when  the  demand  is  made,  as  in  case 
of  payment  the  acceptor  is  entitled  to  it  as  his  voucher.     "When  the 


CHICOPEE  BANK  V.    PHILADELPHIA  BANK.  325 

bill  is  made  payable  at  a  bank,  it  has  been  held  that  the  presence 
of  the  bill  in  the  l)aiik  at  maturity,  with  tlie  fact  that  the  acceptor 
had  no  funds  there,  or,  if  he  had,  were  not  to  Ije  applied  to  payment 
of  the  paper,  constitute  a  sufficient  presentment  and  demand  ;  and, 
if  the  bill  is  the  property  of  the  bank,  the  presence  of  the  paper 
there  need  not  be  proved,  as  the  presumption  of  law  is,  that  the 
paper  was  in  the  bank,  and  the  burden  rests  upon  the  defendant 
to  show  that  the  acceptor  called  to  pay  it.* 

In  the  present  case,  it  is  ar}j:ued  that  the  bill  was  in  the  Chicopee 
Bank  at  the  time  of  its  maturity,  and,  as  the  acceptors  had  no  funds 
there,  a  sufficient  presentment  and  demand  were  made,  according 
to  tlie  law  merchant.  It  is  true,  the  bill  was  there  physically,  but, 
within  tlie  sense  of  this  law,  it  was  no  more  present  at  the  bank 
than  if  it  had  been  lost  in  the  street  by  the  messenger  on  his  way 
from  the  post-office  to  the  bank,  and  had  remained  there  at  maturity ; 
and  this  loss,  which  occasioned  the  failure  to  take  the  proper  steps, 
or  rather,  in  the  present  case,  to  furnish  the  holder  with  the  proper 
evidence  of  the  dishonor  of  the  paper,  so  as  to  charge  the  prior 
parties,  and  enable  him  to  liave  recourse  against  them,  is  wholly 
attributable,  according  to  the  verdict  of  the  jury,  to  the  collecting 
bank.  In  the  eye  of  the  law  merchant  there  was  no  presentment 
or  demand  against  the  acceptors  ;  and,-  as  a  consequence  of  this 
default,  the  holder  lias  lost  his  remedy  against  the  drawer  and 
indorser,  which  entitles  him  to  one  against  the  defendant.  The 
radical  vice  in  the  defence  being  the  failure  to  prove  a  presentment 
and  demand  upon  the  acceptors  at  the  maturity  of  the  bill,  the 
question  of  notice  is  unimportant. 

But  if  it  had  been  otherwise,  the  notice  itself  was  utterly  defec- 
tive. That  relied  on  is  the  answer  of  the  defendant  tu  the  telegram 
of  the  plaintiff  of  the  20th  February,  which  was,  that  the  liill  had 
not  yet  been  received.  This  was  after  its  maturity,  and  it  simply 
advised  the  holder  and  payee  indorser,  to  whom  the  information 
was  communicated  the  same  day,  that  the  drawer  and  indorser 
were  discharged  from  any  liability  on  the  paper.  It  showed  that  the 
proper  steps  had  not  been  taken  against  the  acceptors  to  cluirge  them. 

Some  criticism  is  made  upon  the  refusal  of  the  Court  below  to 
charge  as  to  which  side  the  burden  of  proof  belonged,  in  respect  to 
the  question  of  negligence  and  want  of  care,  after  the  paper  came 

1  FuUerton  v.  Bank  of  United  States,  1  Peters,  G04 ;  Bank  of  United  States  c.  Carneal, 
2  id.  543  ;  Seneca  Co.  Bank  v.  Neass,  5  Denio,  329 ;  State  Bank  v.  Napier,  6  Humph. 
270 ;  Folgar  i-.  Chase.  18  Pick.  63. 


326  PRESENTMENT    AND   DEMAND   FOR  PAYMENT. 

into  tlic  hands  of  the  defendant.  No  objection  is  taken  to  the 
charge  itself,  upon  this  question,  and,  indeed,  could  not  have  been, 
as  the  point  was  submitted  to  the  jury  as  favorably  to  the  defend- 
ants as  could  have  been  asked.  We  think  the  Court,  after  having 
submitted  fairly  the  evidence  on  both  sides  bearing  upon  the  ques- 
tion, had  a  right,  in  the  exercise  of  its  discretion,  to  refuse  the 
request. 

If,  however,  the  Court  had  inclined  to  go  further,  and  charge  as 
to  the  burden  of  proof,  it  should  have  been  that  it  belonged  to  the 
defendant.  The  loss  of  the  bill  by  the  bank  carried  with  it  the 
presumption  of  negligence  and  want  of  care  ;  and,  if  it  was  capable 
of  explanation,  so  as  to  rebut  this  presumption,  the  facts  and  cir- 
cumstances were  peculiarly  in  the  possession  of  its  officers,  and  the 
defendant  was  bound  to  furnish  it.  Where  a  peculiar  obligation  is 
cast  upon  a  person  to  take  care  of  goods  intrusted  to  his  charge,  if 
they  are  lost  or  damaged  while  in  his  custody,  the  presumption  is 
that  the  loss  or  damage  was  occasioned  by  his  negligence,  or  want 
of  care  of  himself  or  of  his  servants.  This  presumption  arises  with 
respect  to  goods  lost  or  injured,  which  have  been  deposited  in  a 
public  inn,  or  which  had  been  intrusted  to  a  common  carrier.  But 
the  presumption  may  be  rebutted.^  Judgment  affirmed. 

Adams  v.  Leland,  30  N.  Y.  309,  is  an  additional  authority  on  the  point 
stated  in  the  opinion  in  the  principal  case,  Taylor  v.  Snyder,  that  where  a  note 
is  made  by  a  resident  of  a  State,  who,  before  it  matures,  removes  from  the 
State  and  takes  up  a  permanent  residence  elsewhere,  the  holder  need  not  follow 
him  to  present  the  note  for  payment.  See  also,  to  the  same  effect,  Foster  v. 
Julien,  24  N.  Y.  (10  Smith)  28. 

The  question  arose  in  Pearson  v.  Bank  of  Metropolis,  1  Peters,  89,  in  1828, 
whether  parol  evidence  could  be  received  of  an  agreement  of  all  the  parties  to  a 
note  that  demand  of  the  maker  might  be  made  at  a  certain  place,  —  no  place  of 
payment  being  specified  on  the  face  of  the  note.  The  Court  held  the  evidence 
admissible.  Marshall,  C.  3 .,  in  delivering  the  opinion,  said :  "The  plaintiffs 
in  error  contend  that  the  testimony  ought  not  to  have  been  admitted,  because  it 
is  an  attempt,  by  parol  proof,  to  vary  a  written  instrument.  But  this  is  not  an 
attempt  to  vary  a  written  instrument.  The  place  of  demand  is  not  expressed  on 
the  face  of  the  note,  and  the  necessity  of  a  demand  on  the  person,  when  the 
parties  are  silent,  is  an  inference  of  law,  which  is  drawn  only  when  they  are  si- 
lent. A  parol  agreement  puts  an  end  to  this  inference,  and  dispenses  with  a  per- 
sonal demand.  The  parties  consent  to  a  demand  at  a  stipulated  place,  instead 
of  a  demand  on  the  person  of  the  maker;  and  this  does  not  alter  the  instrument, 
so  far  as  it  goes,  but  supplies  extrinsic  circumstances  which  the  parties  are  at 

1  Dawson  v.  Chamney,  5  Q.  B.  164;  Coggs  v.  Bernard,  2  Ld.  Raym.  918;  Day 
V.  Riddle,  16  Vt.  48. 


CHICOPEE  BANK  V.    PHILADELPHIA  BANK,  327 

liberty  to  supply.  No  demand  is  necessary  to  sustain  a  suit  againjit  the  maker. 
His  undertaking  is  unconditional,  but  the  indorser  undertakes  conditionally  to 
pay,  if  the  maker  does  not ;  and  this  imposes  on  the  holder  the  necessity  of  tak- 
ing the  proper  steps  to  obtain  payment  from  the  maker.  This  contract  is  not 
written,  but  is  implied.  It  is,  that  due  diligence  to  obtain  payment  from  the 
maker  shall  be  used.  When  the  parties  agree  what  this  due  diligence  shall  be, 
they  do  not  alter  the  written  contract,  but  agree  upon  an  extrinsic  circumstance, 
and  substitute  that  agreement  for  an  act  which  the  law  prescribes  only  when  they 
are  silent." 

A  Contrary  doctrine  is  held  in  Pierce  v.  Whitney,  29  Me.  (16  Shepl.)  188, 
citing  Story,  Promissory  Notes,  §  49,  and  note  ;  but  Pearson  v.  Bank  of  Metrop- 
olis, supra,  is  not  noticed  in  either  place.  And  Mr.  Justice  Story,  in  support  of 
his  position,  refers  to  the  rule  that  parol  evidence  is  not  admissible  to  vary  the 
terms  of  a  written  contract;  a  rule  which  Chief  Justice  Marshall  very  clearly 
shows  is  not  infringed  by  the  decision  which  he  pronounces. 

Thompson,  C.  J.,  in  Anderson  v.  Drake,  14  Johns.  114,  decided  in  1817,  also 
makes  the  statement  that  parol  testimony  is  inadmissible  to  show  such  an  agreement ; 
disapproving  a  dictum  to  the  contrary  in  Thompson  v.  Ketcham,  4  Johns.  285; 
but  his  statement  was  also  a  dictum  ;  that  point  not  being  involved  in  the  case. 

In  State  Bank  v.  Ilurd,  12  Mass.  171  (1815),  the  note  was  made  payable 
at  the  State  Bank.  By  direction  of  the  maker  and  indorser,  notices  were  left 
at  a  certain  shop  for  the  promisor  and  for  the  indorser,  the  defendant.  No  other 
notice  or  demand  was  given  or  made.  It  was  held  that  the  agreement  that  no- 
tice left  for  the  maker  at  the  shop  should  be  equivalent  to  a  more  formal  demand 
upon  him,  removed  the  necessity  of  making  demand  at  the  bank,  and  the  indorser 
was  liable. 

And  it  is  held  in  Sussex  Bank  v.  Baldwin,  2  Harrison,  487  (184<J),  that  the 
indorser  cannot  object  to  presentment  made  at  an  improper  place,  where  the 
maker  alone  had  directed  the  holder  to  present  the  note  at  such  place.  But  this 
may  be  doubted.  The  reason  given  in  that  case  is  this  :  The  maker  is  estopped 
from  objecting  by  his  conduct;  "and  that  which  is  good  against  the  drawer 
is  good  against  the  indorser."  The  proposition  in  quotation  marks  may  be 
generally  true,  so  far  as  presentment  is  concerned ;  but  a  drawer  is  not  & 
maker.  The  drawer's  liability  is  that  of  an  indorser,  while  the  maker's  liability 
is  absolute.     The  Court  evidently  confused  the  terms  maker  and  drawer. 

On  this  point  State  Bank  v.  Hurd,  supra,  was  cited ;  but  there  is  this  mate- 
rial dilTerence  between  the  two  cases,  that  in  the  former  the  indorser  and  maker 
together  gave  the  directions ;  while  in  the  latter  case  the  indorser  was  not  privy 
to  the  matter ;  at  least  it  is  not  stated  that  he  knew  any  thing  of  it.  And  the 
ground  taken  in  Pearson  v.  Bank  of  the  Metropolis,  supra,  was  that  it  was  an 
agreement  of  all  the  parties. 

With  respect  to  the  place  at  which  presentment  should  be  made,  it  is  not  suf- 
ficient to  charge  an  indorser  that  it  was  made  in  the  street.  When  a  bill  is  pay- 
able generally  and  not  at  a  specified  place,  demand  must  be  made  at  the  place  of 
business  of  the  maker  or  acceptor,  if  he  has  one  ;  if  not,  at  his  residence.  King  v. 
Holmes,  11  Penn.  State,  456.  But  it  was  held  in  this  case  that  if  the  notary,  on 
his  way  to  the  acceptor's  place  of  business,  meets  him  in  the  street  and  informs  him 
of  his  business  and  where  he  is  going,  and  the  acceptor  offers,  if  he  will  go  to  his 


328         PRESENTMENT  AND  DEMAND  FOR  PAYMENT. 

place  of  business,  to  give  bim  only  a  cbeck  on  a  broker,  it  is  not  necessary  for 
the  notary  to  proceed  farther.     The  demand  at  the  place  of  business  is  waived. 

In  Sussex  Bank  v.  Baldwin,  sujna,  the  Court,  Dayton,  J.,  say  that  there 
is  "no  doubt  where  a  person  has  an  ofBce  or  known  and  settled  place  of 
business  for  the  transaction  of  his  moneyed  cohcerns,  whether  he  be  a  hanker, 
broker,  merchant,  manufacturer,  mechanic,  or  dealer  in  any  other  waf^,  a  pre- 
sentment and  demand  at  that  place  "  as  well  as  at  his  residence,  will  be^ffectual. 
"  It  must  not,  however,  be  a  place  selected  and  used  temporarily  for  the  transac- 
tion of  some  particular  business,  as  settling  up  some  old  books  or  accounts  mere- 
ly, but  his  regular  and  known  place  of  business  for  the  transaction  of  his  moneyed 
concerns.  The  counting-room  of  a  banker  or  merchant  may  be  a  proper  place 
for  a  demand,  though  the  manufactory  or  workshop  would  not.  Yet  if  the 
manufacturer  or  mechanic  have  an  office  or  known  place  of  business  for  the  pur- 
pose aforesaid,  a  good  demand  may  be  made  there." 

In  West  V.  Brown,  6  Ohio  State,  542,  it  was  contended  that  demand  should 
have  been  made  at  the  maker's  residence,  since  he  had  no  well-established 
place  of  business.  But  he  had  a  room  at  which  he  received  business  calls,  and 
where  he  directed  them  to  be  made.  Demand  was  there  made,  and  it  was  held 
sufficient,  though  the  same  office  was  occupied  as  a  place  of  business  by  other 
persons. 

And  if  the  maker  or  acceptor  had  neither  place  of  business  nor  residence  in 
the  city  in  which  the  paper  is  payable,  it  is  sufficient  to  charge  an  indorser  or  a 
drawer  that  the  holder  was  there  on  the  day  of  payment,  ready  to  receive  the 
money.  Boot  v.  Franklin,  3  Johns.  207,  Kent,  C.  J.;  Mason  v.  Franklin,  3 
Johns.  202  ;  Maiden  Bank  v.  Baldwin,  13  Gray,  154.  See  also  Stivers  v.  Pren- 
tice, 3  B.  Mon.  461 ;  Deyraud  v.  Banks,  16  La.  461 ;  Shamburgh  v.  Commagere, 
10  Mart.  La.  18. 

The  result  of  the  cases  seems  to  be  that  if  the  maker  or  acceptor  of  paper 
payable' at  no  designated  place  has  a  regular  place  of  business  and  an  office,  de- 
mand should  there  be  made  to  charge  the  indorser,  otherwise  the  demand  should 
be  made  at  his  residence. 

Where  the  bill  or  note  is  payable  at  a  particular  bank  or  other  place  certain, 
in  order  to  charge  an  indorser,  "  it  is  well  settled,  not  only  that  the  holder  is  not 
bound  to  present  it  to  the  promisor  at  any  other  place,  but  that  a  presentment  at 
any  other  place  would  be  unavailing."  Per  Shaw,  C.  J.,  in  North  Bank  j;.  Ab- 
bot, 13  Pick.  465.  See  also  Bank  of  the  United  States  v.  Smith,  11  Wheat. 
171;  Watkins  v.  Crouch,  5  Leigh,  522;  Shaw  v.  Reed,  12  Pick.  132;  Bank  of 
the  United  States  v.  Carneal,  2  Peters,  543. 

If  the  bank  at  which  the  paper  is  payable  is  owner  of  the  same,  all  that 
"  ought  to  be  required  is  that  the  books  of  the  bank  should  be  examined,  to 
ascertain  that  the  maker  had  any  funds  in  their  hands ;  and,  if  not,  there  was 
a  default  which  gave  to  the  holder  a  right  to  look  to  the  indorser  for  payment." 
If  the  maker  had  any  balance  standing  to  his  credit,  "the  bank  would  have  a  right 
to  apply  it  to  the  payment  of  the  note,  and  no  default  would  be  incurred  by  the 
maker,  which  would  give  aright  of  action  against  the  indorser."  Per  Thompson, 
J.,  in  Bank  of  the  United  States  v.  Smith,  supra.  See,  to  the  same  effect,  Bank 
of  South  Carolina  v.  Flagg,  1  Hill  (S.  C),  177.  But  this  is  matter  of  defence, 
and  need  not  be  alleged  in  the  declaration.     State  Bank  v.  Napier,  6  Humph.  270. 

A  bill  of  exchange  may  be  accepted  payable  at  a  particular  place  in  the  city 


CHICOPEE  BANK  V.    PHILADELPHIA  BANK.  329 

or  town  in  which  the  acceptor  resides,  though  it  be  not  his  place  of  business. 
Troy  City  Bank  v.  Lauinati,  19  N.  Y.  (5  Smith)  477. 

But  it  cannot  be  made  payable  by  the  accejjtance  in  a  city  or  town  other  than 
that  of  the  acceptor's  residence  (the  bill  itself  not  stating  such  place  of  payment  ?) 
so  as  to  charge  the  drawer  or  inclorser  by  presentment  at  the  place  named  in  the 
acceptance.  Niagara  District  Bank  v.  The  Fairman,  &c.,  Manufacturing  Co., 
31  Barlj.  •403;  Rowe  v.  Young.  2  Brod.  &  B.  165;  Walker  v.  Bank  of  New 
York,  13  Barb.  636.  But  see  Mason  v.  Franklin,  3  Johns.  202,  in  which  the 
bill  was  drawn  on  a  person  in  Liverpool,  payable  m  London,  and  protested  for 
non-acceptance  and  non-payment  in  the  former  place.  Kent,  C  J.,  said:  "We 
are  of  opinion  that,  as  no  place  of  payment  in  London  was  designated,  the  de- 
mand for  payment  and  protest  for  non-payment  were  well  made  upon  the  draw- 
ees personally  at  Liverpool." 

It  is  said  that,  when  the  payor  of  comtnercial  paper  has  become  insolvent  be- 
fore its  maturity,  and  has  abscondedyVo/n  the  State  and  gone  into  parts  unknown, 
there  must  be  a  presentment  and  demand  of  payment  at  his  last  place  of  busi- 
ness or  of  residence,  or  due  efforts  should  be  made  to  find  the  one  or  the  other, 
in  order  to  charge  the  indorser.  Grafton  Bank  v.  Cox,  13  Gray,  503.  But  this 
statement  does  not  seem  to  be  strictly  accurate ;  and  the  learned  judge  perhaps 
had  in  mind  the  case  of  an  ordinary  removal  by  the  payor  into  another  juris- 
diction. It  would  seem  from  the  language  of  the  rule  stated  in  lleid  v.  Morrison, 
2  Watts  &  S.  401,  that  the  party  need  not  have  left  the  State  to  dispense  with 
presentment.  Sergeant,  J.,  says  on  p.  405:  "The  rule  of  law  on  this  subject 
seems  to  be  that,  if  the  drawee  has  merely  removed  from  his  usual  place  of  resi- 
dence to  another  in  the  same  State  or  kingdom,  it  is  incumbent  on  the  holder  to 
make  every  reasonable  endeavor  to  find  out  whether  he  has  removed,  and,  in 
case  he  succeed  in  such  attempt,  to  present  the  note  or  bill  for  payment  at  that 
place.  But  if  the  drawee  or  maker  has  absconded,  that  circumstance  will  dis- 
pense with  the  necessity  of  making  any  further  incjuiry  after  him,"  citing  Chitty, 
Bills,  261  ;  Bayley,  95;  Duncan  v.  McCullough,  4  Serg.  &  R.  480. 

The  connection  of  the  two  sentences  indicates  that  the  learned  judge  regard- 
ed as  immaterial  the  place  to  which  the  payor  had  absconded ;  whether  he  had 
left  the  State  or  not.  At  any  rate,  it  seems  highly  probable  that  if  he  had 
thought  that  there  was  such  a  distinction,  he  would  have  mentioned  it.  And 
there  seems  to  be  no  solid  ground  for  the  distinction.  An  absconding  debtor 
always  endeavors  to  cover  up  his  tracks,  and  usually  succeeds  in  doing  so ;  and 
how  can  it  be  determined  whether  or  no  he  has  left  the  State  ?  Shall  the  holder 
wait  in  the  probably  vain  endeavor  to  ascertain  whether  the  payor  has  passed  the 
jurisdiction,  in  order  to  determine  whether  he  must  make  presentment  at  the 
debtor's  last  place  of  residence  ?  Such  a  requirement  would  be  unreasonable,  if 
not  absurd.  If  the  absconding  is  any  excuse  at  all,  it  should  be  so  without  ref-. 
erence  to  the  locality  of  the  hiding-place,  unless  this  is  within  the  jurisdiction 
and  the  holder  knows  where  it  is.  In  such  a  case  it  would  certainly  be  his  duty 
to  present  the  paper  at  the  debtor's  residence  or  place  of  business.  But  this  is  not 
the  case  stated  in  Grafton  Bank  v.  Cox,  supra.  That  case  speaks  of  an  ab- 
sconding "  into  parts  unknown." 

This  view  is  confirmed  by  Duncan  v.  McCullough,  4  Serg.  &  R.  480. 
2'il<jhman,  C.  J.,  said  :  "  If  the  plaintiff  had  proved  that  Adams  had  absconded 


330  PRESENTMENT   AND   DEMAND    FOR   PAYMENT. 

and  was  not  to  be  found  wlien  the  note  fell  due,  a  demand  of  payment  would 
have  been  dispensed  with,  because  it  would  have  been  impossible  to  make  it." 
There  was  evidence  that  Adams  had  been  seen  in  the  State,  and  none  that  he  had 
left  the  State.  And  Lehman  v.  Jones,  1  Watts  &  S.  12G,  directly  decides  the 
point  that  presentment  in  such  case  need  not  be  made  at  the  payor's  last  abode. 
See  also  Foster  v.  Julien,  24  N.  Y.  (10  Smith)  28,  37 ;  Ratcliflf  v.  Planters' 
Bank,  2  Sneed,  425,  555;  Hale  v.  Burr,  12  Mass.  85,  89;  Gist  u.  Lybrand, 
3  Ohio,  307;  Shaw  v.  Reed,  12  Pick.  132;  Bruce  v.  Lytle,  13  Barb.  163; 
Edwards,  Bills,  485-487,  and  note;  1  Parsons,  Notes  and  Bills,  449,  450.  But 
Pierce  v.  Cate,  12  Cush.  190,  declares  a  more  strict  rule  than  that  held  in 
the  early  Massachusetts  cases.  It  is  there  held  that  where  the  maker  of  a  note 
absconds,  leaving  no  visible  property  that  may  be  attached,  a  want  of  demand 
or  inquiry  for  liim  is  not  thereby  excused,  though  the  indorser  knew  of  the  ab- 
sconding. Opinion  by  Shaw,  C.  J.  It  is  not  stated,  however,  in  the  report 
that  this  point  was  argued ;  and  It  is  said  in  1  Parsons,  Notes  and  Bills,  450,  note, 
that  "  it  is  a  fact  personally  known  to  us  that  this  point  was  not  argued,  nor 
indeed  raised  by  counsel  in  this  case.  The  defence  was  based  upon  other 
grounds."  See  Story,  Promissory  Notes,  §§  205,  237 ;  Chitty,  Bills,  280,  330, 
367. 

A  very  different  question  arises  in  the  case  of  a  mere  removal  by  the  payor 
into  another  jurisdiction ;  but  there  is  conflict  upon  the  necessity  of  present- 
ment at  the  debtor's  last  abode,  even  in  this  case.  The  general  rule  is  well 
settled  that  in  such  case  the  holder  need  not  follow  the  maker  or  acceptor 
into  another  State ;  but  the  question  is,  must  he  still  make  presentment  at  the 
payor's  last  place  of  residence  ?  Wheeler  v.  Field,  6  Met.  290,  Wilde,  J.,  holds 
the  affirmative.  Gist  v.  Lybrand,  3  Ohio  308,  and  Foster  v.  Julien,  24  N.  Y. 
(10  Smith)  28,  Mason,  J.,  dissenting,  held  the  negative.  Reid  v.  Morrison, 
supra,  says  that  the  rule  which  applies  in  the  case  of  an  absconding  debtor, 
applies  equally  in  the  case  of  the  removal  of  the  payor  into  another  State. 
M'Gruder  v.  Bank  of  W^ashington,  9  Wheat.  598,  merely  decides  that  in  case  of 
such  removal,  presentment  at  the  maker's  last  abode  is  sufficient ;  but  it  does  not 
hold  that  it  is  necessary.  That  point  was  not  involved  in  the  case.  In  3  Kent, 
Com,  96,  the  rule  is  stated  in  the  same  way.  It  is  there  said:  "  If  he  [the 
payor]  has  removed  out  of  the  State,  subsequent  to  the  making  of  or  accepting 
the  bill,  it  is  sufficient  to  present  the  same  at  his  former  place  of  residence." 

The  reason  of  requiring  presentment  at  the  payor's  last  residence,  is  probably 
that  he  may  have  provided  and  left  funds  there  for  the  payment  of  the  paper ; 
which  is  indeed  a  strong  argument  for  the  recjuirement,  and  seems  sufficient  to 
decide  the  question  in  the  case  of  an  honest  removal.  It  wholly  fails,  however, 
in  the  case  of  an  absconding  debtor ;  such  a  person  is  not  apt  to  leave  funds 
with  which  to  pay  his  debts.  See  note  to  M'Gruder  v.  Bank  of  Washington, 
post. 


WHEELER  V.   GUILD.  331 


PAYMENT. 


[The  subject  to  be  illustnited  here,  in  regular  course,  is  the  extinguishment  of  a  bill  or  note 
by  payment.  Commercial  jiaper  received  in  payment  of  debt  will  be  considered  under  Bank 
Bills,  post ;  and  the  effect  of  releases,  extension  of  time,  &c.,  will  be  considered  under  Dis- 

CHAKGING    InDORSEH,  pvst.'\ 


John  Wheeler  v.  Albert  H.  Guild  et  al. 

(20  Pickering,  5-15.     Supreme  Court  of  Massachusetts,  October,  1838.) 

Payment  to  one  not  authorized  to  receive  it  and  before  maturity.  —  The  plaintiflF,  holder  of  a 
note  indorsed  in  blank,  delivered  it  to  B.  and  G.,  attorneys  in  partnership,  to  be 
held  by  them  as  collateral  security  for  the  payment  of  certain  debts  due  from  the 
plaintiff"  to  B.  and  G.,  and  other  persons  ;  and  the  note  was  placed  among  the  pri- 
vate papers  of  G.,  by  whom  the  business  was  transacted.  Some  time  after  pay- 
ment of  the  debts  so  secured,  but  before  the  maturity  of  the  note,  the  maker  paid 
to  B.  the  amount  due  on  the  note,  exclusive  of  interest,  and  took  therefor  a  receipt 
signed  by  B.  alone,  setting  forth  that  it  was  in  full  payment  of  the  note,  and  that 
the  note  was  to  be  delivered  up  to  the  maker.  Held,  that  as  the  note  was  not  in 
fact  delivered  up  to  the  maker,  and  as  the  right  of  B.  and  G.  to  transfer  or  collect 
the  note  had  ceased  upon  payment  of  the  debts  for  which  it  was  pledged,  and  as 
the  note  was  paid  before  maturity,  the  payment  to  B.  did  not  operate  as  a  dis- 
charge of  the  note  ;  and  that  the  plaintiff'  might,  notwithstanding  such  payment, 
recover  the  amount  from  the  maker. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Shaw,  C.  J.  The  facts  of  this  case  present  a  very  important 
question  for  the  consideration  of  the  Court.  Whatever  affects  the 
negotiability,  and  the  free  currency  of  promissory  notes  and  bills 
of  exchange,  is  of  the  utmost  importance  to  a  mercantile  commu- 
nity, the  business  of  which  is  to  a  great  extent  transacted  tlirough 
the  medium  of  these  instruments.     . 

The  facts  which  may  be  deemed  material  are  these.  The  plain- 
tiff became  the  holder  of  the  note  in  question  by  regular  indorse- 
ment for  valuable  consideration*  soon  after  it  was  made,  being  a 
note  dated  September  1,  1833,  payable  in  three  years,  with  interest, 


332  PAYMENT. 

and  the  last  indorsement  bein*?  in  blank.  Witbin  a  year  from  the 
date  of  the  note,  to  wit,  in  March,  1834,  the  plaintiff,  John  Wheeler, 
as  surety,  joined  with  Daniel  G.  Wheeler  in  three  promissory  notes, 
one  to  Brigham  and  Goodrich,  attorneys  and  partners,  in  Worces- 
ter, one  to  Tappan  &  Co.,  and  one  to  Stewart  &  Co.,  of  New  York, 
for  both  of  wiiicb  parties  Brigham  and  Goodrich  were  agents  and 
attorneys.  On  that  occasion,  the  plaintiff,  John  Wheeler,  delivered 
to  Brigham  and  Goodrich,  as  collateral  security  to  his  three  joint 
and  several  promises,  the  note  in  question,  indorsed  in  blank,  and 
took  their  receipt,  specifying  that  it  was  so  received,  and  to  be  by 
them  held,  as  collateral  security  for  the  payment  of  those  notes. 
In  September,  1885,  these  three  notes  had  been  fully  paid.  Though 
Brigham  and  Goodrich  were  in  partnership  as  attorneys-at-law,  yet 
Brigham  was  engaged  in  much  other  business,  and  had  many 
separate  negotiations,  and  the  business  in  question  had  been  done 
in  the  partnership  name,  but  in  fact  by  Goodrich.  In  Decem- 
ber, 1835,  the  plaintiff  applied  to  Goodrich  for  the  note,  who  then 
produced  and  exhibited  it  from  a  file  of  private  papers,  where  it 
had  been  kept  by  him,  and  he  would  then  have  given  it  up  to  the 
plaintiff,  but  the  plaintiff  had  not  his  receipt  with  him,  to  exchange 
for  it.  In  the  mean  time,  before  this  application  of  the  plaintiff  to 
Goodrich,  viz.,  on  the  twenty-eighth  of  November,  1835,  Brigham 
had  received  of  Stafford,  one  of  the  firm  of  A.  H.  Guild  &  Co.,  and  one 
of  the  defendants,  $500  to  pay  the  note  in  question,  describing  it 
as  a  note  payable  in  September,  1836,  and  gave  him  a  receipt,  in 
his  separate  name,  signed  D.  T.  Brigham,  stating  that  the  $500  had 
been  received  in  full  payment  of  the  note,  and  the  note  to  be 
delivered  up  to  Stafford.  Soon  after  the  application  of  the  plaintiff 
to  Goodrich  above  stated,  viz.,  about  the  twenty-fourth  of  December, 
Stafford,  one  of  the  defendants,  producing  Brigham's  receipt,  applied 
to  Goodrich  for  the  note,  who  declined  giving  it,  on  the  ground  that 
Brigham  had  no  right  to  receive  pay  for,  and  discharge  the  note, 
and  by  mutual  consent  it  was  placed  in  the  custody  of  a  gentleman, 
for  the  use  of  the  party  having  the  better  title  to  it,  by  whom  it  was 
produced  in  this  Court  on  the  trial. 

Some  inferences  are  to  be  drawn  from  this  evidence,  which  may 
have  a  bearing  on  the  case  ;  but  we  think  they  are  plainly  deducible 
from  the  circumstances  stated,  and  they  are  these  :  that  Goodrich 
did  not  assent  to  the  payment  received  by  Brigham,  and  did  not  in 
fact  know  of  it  till  after  he  had  been  applied  to  by  the  plaintiff  for 


WHEELER    V.    GUILD.  333 

the  note  ;  that  Goodrich  liad  the  actual  j)ossession  and  custody  of 
the  note,  and  that  at  the  time  that  Brighani  received  the  money 
and  gave  the  receipt,  lie  not  only  did  not  produce  or  exhibit  the 
note,  but  that  he  had  not  the  actual  custody  of  it,  nor  was  it  so 
amongst  the  partnership  papers,  as  that  it  was  in  the  actual  joint 
custody  of  the  parties  as  partners.  If  he  had  it  in  his  possession, 
or  had  regular  access  to  it,  in  the  ordinary  way  of  business,  there 
is  no  reason  why  he  did  not  deliver  it  up  to  Stafford,  instead  of 
giving  him  a  receipt,  and  a  ])romise  to  deliver  it. 

The  law  in  regard  to  bills  of  exchange  and  promissory  notes  is 
so  framed  as  to  give  confidence  and  security  to  those  who  receive 
them  for  valuable  consideration,  in  tiie  ordinary  course  of  business, 
when  payable  to  bearer  or  indorsed  in  blank,  sp  as  to  be  transfer- 
al)le  by  delivery  ;  and  in  general  a  party  taking  such  a  bill  under 
such  circumstances,  has  only  to  look  to  the  credit  of  the  parties  to 
it,  and  the  regularity  and  genuineness  of  the  signatures  and 
indorsements.  So  that  if  such  a  bill  or  note  be  made  without  con- 
sideration, or  be  lost  or  stolen,  and  afterwards  be  negotiated  to  one 
having  no  knowledge  of  these  facts,  for  a  valuable  consideration  and 
in  the  usual  course  of  business,  his  title  is  good  and  he  shall  be 
entitled  to  receive  the  amount.  Miller  v.  Race,  1  Burr.  452;  Pea- 
cock V.  Rhodes,  2  Doug.  633  ;  Grant  v.  Vaughan,  3  Burr.  1516. 
The  credit  which  the  law  thus  attributes  to  notes  and  bills  of 
exchange  which  are  transferable  by  delivery,  arises  mainly  from 
the  conlideiice  inspired  by  the  actual  custody  and  possession,  and 
the  actual  delivery  of  the  security  upon  such  negotiation.  To  so 
great  an  extent  is  this  principle  carried,  that  in  regard  to  bank- 
notes, and  in  most  respects  in  regard  to  all  other  bills  and  notes 
transferable  by  delivery,  the  title  and  the  possession  are  con- 
sidered to  be  inseparable.  And  it  will  be  presumed  that  the  party 
thus  in  possession  of  a  bill  holds  it  for  value,  until  the  contrary 
appears  ;  and  the  burden  of  proof  is  on  the  party  impeaching  his 
title.     Collins  v.  Martin,  1  Bos.  &  Pul.  648. 

But  these  rules  are  aih)pted  with  this  limitation,  that  the  party 
thus  taking  the  note  or  bill  docs  it  in  the  ordinary  course  of  trade, 
when  not  overdue  or  otherwise  dishonored  by  any  thing  ajjparent 
upon  the  face  of  it,  and  without  notice  that  it  had  been  lost  or 
stolen,  or  that  the  holder  had  obtained  it  wrongfully,  or  iiad  no  just 
right  to  receive  it  in  the  way  of  IJusiness.  Paterson  v.  Hardacre,  4 
Taunt.  114.     If  one  takes  a  note  or  bill  with  actual  notice  that  it 


334  PAYMENT. 

has  been  lost  by  the  owner,  he  cannot  hold  it  against  the  true 
owner.     Lovcll  v.  Martin,  4  Taunt.  799. 

It  has  been  argued  that  where  a  party  has  a  legal  title  by  indorse- 
ment and  delivery,  and  the  actual  possession  of  the  bill  or  note, 
although  he  holds  without  any  just  right  to  negotiate  or  collect  it, 
still  as  he  has  a  legal  title,  a  transfer  from  him  will  vest  a  legal 
title  in  another,  and  authorize  such  other  to  take  for  his  own  use. 
But  this  consequence,  we  think,  does  not  follow.  The  true  ground 
is  expressed  by  Eyre^  C.  J.,  in  the  case  above  cited,  Collins  v.  Mar- 
tin. He  says,  "  for  the  purpose  of  rendering  bills  of  exchange 
negotiable,  the  right  of  property  passes  with  the  bills  themselves. 
The  property  and  the  possession  are  inseparable.  This  was  neces- 
sary to  make  them  negotiable,  and  in  this  respect  they  differ  essen- 
tially from  goods."  In  another  part  of  his  judgment,  in  assigning 
the  reason  why  a  person  thus  having  a  legal  title  may  not  enforce 
the  collection  of  the  bill,  whether  he  has  given  value  for  it  or  not, 
he  says  :  "  If  it  can  be  proved  that  the  holder  gave  no  value  for  the 
bill,  then  he  is  in  privity  with  the  first  holder,  and  will  be  affected 
by  every  thing  that  affects  the  first.  This  all  proceeds  upon  an 
argumentum  ad  hominem.  It  is  saying,  you  have  the  title,  but  you 
shall  not  be  heard  in  a  court  of  justice  to  enforce  it  against  good 
faith  and  conscience."  The  same  reasoning  applies  to  other  cases, 
where  a  party  has  the  custody  of  a  bill,  without  any  just  right  or 
lawful  authority  to  collect  or  negotiate  it,  as  where  it  has  been  lost 
or  stolen,  or  embezzled  from  the  true  owner,  or  intrusted  to  an 
agent,  for  a  special  purpose  only  ;  if  these  facts  are  known  to  the 
party  receiving  it,  he  is  in  privity  with  the  party  from  whom  he 
receives  it,  and  cannot  be  heard  in  a  court  of  justice,  though  having 
a  legal  title  to  enforce  an  inequitable  and  unjust  demand.  Such  a 
case  is  not  within  the  reason  of  the  rule,  which  is  designed  only  to 
protect  bills  and  notes,  when  taken  in  good  faith,  in  the  course  of 
business.  If  a  note  is  paid,  not  in  the  usual  course  of  business,  or 
to  a  person  having  the  custody,  but  not  authorized  to  receive  pay- 
ment, and  that  known  to  the  party  paying,  though  the  note  be 
given  up,  it  is  no  discharge  against  the  true  owner.  Kingman  v. 
Pierce,  17  Mass.  247. 

So  payment  of  a  bill  or  check,  before  it  is  due,  will  not  be  a  dis- 
charge unless  made  to  the  real  proprietor  of  it ;  and  therefore  where 
a  banker,  contrary  to  usage,  paid  a  check  the  day  before  it  bore 
date,  which  had  been  lost  by  the  payee,  it  was  held  that  he  was  Ha- 


"WHEELER   V.    GUILD.  335 

ble  to  repay  the  amount  to  the  person  losing  it.  Da  Silva  v.  Fuller, 
Sel.  Cas.  238,  cited  in  Chitty,  Bills  (0th  Eng.  ed.)  148.  In  this 
case,  although  the  holder  had  the  legal  title  arising  from  the  pos- 
session of  the  check;  yet  he  was  not  boyia  fide  the  holder  with 
authority  to  collect,  and  as  the  banker  paid  it  out  of  the  usual 
course  of  business,  he  paid  it  at  the  risk  of  being  obliged  to  pay  it 
again,  if  the  party  presenting  it  had  not  just  right  to  receive  it. 

Most  of  the  same  principles  and  reasons  apply  alike  to  trans- 
fers and  to  payments.     We  think  the  rules  dcducible  from  the 
cases  are  these :  where  a  party  takes  a  bill  transferable  by  deliv- 
ery, not  overdue  nor  otherwise  apparently  dishonored,  for  valuable 
consideration,  in  the  usual  course  of  business,  and  without  notice, 
actual  or  constructive,  that  the  holder  came  by  it  unlawfully  or 
without  title,  and  has  no  just  right  to  collect  and   receive   it,  the 
party  taking  it  shall  hold  it  as  a  valid  security,  notwithstanding 
that  it  has  been  lost  by  the  true  owner,  or  stolen  from  him,  or 
taken  by  the  holder  as  a  mere  agent  to  keep,  or  for  other  special 
purpose,  without  any  authority  to  collect  or  transfer  it,  otherwise 
he  shall  not  be  deemed  to  have  a  good  title  to  hold  and  enforce 
payment  of  it,  or  to  withhold  the  bill  itself  or  the  proceeds  of  it, 
from   the   party    justly   entitled.     Bleaden   v.    Charles,   7    Bing. 
'246.     The  same  rule  applies  to  payments ;  if  a  bill  be  paid  at 
maturity,  in  full,  by  the  acceptor,  or  other  party  liable,  to  a  person 
having  a  legal  title  in  himself  by  indorsement,  and  having  the 
custody  and  possession  of  the  bill  ready  to  surrender,  and  the 
party  paying  has  no  notice  of  any  defect  of  title  or  authority  to 
receive,  the  payment  will  be  good.     But  in  both   cases  faith  is 
given  to  the  holder,  mainly  on  the  ground  of  his  possession  of  the 
bill,  ready  to  be  surrendered  or  delivered,  and  the  actual  surren- 
der and  delivery  of  it  upon   the  payment  or  transfer.     If,  there- 
fore, upon  such  payment,  the  holder  has  not  the  actual  possession 
of  the  bill  ready  to  be  delivered,  and  does  not  in  fact  surrender  it, 
but  gives  a  receipt  or  other  evidence  of  the  payment ;  and  if  it 
turns  out  that  the  party  thus  receiving,  had  not  a  good  right  and 
lawful  authority  to  receive  and  collect  the  money,  but  that  another 
person  had  such  right,  the  payment  will  not  discharge   the  party 
paying,  but  will  be  a  payment  in  his  own  wron^  ;  he  must  pay  the 
bill  again  to  the  right  owner,  and   must  seek  his  redress  against 
the  party  receiving  his  money,  on  the  pretence  that  he  had  a  right 
to  receive  it  as  the  holder  of  the  bill,  when  in  fact  he  had  no  such 
right. 


336  PAYMENT. 

Applying  these  principles  to  the  present  case,  the  Court  are  of 
opinion,  that  the  payment  made  by  Stafford  to  Brigham,  under  the 
circumstances,  did  not  operate  as  a  payment  and  discharge  of  thig 
note,  and  that  the  plaintiff  is  entitled  to  recover. 

The  plaintiff  was  the  holder  of  this  note  by  indorsement,  before 
it  was  pledged  to  Brigham  and  Goodrich,  and  had  the  complete 
legal  and  equitable  title  to  it,  and  the  whole  beneficial  interest  in 
it.  Being  transferable  by  delivery,  when  transferred  to  Brigham 
and  Goodrich,  they  took  the  legal  title,  with  a  right  to  collect  it, 
and  apply  the  proceeds  to  the  payment  of  the  notes,  for  the  secu- 
rity of  which  it  was  pledged,  if  they  should  not  be  otherwise  paid. 
But  when  those  notes  were  paid,  all  right  of  Brigham  and  Good- 
rich to  transfer  or  collect  it  ceased,  and  they  had  the  mere  naked 
possession  of  it  for  the  plaintiff,  to  be  surrendered  on  demand. 
Now  whatever  might  have  been  the  effect  of  an  actual  surrender 
and  delivery  of  this  note  to  one  of  the  promisors,  on  receiving 
payment,  it  is  very  clear  that,  according  to  all  the  rules  applicable 
to  this  subject,  without  surrendering  and  delivering  up  the  note, 
the  payment  must  be  considered  as  made  at  the  risk  of  the  party 
paying ;  and  as  the  party  receiving  in  fact  had  no  right  to  receive 
payment,  such  payment  and  receipt  did  not  discharge  the  note,  as 
against  the  true  owner.  It  is  not  necessary  to  consider  whether 
Brigham  was  acting  in  his  partnership  capacity  or  not ;  because 
after  the  purpose  was  accomplished,  for  which  the  note  was 
pledged  to  the  partners,  they  had  no  just  right  or  lawful  authority 
to  transfer  or  collect  the  note,  as  against  the  plaintiff.  If  they 
had  jointly  transferred  it  in  the  due  course  of  business,  although 
their  transfer  without  notice  might  have  held  it,  it  would  be  in 
virtue  of  the  law  which  protects  such  transfers  to  a  party  without 
notice,  in  order  to  give  effect  to  the  currency  of  bills  and  notes, 
and  not  because  Brigham  and  Goodrich  had  any  right  or  lawful 
authority.  If  therefore  they  had  given  a  transfer  in  writing  with 
a  promise  to  deliver  the  note,  not  delivering  or  producing  it,  no 
title  would  have  passed  as  against  the  plaintiff,  because  such 
transfer  without  delivery  would  not  be  within  the  reason  or  prin- 
ciple of  the  rule. 

But  we  think  the  other  point  is  equally  decisive.  Brigham  not 
only  did  not  produce  or  exhibit  the  note,  but  he  had  not  the  actual 
custody  or  possession  of  it.  He  did  not  profess  to  act  for  the 
partnership,  but  signed  the  receipt  in  his  own  name.  .  Had  Brig- 


WHEELER   V.    GUILD.  337 

ham  and  Goodrich,  as  partners,  been  the  true  holders  of  the  note, 
or  if  they  had  had  a  Joint  authority  to  collect  it,  it  iflay  well  be 
j^dmittcd,  that  the  act  of  one  or  the  receipt  of  one  would  Ijind  both. 
But  all  the  right  and  autliority  which  they  ever  had  over  the  note, 
except  to  give  it  back  to  the  plaintiff,  agreeably  to  tlicir  contract, 
had  ceased.  A  rcccij)t  of  one  therefore  in  his  own  name  and  not 
purporting  to  be  for  the  use  of  both,  was  not  within  tiie  scope  of 
the  partnership  autliority,  and  did  not  bind  his  partner.  The  de- 
fendant Stafford  gave  credit  to  Brigham  only.  For  though  his 
receipt  purports  to  be,  not  merely  executory,  but  a  present  dis- 
charge of  the  note,  yet  as  he  had  no  authority  to  discharge  it, 
either  by  himself,  or  for  himself  and  partner,  and  as  he  had  not  the 
note  to  surrender  and  give  up,  the  legal  effect  and  operation  of  his 
receipt  was,  an  executory  undertaking,  that  he  would  procure 
a  discharge  of  the  note  and  surrender  it.  The  consequence  is, 
that  Stafford  paid  his  money  to  the  wrong  person,  and  must  look 
to  him  for  an  indemnity. 

Besides,  the  note  was  not  paid  in  the  due  course  of  business. 
It  was  paid  many  months  before  it  was  due  ;  the  full  sum  was  not 
paid,  there  being  more  than  two  years'  interest  due  on  the  notes, 
wliich  was  wholly  relinquished  ;  no  notice  was  given  to  Goodrich, 
the  partner  who  transacted  the  business  of  taking  these  notes, 
and  giving  the  receipt  for  them,  and  who  had  the  actual  custody 
of  this  note,  all  of  which  would  be  strong  evidence  to  go  to  a  jury, 
to  establish  the  fact  of  constructive  notice  to  Stafford,  that  Brig- 
ham  had  no  right,  either  in  his  own  name  or  as  a  partner  with 
Goodrich,  to  receive  payment  of,  or  to  discharge  tliis  note.  But 
the  other  grounds  are  sufficient,  without  relying  upon  these  circum- 
stances. 

The  grounds  upon  which  the  Court  place  their  judgment  are 
these  :  The  plaintiff  had  once  a  good  title  to  the  note.  It  was 
delivered  to  Brigham  and  Goodrich,  for  a  special  purpose,  which 
was  accomplished^  After  that,  Brigham  and  Goodrich  liad  a 
mere  naked  custody  of  the  note  for  the  plaintiff  and  had  no  rigbt 
or  lawful  authority  either  to  negotiate  or  collect  it ;  a  fordori, 
Brigham  alone  had  no  such  authority.  The  defendant  Stafford 
was  not  lawfully  called  upon  to  pay  Brigham,  as  having  the  posses- 
sion and  custody  with  a,  prima  facie  title,  because  he  had  no  such 
custody  or  possession,  and  the  note  was  not  due.  StatTord  was  not 
deceived  into. taking  the  note  by  the  production  and  delivery  of  it, 

22 


338  PAYMENT. 

because  it  was  not  delivered  or  produced  ;  if  he  paid  it  therefore 
to  BrighanV,  without  having  [taken]  up  his  note,  he  did  it  on  the 
faith  that  Brighani  iiad  good  right  to  receive  ])ayment  and  discharge 
it,  and  of  course  under  the  liability  to  pay  it  over  again  to  the  right- 
ful proprietor  if  Brigham  had  not  such  right.  In  fact  and  law, 
Brighani  had  no  such  right,  but  the  plaintiff  was  at  the  time  the 
rightful  proprietor,  and  of  course  the  defendants  obtained  no  dis- 
charge by  such  payment,  but  upon  the  maturity  of  the  note  they 
were  bound  to  pay  it  to  the  plaintiff.  The  note  having  been  put  by 
Mr.  Goodrich  into  the  hands  of  a  common  friend,  for  the  use  of  the 
party  entitled,  and  the  plaintiff  having  shown  himself  entitled, 
the  note  was  rightly  brought  in  by  the  person  to  whom  it  was  thus 
intrusted,  as  evidence  for  the  plaintiff. 

Judgment  for  plaintiff. 

The  rule  then  is,  in  the  case  of  negotiable  paper,  that  the  promisor  is  not  dis- 
charged, ^?'6-^,  if  he  pays  to  one  not  entitled  to  receive  payment;  or,  secondly,  if 
he  pays  before  the  maturity  of  the  paper,  unless  payment  is  thus  made  to  the 
real  holder  and  the  paper  surrendered,  or  unless  the  indorsee  was  informed  of 
the  payment  before  he  took  the  paper.  See  White  v.  Kibling,  11  Johns.  128; 
Hortsman  v.  Henshaw,  ante,  p.  57,  and  note;  Dod  v.  Edwards,  infra. 

The  learned  judge  who  delivered  the  opinion  seems  to  lay  considerable  stress 
upon  the  circumstance  that  the  note  was  not  surrendered  to  the  maker  when  he 
made  the  payuient  to  the  agent ;  but  this  was,  perhaps,  to  show  more  clearly  the 
want  of  authority  in  the  latter  to  grant  a  discharge,  and  not  that  the  delivery  of 
the  note  would  have  aided  the  plaintilf 's  case.  The  other  objection,  that  the  pay- 
ment was  made  before  maturity,  would  still  have  been  in  the  way.  See  Eckert 
V.  Cameron,  43  Penn.  State,  120;  De  Silva  v.  Fuller,  Chitty,  Bills,  392;  Gris- 
wold  V.  Davis,  31  Vt.  390;  Morley  v.  Culverwell,  7  Mees.  &  W.  174;  Burridge 
V.  Manners,  3  Camp.  193;  Story,  Bills  of  Exchange,  §  417. 

So  it  is  no  defence  to  an  action  by  an  indorsee  against  the  acceptor  of  a  bill, 
that  the  drawer,  who  had  made  the  bill  payable  to  his  own  order,  had  given  the 
acceptor  a  general  release  before  his  own  indorsement,  unless  it  is  shown  that 
the  indorsee  knew  of  the  release.  Dod  v.  Edwards,  2  Car.  &  P.  602,  per  Lord 
Tenterden. 

It  is  held  that,  in  an  action  against  the  acceptor,  evidence  is  admissible  to 
show  that  the  person  who  indorsed  the  bill  in  question  as  payee  was  not  the  real 
payee,  though  he  had  the  same  name.  Mead  v.  Young,  4  T.  R.  28.  In  this 
case,  Ashurst,  J.,  said:  "  In  order  to  derive  a  legal  title  to  a  bill  of  exchange,  it 
is  necessary  [for  the  holder]  to  prove  the  handwriting  of  the  payee ;  and  there- 
fore, though  the  bill  may  come  by  mistake  into  the  hands  of  another  person, 
though  of  the  same  name  with  the  payee,  yet  his  indorsement  will  not  confer  a 
title."  Buller,  J.,  said:  "lam  of  opinion  that  it  is  incumbent  on  a  plaintiff 
who  sues  on  a  bill  of  exchange  to  prove  the  indorsement  of  the  person  to  whom 
it  is  really  payable.    Here  it  is  clear  that  the  indorsement  was  not  made  by  the 


WIIRRLER   V.    GUILD.  339 

sariK!  II.  Davis  to  whom  tlie  hill  was  payabk-,  and  no  indorsemotit  by  any  other 
pirsoM  will  give  any  title  whatever.'"  • 

A  creditor,  residing  in  Mendota,  111.,  requested  his  debtor,  residing  in  New 
York,  to  send  him  the  amount  of  his  debt  "  in  a  check  on  the  Marine  IJank  of 
Chicago,  or  any  other  way  that  is  safe."  The  bill  was  drawn  payable  to  the 
order  of  the  creditor,  without  any  further  description,  either  by  stating  his  resi- 
dence, or  otherwise  designating  him.  By  a  mistake  of  the  debtor,  the  bill  was 
directed  to  La  Salle,  111.,  instead  of  to  Mendota,  at  which  place  there  resided  a 
person  of  the  same  name  as  that  of  the  creditor,  the  payee  of  the  bill.  The 
mistake,  however,  was  corrected,  and  the  letter  sent  to  Mendota ;  but  it  was  de- 
livered to  this  other  person  instead  of  to  the  creditor.  He  sold  the  draft  to  one 
who  had  no  notice  of  the  facts,  and  itVas  paid  in  the  usual  and  regular  course 
of  business.  The  creditor  after  this  payment  assigned  his  interest  to  the  plain- 
till",  who  sued  the  acceptors  in  trover;  and  the  Court  held  him  entitled  to 
recover;  Roostvelt,  J.,  dissenting.  Selden,  and  Strong,  JJ.,  expressed  no 
opinion.  Graves  v.  American  Exchange  Bank,  17  N.  Y.  (3  Smith)  205.  Mr. 
Justice  Roosevelt,  in  his  dissenting  opinion,  said:  "The  payee  had  no  desig- 
nation but  his  name ;  none  at  all  events  was  given  by  the  drawer.  The  bank 
in  good  faith  paid  the  draft  to  a  person  presenting  it  with  the  indorsement 
of  Charles  F.  Graves,  a  genuine  indorsement,  but  not  the  indorsement,  it  is 
said,  of  the  genuine  Graves.  Which  of  the  two,  under  these  circumstances, 
should  bear  the  loss ;  the  drawer  who  carelessly  omitted  all  designation,  or  the 
drawee  who  innocently  paid  the  wrong  person  in  consequence  of  such  omission  ? 
As  between  these  parties,  the  loss,  it  seems  to  me,  should  fall  on  the  former. 
Nor  do  I  perceive  that  the  payee,  the  qnaai  assignee  of  the  drawer,  occupies  any 
better  position  than  his  assignor.  Hurd  was  his  debtor,  and  bought  the  draft  to 
remit  in  payment  of  the  debt.  Ilurd  directed  the  form.  He  did  nothing  to  sup- 
I)ly  the  drawer's  omission,  but  aggravated  the  error  by  another  of  his  own  ;  he 
mailed  the.draft  to  Charles  F.  Graves,  La  Salle,  111.,  intending  it,  he  says,  for 
Charles  F.  Graves,  Mendota,  111.,  the  two  places  being  only  fifteen  miles  apart. 
...  He  thus  by  his  own  act  put  the  draft  into  the  hands  of  the  La  Salle 
Graves,  and  held  out  the  La  Salle  Graves  as  the  real  payee.  Can  he  complain, 
then,  that  the  Exchange  Bank  recognized  his  indorsement?  Must  they  pay 
twice  because  he,  after  '  full  warning'  as  he  ailmits,  chose  to  be  careless  of  his 
own  interests  ?  *' 

If  the  drawer  put  a  bill  into  circulation  bearing  a  forged  indorsement  of  the 
payee,  and  the  acceptor  pay  the  same  to  a  honajide  holder,  he  cannot,  on  discov- 
ering the  Ibrgery,  recover  the  sum  paid.  He  must  pay  the  bill  twice.  See 
Ilortsuian  v.  Ilenshaw,  ante,  p.  57,  and  note. 

The  rule  in  the  principal  case  as  to  the  time  of  payment,  relates  of  course  to 
negotiable  paper.  In  the  case  of  unnegotiable  bills  or  notes,  payment  may  be 
made  before  maturity ;  for  here  there  can  be  no  party  not  affected  with  notice 
as  in  the  case  of  an  innocent  indorsee  of  negotiable  paper.  The  assignee  of  un- 
negotiable paper  stands  oidy  on  the  rights  of  the  assignor  and  payee  ;  and  as 
the  defence  of  payment  can  always  be  raised  between  the  original  parties,  so  it 
can  be  raised  against  the  assignee  in  this  case.  Story,  Bills  of  Exchange, 
§§  GO,  199,  201,  and  cases  cited.  See  Whistler  v.  Forster,  14  Com.  B.  (n.  8.) 
2-4G.     See  following  cases. 


340  •  PAYMENT. 


SwoPE  et  al.  V.  Ross  et  al. 

(40  Pennsylvania  State,  186.     Supreme  Court,  1861.) 

Paper  not  accepted  discounted  hy  drawee  before  maturity.  —  The  drawee  of  a  bill  not  ac- 
cepted by  him  may  discount  the  same  before  maturity  and  thus  become  holder  of 
the  paper.  Sucli  proceeding  is  not  a  payment,  and  the  drawee  can  recover  against 
the  drawer  at  the  maturity  of  the  paper,  upon  taking  the  usual  proceedings  to 
charge  him. 

Assumpsit  between  George  Ross  &  Co.,  plaintiffs,  and  Swope  and 
Karns,  in  which  the  following  case  was  stated  for  the  opinion  of 
the  Court  in  the  nature  of  a  special  verdict. 

Ross  Forward  gave  to  Swope  and  Karns  the  following  instru- 
ment of  writing :  — 

"  Somerset,  Pa.,  August  18,  1859. 
"  George  Ross  &  Co.,  bankers,  pay  to  Swope  and  Karns,  or  order, 
ninety  days  from  date,  six  hundred  and  sixteen  dollars. 

"  Ross  Forward." 

On  or  about  the  first  of  September  thereafter,  Swope,  one  of 
the  firm  of  Swope  and  Karns,  delivered  this  paper,  (indorsed 
Swope  and  Karns)  to  the  plaintiffs'  bank,  had  the  same  dis- 
counted, and  received  the  money  thereon,  less  the  discount, 
$16.40. 

At  the  time  this  check  was  given,  and  wlien  it  was  discounted 
at  the  bank,  Ross  Forward  was  one  of  the  firm  of  George  Ross  & 
Co.,  but  went  out  on  the  nineteenth  of  September,  1859. 

Wlien  the  day  of  payment  named  in  the  check  came  round. 
Forward  had  no  funds  in  the  bank,  and  the  paper  was  regularly 
protested  for  non-payment  on  the  nineteenth  of  November,  1859. 

If  the  Court  be  of  the  opinion  that  on  the  above  state  of  facts, 
ihe  plaintiffs  are  entitled  to  recover,  the  judgment  to  be  entered  in 
favor  of  plaintiffs  for  8616,  with  interest  from  November  19, 
1859 ;  otherwise  judgment  for  defendant  with  costs.  Notice 
of  dishonor  of  the  bill  was  admitted  in  the  argument.  The 
Court  below  entered  judgment  for  plaintiffs  for  $616,  with  interest 
from  November  19,  1859. 


SWOPE   V.    ROSS.  ■  341 

The  defendants  thereupon  sued  out  t\\h  writ,  and  assigned  tlie 
entry  of  judgment  for  plaintiffs  for  error. 

Strong,  J.  The  question  presented  l>y  the  case  stated  is  (juite 
novel,  and  we  liave  not  been  able  to  find  that  it  has  been  adjudi- 
cated. Undoubtedly  the  acceptor  of  a  bill  of  exchange  is  the 
principal  delator,  and  the  drawer  and  indorsers  are  l)ut  sureties. 
Of  course  the  acceptor,  even  after  ])ayinent,  cannot  sue  either  the 
drawer  or  indorscr  of  the  bill  unless  his  acceptance  was  supra 
protest.  His  payment  of  the  bill  extinguishes  it,  but  tlie  case 
stated  finds  that  the  plaintiffs  discounted  the  bill  for  the  payees 
before  it  became  payal»lc,  not  that  they  accepted  it  or  paid  it. 
Discounting  a  bill,  though  it  be  done  by  the  drawee,  is  neither 
acceptance  nor  payment:  Acceptance  is  an  engagement  to  pay  the 
bill  according  to  its  tenor  and  effect  when  it  becomes  due,  not  be- 
fore. A  l)ill  is  paid  only  when  there  is  an  intention  to  discharge 
and  satisfy  it.  In  Burbridge  v.  Manners,  3  Camp.  194,  Lord 
EUenhoroiujIi  said  "  that  even  payment  of  a  l)ill  before  it  became 
due,  does  not  extinguish  it  any  more  than  if  it  were  merely  dis- 
counted," and  added  that  "  payment  means  payment  in  due  course 
and  not  by  anticipation."  His  lordship  evidently  thought  that 
discounting  a  bill  by  a  drawee  is  neither  payment  nor  extinguish- 
ment. In  Attenborough  v.  McKenzie,  in  the  English  Court  of 
Exchequer,  36  Eng.  L.  <fe  Eq.  562,  it  was  held  that  if  the  ac- 
ceptor of  a  bill  discounts  it,  he  may  reissue  it  so  as  to  charge  the 
drawer  ;  that  nothing  will  discharge  the  drawer  but  payment ;  i.  e., 
payment  when  due,  or  payment  for  the  purpose  of  discharging  and 
satisfying  the  bill.  Therefore,  if  the  acceptor  discounts  the  bill 
for  the  drawer  and  then  indorses  it  away,  the  drawer  will  be  liable 
upon  it  to  the  holder,  and  the  transfer  by  the  drawer  to  the  acceptor 
will  operate  as  an  indorsement,  although,  at  the  time,  the  drawer 
does  not  intend  to  transfer  by  way  of  indorsement,  being  under 
the  impression  that  the  bill  is  discharged  by  coming  into  tiie  hands 
of  the  acceptor.  Nor  will  the  payment  of  the  amount  less  the 
discount,  be  deemed  a  payment  of  the  bill  by  the  acceptor.  In 
that  case  the  holder  of  the  bill  took  it  by  indorsement  after  it  was 
due,  from  the  transferee  of  the  acceptor.  The  ruling  goes  to  the 
length  that  even  the  accepting  drawee  of  a  bill  may  take  it  as  an 
indorsee,  and  as  such  may  issue  it.  It  also  decides  that  he  does 
take  it  as  an  indorsee  when  he  discounts  it.     Can  then  the  drawee 


342  PAYMENT. 

of  a  bill,  payable  on  time,  who  has  discounted  it,  maintain  an 
action  on  it  against  the  drawer  or  indorser  if  it  be  protested  for 
non-payment  and  notice  be  given  ?  He  is  not  a  party  to  the  bill 
until  he  has  accepted  it.  Until  then,  he  has  not  assumed  the 
position  of  principal  debtor,  nor  undertaken  any  obligation  in  re- 
gard to  it.  His  discounting  has  neither  paid  nor  extinguished  it, 
and  it  is  not  a  promise  to  pa  yaccording  to  its  tenor  and  effect. 
Is  he  precluded  from  becoming  an  indorser  by  the  fact  that  the 
bill  was  directed  to  him  ?  It  seems  well  settled  that  the  drawee 
of  a  bill  may  accept  or  pay  it,  swpra  protest,  for  honor  of  the 
drawer  or  indorser,  and  if  he  takes  it  up  he  stands  in  the  position 
of  an  indorsee  paying  full  value  for  it,  has  the  same  remedies  to 
which  an  indorsee  would  be  entitled  against  all  prior  parties,  and 
can  of  course  sue  the  drawer  or  indorser.-  Chitty,  Bills,  375.  In 
such  cases  the  fact  that  the  bill  was  drawn  upon  him  does  not  inca- 
pacitate him  from  acquiring  the  rights  of  an  indorsee.  No  reason 
is  apparent  for  a  different  rule  where  the  drawee  becomes  the 
holder  by  discounting  the  bill  before  its  dishonor.  Uncertain 
whether  the  drawer  will  put  funds  into  his  hands  to  meet  the  bill 
at  maturity,  he  may  well  refuse  to  accept,  and  yet  may  discount 
it  on  the  credit  of  botli  the  drawer  and  indorser.  If  he  does  not 
accept  he  is  as  much  a  stranger  to  it  as  any  other  person  dis- 
counting it  for  the  drawer  or  indorser  ;  is  but  purchasing  the  con- 
tract, and  the  contract  thus  purchased  is  that  the  drawee  will  pay 
the  bill  on  presentment,  when  it  shall  fall  due,  or  in  case  of  his 
failing  to  do  so,  that  the  parties  whose  names  are  already  upon  it 
will  pay,  if  due  notice  of  its  dishonor  be  given  to  them.  The 
promise  is  made  by  the  parties  to  the  bill.  The  purchaser  enters 
into  no  engagement. 

These  views  accord  with  the  doctrine  laid  down  in  Desha 
Sheppard  <fe  Co.  v.  Stewart,  6  Ala.  852,  a  case  which  more 
closely  resembles  the  present  than  any  we  have  been  able  to  find. 
In  it  the  Supreme  Court  of  that  State  ruled  that  the  drawees  of  a 
bill  may  sue  the  drawer  or  indorsers  after  it  has  been  dishonored, 
even  though  they  obtained  the  bill  before  its  dishonor ;  and  that 
until  acceptance  they  are  strangers  to  the  bill,  and  may  acquire 
riglits  to  it,  and  stand  in  the  same  condition  as  any  other  holder.. 
It  was  said  that  tliere  is  no  legal  presumption  if  the  drawee  comes 
into  possession  of  the  bill  previous  to  its  dishonor,  that  he  takes 
it  with  the  obligation  to  accept. 


EASTMAN    V.    PLUMER.  343 

Such  being  in  our  opinion  the  law,  it  was  not  error  that  the 
Court  of  Common  Pleas  gave  judgment  for  the  plaintiff  upon  the 
case  stated.  Tiie  fact  is  not  distinctly  found  that  notice  of  dis- 
honor of  the  l)ill  was  duly  given  to  the  defendants,  but  it  was 
conceded  on  tiie  argument  that  such  was  the  fact,  and  tbat  such 
is  the  meaning  of  the  case  stated. 

The  judgment  is  affirmed. 

So  where  the  maker  of  an  indorsed  note  offers  it  for  discount  before  maturity, 
this  is  not  notice  to  the  purchaser  of  payment.  Eckert  v.  Cameron,  43  Penn. 
State,  \'10,  citing  the  same  authorities  as  those  referred  to  in  the  principal  case. 
But  if  the  paper  comes  into  the  possession  of  one  o(  the  parties  liable  to  pay  it, 
after  it  has  been  negotiated,  such  possession  is  prima  J'acie  evidence  of  pay- 
ment. McGee  v.  Prouty,  9  Met.  547 ;  Dugan  v.  United  States,  3  Wheat.  172. 
See  also  Fisher  v.  Marvin,  47  Barb.  159.  See  also  upon  the  subjects  discussed 
in  the  princi[)al  case,  2  Parsons,  Notes  and  Bills,  455,  456,  and  cases  cited. 


Eastman  v.  Plumer. 

(32  New  Hampshire,  238.     Supreme  Court,  December,  1855.) 

Wrongiful  payment  (>>/  principal  debtor.  Effect  as  to  surety.  —  Tlie  defendant  signed  a 
negotiable  note  as  surety  for  the  principal  maker.  Tlie  note  was  indorsed  in 
blank,  and  the  indorsee  called  upon  tlie  principal  debtor  for  payment.  The  latter 
brought  the  money,  paid  the  amount,  and  received  tlie  note.  In  point  of  fact  this 
money  paid  by  the  principal  had  been  furnished  by  a  third  person,  who  sent  it 
to  purchase  the  jiaper  through  the  principal  as  his  agent,  though  this  fact  was 
unknown  to  the  holder.  This  third  person,  the  owner  of  the  money,  brought  an 
action  on  the  note  against  the  defendant,  the  surety.  Held,  that  the  payment  by 
the  principal  discharged  the  paper  as  to  the  surety,  and  that  the  action  could  not 
•   be  maintained. 

Assumpsit  upon  a  promissory  note,  payable  to  order,  and  in- 
dorsed in  blank. 

Defence,  payment.  The  defendant,  a  surety,  proved  that  the 
note  had  been  paid  to  the  indorsee  of  the  payee  by  the  principal 
maker,  and  the  note  delivered  to  bini.  The  plaintiff  then  proved 
that  the  j)rincipal  debtor  had  received  the  money  from  himself, 
under  an  arrangement  not  connnunicated  to  the  holder,  Ijv  which 
the  plaintiff  was  to  become  purchaser  of  the  note  ;  that,  on  pay- 
ment of  the  money  to  the  holder,  the  principal  received   the  paper 


344  PAYMENT. 

and  delivered  it  to  the  plaintiff;  and  that  he  had  acted  in  the 
matter  as  the  plaintiff's  agent. 

Perley,  C.  J.  The  defendant  signed  the  note  in  question  as 
surety  for  Young,  the  other  maker  ;  the  note  was  indorsed  in  blank 
by  Roby,  the  payee,  and  the  indorsee  and  holder  called  on  Young, 
the  principal,  for  payment.  Young  came  with  the  money,  paid  it 
over  to  the  holder,  and  took  the  note.  The  holder  called  for  pay- 
ment of  the  party  primarily  bound  to  pay,  and  received  of  him  the 
amount  of  the  note,  as  and  for  payment,  without  notice  of  any 
interest  that  a  third  person  had  in  the  money  paid.  The  holder 
therefore  made  no  contract  to  transfer  the  note. 

Tlie  contract  of  the  defendant  was  to  pay  the  note  to  Roby,  the 
payee,  or  his  order.  By  his  indorsement  in  blank,  Roby  ordered 
the  note  .to  be  paid  to  the  indorsee,  or  to  such  other  person  as 
should  become  the  holder  of  the  note  by  transfer  of  the  note  from 
Roby.  But  the  holder  under  Roby's  indorsement  has  made  no 
transfer  of  the  note  as  an  existing  security.  He  has  received  the 
amount  due  on  the  note  from  the  principal  debtor,  and  given  up 
the  note  to  him,  as  paid  and  discharged.  Looking  at  the  case,  then, 
as  a  mere  matter  of  contract,  according  to  his  original  undertaking 
on  the  note,  the  defendant  has  not  bound  himself  to  pay  it  to  this 
plaintiff,  because  Roby,  the  payee,  has  never  ordered  the  contents 
to  be  paid  to  him. 

The  holder  of  the  note  was  not  bound  to  assign  it.  He  might 
insist  that  the  note  should  be  paid  and  discharged  before  he  deliv- 
ered it  out  of  his  hand.  If  he  transferred  the  note  by  delivery 
merely,  though  he  would  not  be  liable  as  indorser,  his  assignment 
would  still  be  a  contract  involving  certain  liabilities  on  his  part. 
He  would,  for  instance,  be  held  to  warrant  that  the  note  was  gen- 
uine.    Story,  Bills,  118. 

In  this  case  there  was  no  assignment  of  the  note,  in  any  proper 
sense  of  those  terms,  by  the  holder  to  this  plaintiff,  and  the  de- 
fendant made  no  contract  to  pay,  except  to  the  payee,  or  an  as- 
signee under  him. 

This  has  little  resemblance  to  the  case  where  the  surety  pays  a 
debt  and  the  law  subrogates  him  to  the  securities  which  the  cred- 
itor holds  from  the  principal  debtor ;  or  to  the  case  of  one  inter- 
ested in  a  mortgage,  who  discharges  an  incumbrance  to  protect  his 
own  interest,  and  holds  a  security  on  the  mortgaged  property  for 


EASTMAN   V.    PLUMER.  345 

the  money  he  has  advanced.  In  siicli  cases,  though  the  form  of  tlie 
transaction  is  payment,  and  though  it  operates  as  payment,  so  far 
as  to  discharge  the  original  debtor  from  any  action  on  his  contract 
to  recover  the  money,  the  hiw  keeps  the  security  on  foot  to  jjrotcct 
tlie  erpiitahh}  interests  of  the  i)arty  who  has  })aid  hi»  money  under 
such  circumstances. 

This  defendant  was  surety,  and  was  interested  that  the  note 
should  be  ])aid  by  the  princijial.  The  holder  called  on  the  princi- 
pal to  pay,  and  he  came  with  the  money,  paid  it  over,  and  the  note 
waiS  given  up  to  him  by  the  holder,  with- the  understanding  on  his 
part  that  it  was  paid  and  discharged.  So  far  as  the  holder  of  the 
note  and  the  surety  had  any  information,  the  note  was  paid,  and 
the  surety  was  discharged,  and  had  a  right  to  rely  on  the  transac- 
tion as  a  payment.  But  if  the  plaintilT  can  maintain  this  action, 
the  surety  might  be  called  on  to  pay  the  debt  at  any  time  within 
six  years  after  it  fell  due,  in  virtue  of  a  secret  arrangement  between 
the  plaintiff  and  the  principal  debtor,  by  which  the  principal  would 
be  ena])led  to  deceive  his  surety  with  every  apj)carance  of  having 
paid  the  debt,  and  so  relieved  the  surety  from  his  liability. 

The  manifest  object  of  the  arrangement  with  the  plaintiff,  as 
stated  by  the  principal  debtor,  was  to  gain  time,  and  defer  payment 
longer  than  the  holder  of  the  note  would  allow,  by  getting  the 
plaintiff  to  advance  the  money  and  wait  for  repayment.  If  the 
plaintiff  intended  to  resort  to  the  surety  for  payment,  the  arrange- 
ment was  unfair  towards  him  ;  and  if  the  bargain  had  been  positive 
to  wait  on  the  principal  for  a  defuiite  time,  it  would  have  discharged 
the  surety,  without  regard  to  any  other  defence. 

On  this  case  we  think  there  was  no  sucli  transfer  of  the  note 
to  the  plaintiff  as  would  give  him  a  right  of  action  on  it  against 
this  defendant,  and  that  as  to  him  it  must  be  regarded  as  paid  and 
discharged. 

According  to  the  agreement  of  the  parties,  the  verdict  must  be 
set  aside,  and  judgment  entered  for  the  defendant. 

With  respect  to  the  kindred  .subject  of  payment  by  the  drawer  or  indorser, 
there  seems  to  be  some  confusion  among  the  cases ;  but  it  is  believed  that  tlie 
confusion  has  arisen  from  not  carefully  distinguishing  between  ordinary  and 
accommodation  paper.  It  is  plain  that  in  the  case  of  accommodation  paper,  the 
party  accommodatccL  is  the  real  and  ultimate  debtor;  and  in  sound  reason  pay- 
ment by  him  should  discharge  the  paper.  See  Lazarus  v.  Cowic,  o  Q.  15.  459. 
But  in  tile  case  of  ordinary  commercial  paper,  the  maker  or  acceptor  is  the  real 


346  PAYMENT. 

debtor,  and  he  alone  as  it  should  seem  ean  give  a  valid  discharge.     Mechanics' 
Bank  V.  Hazard,  13  Johns.  353. 

Cresswell,  J.,  in  Jones  v.  Broadhurst,  9  Com.  B.  173,  discusses  this  subject  in 
an  able  manner,  both  on  principle  and  authority.  In  delivering  the  opinion 
of  the  Court  he  said  :  — 

"  The  declaration  in  this  case  charges  the  defendant  as  the  acceptor  of  a  bill  of 
exchange  fur  £49,  drawn  by  W.  &  C.  Cook,  payable  to  their  order  at  three 
months  alter  date,  and  indorsed  by  the  drawers  to  the  plaintiffs ;  and,  among 
other  pleas  not  material  to  be  noticed  on  the  present  occasion,  the  defendant  by 
his  fourth  plea  alleged  that,  after  the  indorsement  of  the  bill  of  exchange  to  the 
plaintiffs,  and  before  the  commencement  of  the  action,  the  drawers  of  the  bill 
had  delivered  to  the  plaintiffs,  and  the  plaintiffs  had  accepted,  divers  goods  of 
the  value  of  £oO  in  full  satisfaction  and  discharge  of  the  said  bill  of  exchange, 
and  all  damages  and  causes  of  action  in  respect  thereof;  and  that  the  plaintiffs, 
from  the  time  of  the  said  satisfaction  of  the  said  bill  of  exchange  to  the  time  of 
the  pleading  of  the  plea,  had  always  held  the  same  against  the  will  and  consent 
of  the  said  drawers,  and  so  still  held  the  same ;  and  that  the  plaintiffs  commenced 
this  action,  and  still  prosecuted  the  same,  against  and  in  opposition  to  the  will 
and  consent  of  the  said  drawers. 

To  this  plea  the  plaintiffs  replied  de  injuria  ;  and  a  verdict  was  found  for  the 
defendant  upon  the  trial  of  the  issue  joined  on  that  plea. 

A  rule  has  since  been  obtained  by  the  plaintiffs,  calling  upon  the  defendant  to 
show  cause  why  judgment  should  not  be  entered  for  them  non  obstante  veredicto, 
in  respect  of  the  insufficiency  of  that  plea. 

Upon  this  record  the  bill  of  exchange  must  be  taken  to  have  been  accepted 
upon  a  good  consideration.  The  interest  of  the  acceptor,  therefore,  is  not  lia- 
ble to  be  affected  by  the  state  of  accounts  or  equities  between  any  other  parties 
connected  with  the  bill ;  and  the  only  question  in  which  he  has  any  interest  is, 
whether  the  party  seeking  to  enforce  payment  by  him  is  the  legal  owner  of  the 
bill,  and  whether  recovery  by  and  payment  to  such  party  will  enure  as  a  satisfac- 
tion and  absolute  discharge  of  his  liability  upon  the  bill.  By  the  indorsement 
averred  in  this  declaration,  and  not  traversed,  the  plaintiffs  became  the  legal 
owners  of  the  bill ;  and  the  recovery  of  the  amount  thereof  will  have  the  effect 
of  discharging  the  defendant  from  all  future  liability.  The  plea  does  not  allege 
whether  such  satisfaction  was  given  and  accepted  before  or  after  the  bill  became 
due ;  nor  is  it  averred  to  have  been  at  the  request,  or  for,  or  on  behalf  of  the 
defendant,  or  in  satisfaction  of  his  liability  upon  the  bill,  or  of  the  cause  of  ac- 
tion of  the  plaintiffs  against  him  ;  nor  does  it  in  any  way  connect  the  defendant 
with  the  transaction,  or  show  any  privity  between  him  and  the  parties  to  the  sat- 
isfaction given,  except  so  far  as  such  parties  were  the  drawers  of  the  bill,  and 
the  defendant  was  the  acceptor. 

As  the  plea  did  not  allege  that  the  satisfaction  was  made  at  the  request,  or  for 
or  on  behalf  of  the  defendant,  or  in  respect  of  the  cause  of  action  stated  in  the 
declaration,  the  defendant  was  not  required  to  give  any  evidence  to  such  effect, 
to  entitle  him  to  the  verdict  he  obtained ;  and  therefore  the  verdict  will  not  war- 
rant an  intendment  of  any  such  facts,  or  of  any  other  fact  lending  to  extend  the 
import  of  the  plea  as  stated  upoiH  the  record ;  and  the  ([uestlon  raised  by  the 
plea  according  to  its  terms  is,  whether  satisfaction  of  a  bill  as  between  a  drawer 


EASTMAN   V.    PLUMER.  347 

or  indorscr  and  an  indorsco,  made  before  or  after  the  l)ill  becomes  duo,  enures 
as  a  satisfaction  on  behalf  of  tlie  acceptor,  and  operates  to  discharge  him  from 
liability  to  the  indorsee. 

In  support  of  the  rule  it  was  contended  that  the  plea  did  not  show  sufficient 
matter  to  bar  the  plaintiffs  from  judgment,  because  the  satisfaction  therein  ^et 
forth  was  not,  as  before  stated,  averred  to  have  been  made  at  the  request,  or  for 
or  on  behalf  of  the  defendant,  or  for  or  in  respect  of  the  cause  of  action  de- 
clared upon  ;  and  that  no  legal  privity  was  shown  between  the  parties  who  made 
satisfaction,  and  the  defendant,  and  therefore  the  satisfaction  made  did  not  enure 
as  a  discharge  of  the  defendant ;  and  that  the  satisfaction  was  made  by  parties 
who  were  under  a  personal  liability  upon  the  bill  declared  on,  either  absolute  or 
contingent ;  and  that  the  plea  imports  that  the  satisfaction  made  by  them  re- 
ferred and  was  limited  to  their  own  pers(jnal  liability,  and  was  not  shown  to  have 
extended  beyond;  and  that  the  satisfaction  to  the  indorsee  of  a  bill  made  by  the 
drawer  or  indorser  did  not,  as  a  legal  consequence,  enure  as  a  satisfaction 
of  the  bill  (pioad  the  acceptor  or  any  other  person  other  than  those  who,  if 
called  upon  by  the  indorsee  to  pay  the  bill,  would  have  a  remedy  over  against 
the  party  who  made  the  satisfaction,  and  thereby  subjecting  such  party  to  a  lia- 
bility to  make  double  satisfaction. 

It  was  also  insisted  that  the  plea  did  not  show  any  legal  privity  between  the 
drawers  who  made  the  satisfaction  and  the  defendant ;  and  that  the  plea,  there- 
fore, at  most  amounted  to  a  plea  of  satisfaction  made  by  a  stranger,  and,  as  such, 
could  not  be  pleaded  in  bar  against  the  plaintiffs. 

On  the  part  of  the  defendant,  it  was  contended,  upon  showing  cause,  that, 
upon  principal  and  authority,  satisfaction  made  by  the  drawer  of  a  bill  to  an  in- 
dorsee, eiuired  by  law  as  a  satisfaction  by  or  on  behalf  of  the  acceptor,  and  might 
therefore  be  pleaded  in  bar  to  any  action  afterwards  brought  by  the  indorsee 
against  the  acceptor ;  and  that  the  drawer  and  acceptor's  being  parties  to  the  same 
bill  was  a  sufficient  legal  privity  to  make  satisfaction  by  the  drawer  enure  as  a 
discharge  of  the  acceptor,  as  against  the  indorsee  who  received  the  satisfaction  ; 
and  further,  it  was  contended  that  it  was  competent  to  any  one  to  plead  in  bar 
satisfaction,  even  by  a  stranger,  for  the  cause  of  action  sued  upon,  which  had 
been  accepted  by  the  plaintiffs. 

The  case  was  very  elaborately  argued,  and  many  authorities  were  referred  to 
on  both  sides.  The  Court  has  examined  all  the  authorities  referred  to,  and  con- 
sidered the  case,  and  in  the  result  is  of  opinion  that  the  plea,  as  proved  and  sus- 
tained by  the  verdict,  does  not  show  sufficient  matter  to  bar  the  plaintiffs,  and 
that  the  rule  to  enter  judgment  for  the  jjlaintiffs  non  obstante  veredicto,  must  be 
made  absolute. 

In  considering  the  case  upon  principle,  it  will  be  proper  to  advert  to  the 
legal  relation  in  which  the  respective  parties  stand  towards  each  other,  upon  the 
effect  of  whose  acts  and  rights  the  determination  of  the  rule  must  depend.  It 
is  to  be  observed  that  the  drawers  and  acceptor  are  parties  to  the  same  instru- 
ment as  contractors  with  each  other,  and  not  as  joint  contractors  with  a  thtfd 
person;  and  that,  by  the  indorsement  of  the  bill,  independent  and  different  con- 
tracts arise  on  the  respective,  parts  of  the  drawers  and  the  acceptor,  with  the 
indorsees.  The  acceptor  is  primarily  and  absolutely  liable  to  jiay  the  bill, 
according  to  its  tenor.     The  drawers  are  liable  only  upon  the  contingencies  of 


348  PAYMENT. 

the  acceptor's  or  drawee's  making  default,  and  of  the  holder's  performing  certain 
conditions  precedent,  such  as  presenting  the  bill  according  to  its  tenor,  and  giv- 
ing due  notice  of  the  failure  of  the  acceptor  or  drawee  to  pay  upon  a  proper 
presentment. 

The  contracts  created  by  the  bill,  as  regards  the  drawers  and  the  acceptor, 
are  therefore  essentially  distinct ;  and  thei'e  seems  to  be  no  legal  ground  why  the 
indorsee  of  a  bill  may  not  accept  satisfaction  of  the  contingent  or  absolute  lia- 
bility of  the  drawer,  without,  by  so  doing,  discharging  the  acceptor. 

The  competency  of  an  acceptor  to  pay  may  be  doubtful ;  and  no  valid  reason 
is  apparent  why  the  indorsee  may  not  release  and  discharge  the  drawer  or  an 
indorser  by  competent  legal  means,  either  upon  consideration  more  or  less  valu- 
able, or  without,  and  retain  his  remedies  against  the  acceptor ;  unless  in  the  case 
of  an  accommodation  bill,  in  which  case  the  acceptor  is  a  mere  surety  as  between 
him  and  the  drawer,  and  entitled  to  recover  against  the  drawer  whatever  he  may 
be  compelled  to  pay  in  discharge  of  his  suretyship.  In  such  a  case,  where  an 
indorsee  who  has  received  satisfaction  from  the  drawer  with  notice  sues  the  accept- 
or, a  different  question  may  arise ;  but  upon  the  record  in  this  case'  the  bill  must 
be  taken  to  have  been  a  bill  accepted  for  value,  and  which  the  acceptor  therefore 
ought,  in  all  events,  to  pay ;  and,  having  received  value,  it  is  difficult  to  discover 
any  valid  reason  why  he  should  be  discharged  from  his  liability  to  make  the  pay- 
ment, which  for  value  he  has  contracted  to  make,  by  reason  of  any  arrangements 
between  others  to  which  he  is  no  party,  in  which  he  is  not  shown  to  have  inter- 
fered, or  his  rights  and  liabilities  are  not  shown  to  have  been  in  the  contempla- 
tion of  the  parties  to  any  such  arrangements,  and  by  which  his  interests  are  not 
in  any  respect  compromised  or  affected. 

By  the  indorsement  of  a  bill,  the  indorsee  becomes  the  legal  owner  of  it ;  and 
satisfaction  of  the  contingent  or  absolute  liability  of  the  drawer,  or  of  an  indors- 
er, does  not  necessarily  vacate  or  avoid  the  effect  of  the  indorsement,  or  destroy 
the  title  of  the  indorsee  to  the  ownership  of  the  bill.  Payment  of  the  bill  by  a 
drawer  or  an  indorser  may  or  may  not,  according  to  circumstances,  entitle  the 
party  paying  to  the  possession  of  the  bill ;  there  may  be  a  satisfaction  of  the  bill 
between  such  parties,  which  may  not  entitle  them  to  the  possession  of  the  bill. 
The  plea  in  question  has  no  statement  to  the  effect  that  the  drawers,  by  reason 
of  the  satisfaction  made,  were  entitled  to  have  the  bill  delivered  up ;  it  only 
states  that  the  plaintiffs  hold  the  bill  against  the  will  and  consent  of  the  drawers, 
which  is  by  no  means  equivalent  to  a  statement  that  they  were  entitled  to  have 
the  bill  delivered  to  them.  The  plea  does  not  aver  that  the  value  of  the  goods 
delivered  in  satisfaction  was  equal  to  the  amount  of  the  bill ;  and  it  is  consistent 
with  the  language  of  the  plea  that  the  drawers  may  have  made  satisfaction  of  the 
bill,  so  far  as  regarded  their  lial)ility,  by  any  small  composition,  leaving  the 
plaintiffs  with  all  their  remedies  in  point  of  law  against  the  acceptor,  and  other 
parties  to  the  bill ;  and  yet  the  drawers  may  afterwards  have  dissented  from  the 
plaintiffs'  retaining  the  bill,  or  suing  the  acceptor  upon  it. 

^  The  terms  of  the  plea  do  not  import  that  the  satisfaction  was  made  upon  any 
contract  or  condition,  either  that  the  bill  should  be  delivered  up,  or  be  deemed  to 
be  satisfied  as  between  the  plaintiO's  and  the  acceptor ;  and,  when  the  nature  of 
the  relation  in  which  the  respective  partie's  stand  towards  each  other  is  consid- 
ered, no  principle  is  apparent  upon  which,  as  a  consequence  in  law,  the  satisfac- 


EASTMAN    V.    PLUMER.  349 

faction  of  a  bill  as  between  the  indorsee  and  the  drawer,  should  operate  as  a 
satisfaction  and  discharge  in  favor  of  the  acceptor. 

Supposing  the  effect  of  the  plea  to  be  that  the  plaintiffs  are  suing  as  trustees 
for  the  drawers,  but  against  their  consent,  such  matters  would  furnish  no  legal 
bar  to  the  plaintiffs,  as  the  law  can  take  no  notice  of  the  trust,  nor,  consequent- 
ly, whether  the  trustee  is  enforcing  his  legal  rights  against  a  third  j)erson  witii  <jr 
against  the  consent  of  his  cestui  que  inist.  And  we  are  of  opinion  that  the  de- 
fendant has  not  established  any  legal  principle  which  will  entitle  him  to  judgment 
upon  this  plea. 

But  it  has  on  his  behalf  been  contended,  that  the  plea  ought  to  be  supported, 
and  judgment  given  for  the  defendant  upon  authority. 

We  have  reviewed  the  autliorities  relied  upon,  and  they  do  not  appear  to  us 
to  entitle  the  defendant  to  judgment. 

The  case  of  Bacon  v.  Searles,  1  II.  Bl.  88,  was  cited  ;  and  it  nmst  be  ad- 
mitted that  in  that  case,  according  to  the  report,  it  was  held  that  the  indorsee  of 
a  bill  who  had  received  from  the  drawer  a  part  of  the  amount  of  the  bill,  was 
entitled  to  recover  from  the  acceptor  only  the  balance ;  and  Lord  Loughborough 
then  Chief  Justice,  is  reported  to  have  said  that,  "  if  the  drawer  of  a  bill  antici- 
{)ates  the  acceptor,  and  pays  the  money  himself,  he  thereby  releases  the  acceptor 
from  his  undertaking;  "  and  he  adds  :  "  so  that,  if  the  acceptor  were  to  pay  the 
bill  after  notice  given  to  him  that  the  drawer  had  already  paid  it,  an  action  would 
lie  for  the  drawer  against  the  acceptor  to  recover  back  the  money  so  paid." 
Lord  Loughborough  concludes  his  judgment  by  saying:  "  Another  reason  which 
weighs  much  with  me  is,  the  great  mischief  which  would  ensue  to  merchants, 
among  whom  accommodation  bills  are  circulated  to  a  vast  extent,  if,  after  a  bill 
had  been  taken  up  by  the  drawer,  the  acceptor  should  be  called  upon  for  pay- 
ment." The  report  of  this  case  is  not  satisfactory.  Lord  Loughborough  is  made 
to  say  that,  if  the  drawer  anticipates  the  acceptor  and  pays  the  money  himself, 
he  thereby  releases  the  acceptor  from  his  undertaking ;  and  yet  he  is  said  to  have 
added,  "  that  if  the  acceptor  were  to  pay  the  bill,  after  notice  given  to  him  that 
the  drawer  had  already  paid  it,  an  action  would  lie  for  the  drawer  to  recover  it 
back  again ;  "  which,  as  applied  to  the  facts  of  the  case,  is  not  very  iutelligiljle. 
If  it  was  meant  that,  supposing  the  drawer  should  sue  the  acceptor  upon  the  bill 
tlie  acceptor  could  not  plead  in  bar  the  payment  to  an  indorsee,  after  notice  that 
the  drawer  had  paid  it,  it  is  intelligible,  but  not,  upon  the  liicts  stated,  very  sat- 
isfactory. The  point  in  judgment  was,  whether  an  indorsee,  after  having  re- 
ceived payment  of  part  of  the  bill  from  the  drawer,  was  entitled,  in  an  action 
against  the  acceptor,  to  recover  the  whole  amount  of  tiie  bill,  or  only  the  balanee 
of  the  bill  remaining  unpaid  ;  and  it  was  held  that  the  balance  only  was  recov- 
erable. As  a  decision  upon  that  point  it  has  been  overruled.  The  observations 
made  by  the  judges  render  it  uncertain  whether  it  was  the  case  of  a  bill  lor  value, 
or  an  accommodation  bill ;  but  those  observations  are  of  doubtful  accuracy  in 
either  view  of  the  case.  If  it  was  a  bill  for  value,  the  remark  is  not  correct  that 
payment  by  the  drawer  discharged  the  acceptor  from  his  promise ;  because  the 
acceptor  in  such  a  case  would  be  clearly  liable  to  the  drawer,  who,  by  his  pay* 
ment  to  the  indorsee,  would  become  entitled  to  sue  the  acceptor  upon  tiie  bill; 
and  if  it  was  tiie  case  of  an  acconnnoda||on  lull,  the  remark  is  uniutelligihlf  that, 
if  the  acceptor,  who  would  be  surety  only  for  the  drawer,  was   to  pay  ll;e   bill 


350  PAYMENT. 

after  notice,  the  drawer,  who  was  the  principal  debtor,  might  recover  the  money- 
back  again  IVoni  the  acceptor,  his  surety. 

It  may  be  that  what  was  intended  to  be  said  was  that  such  a  payment  by  the 
acceptor  would  make  the  indorsee  a  trustee  for  the  drawer,  and  liable  to  refund 
to  him  what  should  be  paid  by  the  acceptor;  but  it  is  by  no  means  clear 
that  this  was  intended  to  be  said,  because  the  remarks  refer  to  tlie  acceptor's  lia- 
bility to  refund,  in  terms,  and  speak  of  a  payment  by  the  acceptor  after  notice 
of  payment  by  the  drawer,  —  which  would  be  quite  immaterial  upon  the  ques- 
tion whetlier  the  indorsee  would  become  a  trustee  for  the  drawer,  in  regard 
to  the  sum  received  from  the  acceptor.  The  doubt  whether  it  was  the  case  of  a 
bill  for  value  or  an  accommodation  bill,  is  increased  by  the  observations  of  Mr. 
Justice  Wilson,  who  referred  to  a  case  of  Beck  v.  Robley. 

Considering  tliis  case  of  Bacon  v.  Searles  with  reference  to  the  point  decided, 
—  that  part  of  a  bill  (accepted  for  value)  being  paid  by  a  drawer  or  indorser, 
disentitles  the  indorsee  to  recover  from  the  acceptor  more  than  the  balance 
remaining  unpaid,  —  it  has  been  overruled  by^  modern  decisions,  and  is  not 
now  to  be  deemed  to  be  law ;  and,  if  it  is  to  be  considered  as  the  case  of  an 
accommodation  bill,  it  is  inapplicable  to  the  questions  which  arise  upon  this 
plea. 

Mr.  Justice  Wilson  referred  to  the  case  of  Beck  v.  Robley,  reported  in  a 
note  to  Bacon  v.  Searles,  and  which,  it  would  seem  from  the  statements  in  the 
report,  was  the  case  of  an  accommodation  bill.  The  facts  were  these  :  Brown 
drew  the  bill  upon  Robley,  payable  to  Hodsou,  and  gave  the  bill  to  Hodson  as 
security  for  an  advance  made  to  him  by  Hodson.  Robley  accepted  the  bill,  and 
Brown,  the  drawer,  took  it  up  when  due,  in  Hodson's  hands,  and  received  back 
the  bill  with  Ilodson's  indorsement  upon  it.  Brown,  after  the  bill  had  become 
due,  paid  it  to  Beck,  who  brought  the  action  against  Robley.  The  action  was 
belli  not  to  be  maintainable ;  and  correctly  so,  as,  after  the  bill  had  become  due, 
the  drawer  could  only  negotiate  it  subject  to  such  equities  as  existed  against 
him ;  and,  it  being  an  accommodation  bill,  Brown,  the  drawer,  could  not  have 
sued  the  acceptor,  and  so  neither  could  a  subsequent  holder  claiming  under  him 
after  the  bill  bad  become  due.  The  decision  against  the  plaintiff,  therefore, 
would  have  been  correct,  irrespectively  of  another  fact  relied  upon  in  that  case, 
viz.,  that  Beck,  the  plaintiff,  was  compelled  to  claim  through  the  indorsement  of 
Hodson,  the  payee ;  and  the  Court  was  confirmed  in  its  decision  against  the 
plaintiff,  upon  the  ground,  that,  if  effect  were  given  to  Hodson's  indorsement 
under  the  circumstances,  Hodson  himself  might  be  rendered  liable,  —  a  result 
which  ought  not  to  occur.  It  is  unnecessary  to  consider  the  correctness  of  that 
opinion ;  but  both  the  cases  of  Bacon  v.  Searles  and  Beck  v.  Robley  would  be 
well  decided,  if  the  bills  upon  which  those  actions  were  brought  were  accommo- 
dation bills ;  and  Beck  v.  Robley,  in  that  event,  might  be  considered  as  an 
authority  for  the  determination  of  Bacon  v.  Searles. 

Upon  Bacon  v.  Searles  being  cited  as  an  authority,  in  Purssord  v.  Peek,  9 
Mees.  &  W.  196,  as  deciding  that  a  payment  by  the  drawer  of  a  bill  discharged 
the  acceptor  pro  tctnto,  Lord  Abimjer,  C.  B.,  said,  that,  "if  that  were  the  prin- 
ciple of  that  case,  it  might  be  a  question  whether,  if  it  were  now  considered,  it 
would  not  be  overruled."  • 

The  case  of  Johnson  v.  Kennion,  2  Wils.  262,  was  cited  as  an  authority,  on 


EASTMAN    V.    PLUMKR.  3.01 

tlie  part  of  th(!  plaintifTs,  that  the  contract  created  by  tlie  liill,  could  not  he  sev- 
creil  and  niad(!  tlie  <;roiiMd  of  two  actions,  and  tliat  the  lioldcr  must  brin<^  an 
action  fur  the  whole,  and  be  considered  trustee  for  the  drawer,  for  so  much  as 
he  had  paid.  Mr.  Justice  Wilson  is  said  to  have  referred  to  the  case  of  Beck  v. 
Robley,  as  contrary  to  that  position  ;  but  it  is  not  obvious  that  such  is  the  effect 
of  lieck  V.  Roljley.  .Johnson  r.  Ivennion,  however,  distinctly  decided  that  the 
indorsee  was  entitled  to  recover  the  whole  amount  of  the  l)ill,  althon<^h  he  had 
received  a  part  from  the  drawer:  and,  unless  IJacon  r.  Searles  and  Beck  v.  Rob- 
ley  were  distinjiui.shable,  u])un  the  ground  of  the  actions  being  upon  acconuno- 
(lalioM  hills,  it  does  not  a|)pear  how  the  authority  of  Johnson  t'.  Ivennion  was 
avoiileij. 

Assuuiinj,^,  however,  Bacon  i".  Searles  and  ]5eck  v.  Robley  to  be  authorities 
that  the  acceptor  of  a  bill  for  value  is  discharged  altogether,  or  pro  iaiito,  by 
l)aymints  made  by  a  drawer  or  indorser  to  an  indorsee,  wlio  afterwards  sues  the 
accej)tor,  they  cannot  be  considered  as  binding  authorities;  and  they  are  incon- 
sistent with  Callow  r.  Lawrence,  3  M.  &  S.  l»a,  where  the  continued  liability 
of  the  acceptor  is  distiix  tly  determined;  and  Hubbard  i".  Jackson,  1  M.  &  P.  11 
[K.  C.  L.  R.  vol.  17]  ;  s.  c.  4  Bing.  390  [E.  C.  L.  R.  vol.  13,  15]  ;  3  Car.  &  P. 
134  [E.  C.  L.  R.  vol.  14]  is  a  decision  to  the  same  effect,  following  the  authority 
of  Callow  r.  Lawrence;  and,  in  both  cases,  Beck  v.  Robley  was  treated  as  a 
decision  upon  the  ground  that  the  plaintiff"  could  not  claim  through  llodson's 
indorsement. 

Pierson  v.  Diinlop,  2  Cowp.  571,  was  an  action  against  the  acceptor  of  a  bill 
for  £300.  The  drawer  having,  paid  £180,  the  plaintiffs  took  a  verdict  for  the 
whole  amount,  which  the  Court  compelled  them  to  reduce,  at  their  own  cost. 
There  can  be  little  doubt  that  this  also  was  the  case  of  an  acconnnodation  bill ; 
as  it  appears,  that,  after  the  verdict,  a  bill  in  equity  was  filed  to  obtain  a  discov- 
ery of  the  payment,  and  reduction  of  the  verdict;  and,  if  the  ce.s-(ui  que  iriist  of 
the  plaintiffs  was  not  entitled  to  receive  the  £180,  the  Court,  in  its  equitable 
jurisdiction,  could  not  have  permitted  their  trustee  to  recover  it.  The  case 
would  resolve  itself  into  that  of  a  payment  by  the  principal  debtor,  in  ease  of 
the  surety. 

In  the  ease  of  Walwyn  v.  St.  (.^uintin,  1  Bos.  &  Pul.  t)52,  the  plaintilfs  were 
re  (juired  to  give  the  acceptor  credit  for  the  amount  of  the  payment  made  by  the 
drawer,  the  Court  holding  the  bill  to  be  an  acconnnodation  bill. 

The  several  other  cases  which  were  cited  on  the  part  of  the  defendant,  are  no 
authorities  for  the  purpose  for  which  they  were  cited  :  indeed,  they  are  rather 
against  him. 

In  Purssord  i'.  Peek,  9  Mees.  cV:  W.  19(5,  the  Court  held  that  the  plea  was  bad 
fur  duplicity  :   it  alleged  that  the   defendant,  the  acceptor  of  a  bill  of  exchange, 
had  accepted  it  I'ur  the  acconnnodation  of  the  drawer,  and  that  the  drawer  had  ' 
satisfied  the  bill ;  and  it  further  stated,  that,  at  the  time  of  the  action,  the  plain- 
tiff was  a  holder  of  the  bill  without  consideration  or  value. 

Reynolds  v.  Blackburn;  7  Adol.  &  Ellis,  161  [E.  C.  L.  R.  vol.  34]  ;  2  N.  & 
P.  137,  was  an  action  by  indorsee  against  the  acceptor  of  an  accommodation 
bill ;  and  the  plea  alleged,  by  way  of  discharge,  notice  to  the  plaintiff,  and  that, 
after  such  notice,  he  received  other  bills  liom  the  drawer,  and  agreed  to  give 
time  upon  the  bill  sued  upon,  until   such  other  bills  should  become  due,  and  be 


352  PAYMENT. 

dishonored ;  the  plea  proceeded  to  state  that  the  biHs  were  so  delivered  and 
accepted  in  payment  of  the  l)ills  in  the  declaration,  and  that  the  agreement  was 
made  without  the  defendant's  knowledge,  privity,  or  assent.  The  plaintiff  re- 
plied de  injtiria ;  to  which  the  defendant  demurred,  for  duplicity.  The  Court 
said  the  replication  was  as  good  as  the  plea,  which  had  set  up  two  defences,  and 
gave  judgment  for  the  plaintiff. 

Surd  V.  Rhodes,  1  Mees.  &  W.  153;  Tyr.  &  G.  298;  4  Dowl.  P.  C.  743;  1 
Gale,  376,  was  also  an  action  against  the  acceptor  of  an  accommodation  bill,  in 
which  the  defendant  pleaded,  that  the  bill  was  an  accommodation  liill,  and  that 
the  drawer  had  given  another  note,  for  a  larger  sum,  in  payment  and  satisfaction, 
which  the  plaintiff  ha'd  accepted.  The  plaintiff  replied  that  the  note  so  given 
was  dishonored.  The  defendant  demurred,  and  the  replication  was  held  ill,  and 
the  plea  good. 

In  each  of  the  three  last-mentioned  cases,  the  pleas  alleged  the  bills  to  be 
accommodation  bills,  —  showing  what  is  now  understood  to  be  the  law  in  regard 
to  payments  or  arrangements  between  subsequent  parties  to  the  bill,  which  can 
have  little  application  to  the  present  case,  which  is  that  of  a  bill  accepted  for 
value. 

.  Field  V.  Carr,  5  Bing.  13  [E.  C.  L.  R.  vol.  15]  ;  2  M.  &  P.  46  [E.  C.  L.  R. 
vol.  17]  is  also  inapplicable:  it  was  an  action  by  bankers,  as  indorsees,  against 
the  acceptor;  the  drawer  having  delivered  the  bills  to  the  plaintiffs,  his  bankers, 
as  security,  and  the  acceptor  having  paid  the  amount  of  the  bills  to  the  drawer 
without  obtaining  the  bills,  which  remained  in  the  hands  of  the  bankers  :  and 
the  point  really  in  contest  was,  whether,  upon,  the  application  of  the  rule  in 
Clayton's  Case,  1  Meriv.  572,  604,  the  bills,  as  against  the  bankers,  the  plaintiffs, 
were  to  be  considered  as  satisfied ;  the  Court  held  that  they  ought  to  be  so  con- 
sidered. 

The  case  of  Thomas  v.  Fenton,  5  Dowl.  &  L.  28,  was  argued  before  ]\Ir.  Jus- 
tice Coleridfje.  It  was  an  action  against  the  drawer  of  an  accommodation  bill ;  and 
it  appeared  that,  the  bill  being  dishonored,  an  action  had  been  brought  by  one 
Clark  against  the  acceptor,  and  that  the  plaintiff,  as  a  volunteer,  —  being  the 
son-in-law  of  the  acceptor, — had  paid  the  debt  and  costs,  and  obtained  the  bill 
from  the  then  plaintiff,  with  the  defendant's  indorsement  upon  it,  and  brought 
the  present  action  upon  the  bill.  One  question  was,  whether  the  bill  ought  to 
be  deemed  an  accommodation  bill.  A  further  question  was,  whether  there  was 
a  sufficient  dispensation  of  giving  notice  of  the  dishonor ;  also,  whether  the  pay- 
ment which  had  been  made  supported  the  plea  of  payment  by  the  acceptor. 
An  objection  was  also  made  that  the  bill  required  a  new  stamp.  Mr.  Justice 
Coleridge  held  that  the  bill  did  not  require  a  new  stamp,  inasmuch  as  it  had 
never  been  paid,  payment  meaning  payment  by  the  party  ultimately  liable, 
and  the  payment  in  question  not  being  such  a  payment.  He  also  held,  that 
sufficient  excuse  was  alleged  for  not  giving  notice,  the  bill  being  an  accommoda- 
tion bill.  And  the  learned  judge  distinctly  intimates  that  payment  by  an  inter- 
mediate party  is  no  discharge  to  the  acceptor. 

Hemming  v.  Brook,  Car.  &  M.  57  [E.  C.  L.  R.  vol.  41],  was  an  action 
against  the  acceptor,  where  the  drawer  had  paid  part  of  the  bill.  The  cause 
was  undefended ;  the  counsel  for  the  plaintilf  was  instructed  as  to  the  payment, 
but  altogether  uninformed  whether  the  bill  was  an  accommodation  bill,  and  of 


EASTMAN   V.    PLUMER.  353 

every  other  oircumstaiK*  respecting  it.  The  judge,  therefore,  recommended 
that  a  verdiet  should  be  taken,  giving  credit  lor  the  payment. 

Pownal  V.  Ferrand,  i\  Barn.  &  C.  439  [E.  C.  L.  R.  vol.  l:J],  9  Dowl.  & 
Ryl.  603  [E.  C.  L.  R.  vol.  22],  determined  tliat  the  indorser  of  a  bill,  paying  a 
part  of  the  bill  to  the  holder,  might  recover  from  the  acceptor  the  amount  so 
paid,  as  money  paid  to  his  use.  It  is  to  be  observed,  that  the  plaintiff  in  that 
case  had  paid  £40  on  account  of  a  bill  indorsed  by  him,  and  which  had  been 
accepted  by  tlie  defendant,  for  £3o0.  After  the  payment  of  £40  by  the  plaintiff, 
the  holiler  of  the  bill  brought  an  action  upon  the  bill  against  the  defendant,  the 
acceptor,  and  recovered  a  verdict  for  the  whole  amount  of  the  bill,  £'ioO,  but 
afterwards  levied  the  balance  only  due  to  him,  giving  credit  for  the  £40  which 
the  plaintiff  had  paid ;  and,  in  consequence  of  the  defendant's  having  thus  de- 
rived the  benefit  of  the  plaintiff's  payment,  the  action  was  brought  by  the  plain- 
tiflT,  to  recover  the  amount  as  money  paid  to  the  defendant's  use,  when  it  was 
contended  that  the  j)laintilf  could  only  sue  upon  the  bill;  but  the  Court  held, 
that  there  might  be  a  dilliculty  in  suing  upon  the  bill,  by  reason  of  a  judgment 
having  been  recovered  against  him  for  the  whole  amount  of  the  bill,  by  a  former 
holder;  and  that  the  defendant  having  had  the  benefit  of  the  payment,  an  action 
for  money  paid  might  be  maintained. 

Lane  v.  Ridley,  10  Q.  B.  479  [E.  C.  L.  R.  vol.  59],  was  to  the  same  effect  as 
Reynold  v.  Blackburn,  Purssord  v.  Peek,  and  Pascoe  v.  Vyvyan,  1  Dowl.  n.  s. 
939  ;  viz.,  that  where  the  plea  is  double,  it  is  no  objection  that  the  replication  is 
also  double.' 

Reference  has  thus  been  made  to  the  several  cases  which  were  cited,  with  some 
regret,  as  the  only  result  is  to  show  that  they  are  inapplicable  to  this  case,  and 
afford  no  assistance  to  the  Court  in  determining  the  question  raised  upon  the 
record ;  and  in  fact  no  determination  has  been  brought  to  the  notice  of  the 
Court  showing  this  plea  to  be  good,  although  there  are  some  expressions  in  some 
of  the  older  cases  which  have  that  aspect,  but  which  dicta  were  not  necessary  to 
the  decision  of  the  cases  in  which  they  are  to  be  found  ;  and  such  dicta  are  not 
consistent  with  subsequent  determinations.  It  eertainly  has  been  no  rare  prac- 
tice for  indorsees  of  bills  of  exchange  and  promissory  notes,  to  take  verdicts  for 
the  full  amount  of  the  instruments,  after  having  received  partial  payments  from 
other  parties  to  such  instruments ;  and  there  are  reporte<l  authorities  in  distinct 
affirmation  of  the  right  so  exercised  by  the  plaintiffs.  Callow  v.  Lawrence,  be- 
fore mentioned,  Reid  v.  Furnival,  1  Cromp.  &  M.  .538,  and  numerous  cases  in 
bankruptcy,  where  proof  is  admitted  against  the  acceptors  of  bills  and  makers  of 
notes  for  the  full  amount,  notwithstanding  partial  payments  made  by  other  par- 
ties. In  Ex  parte  l)e  Tastet,  la  re  Corson,  1  Rose,  10,  Warren  and  Bruce  were 
held  entitled  to  prove  against  the  estate  of  the  bankrupts,  who  were  the  accept- 
ors for  £13(J4,  and  take  dividends  for  that  amount,  notwithstanding  they  had 
received  payments  from  other  parties,  reducing  their  demand  to  £420. 

We  think,  therefore,  that  this  plea  is  contrary  to  principle,  and  that  it  has 
no  authority  to  support  it. 

The  plaintiffs  stand  upon  the  record  the  legal  owners  of  the  bill,  and  the  de- 
fendant as  having  failed  to  perform  hi.s  contract,  without  any  legal  excuse  for  the 
broach.     The  defendant  was  the  party  primarily  liable,  and  by  his  plea  he  sets 

up,  by  way  of  discharge,  satisfaction  by  one  not  in  privity  with  him  in  relation  to 

23 


354  PAYMENT. 

such  satisfaction,  and  which  we  think  did  not  enure  to  his  discharge ;  and  we 
think  the  plea,  therefore,  bad,  and  the  plaintiffs  entitled  to  judgment  as 
prayed/' 

An  indorsee  for  value  of  a  bill  of  exchange,  who  became  such  before  its  matu- 
rity, and  in  ignorance  that  it  was  given  for  accommodation,  has  a  right  to  treat 
all  parties  thereon  as  liable  to  him  according  to  their  relative  positions  on  the 
bill,  and  to  regard  the  acceptor  as  the  principal  debtor,  and  the  liability  of  the 
drawer  as  collateral ;  and  this  right  is  unaffected  by  any  subsequently  acquired 
knowledge  that  the  bill  was  given  for  accommodation.  In  such  case  a  release  of 
the  drawer  by  the  holder  has  no  effect  upon  the  ultimate  liability  of  the  acceptor. 
Farmers  and  Mechanics"  Bank  v.  Rathbone,  26  Vt.  19,  given  in  full  as  a  leading 
case  under  Discharging  Indorser  or  Drawer,  post.  See  also  Carstairs  v. 
Rolleston,  5  Taunt.  551 ;  s.  c.  1  Marsh.  207. 

Payment  by  a  stranger  of  the  amount  of  a  bill  of  exchange  to  the  bankers  at 
whose  house  the  bill  is  payable,  under  an  arrangement  with  such  bankers  where- 
by the  party  paj^ing  obtains  possession  of  the  bill  for  a  collateral  purpose  of  his 
own,  is  not  payment  by  the  acceptor.     Deacon  v.  Stodhart,  2  Man.  &  G.  317. 

But  if  a  stranger  makes  payment  of  a  note  overdue,  and  declines  to  have  the 
same  cancelled,  but  takes  it  away  with  him,  this  will  be  *  regarded  as  payment 
and  satisfaction  against  a  party  who  afterwards  received  the  note  from  the 
stranger ;  the  latter  not  being  a  bona  fide  holder.  Burr  v.  Smith,  21  Barb. 
262. 

The  fact  that  the  holder  of  a  bill,  accepted  for  the  drawer's  accommodation, 
sends  it  to  a  bank  for  collection,  and  the  bank  passes  the  amount  to  the  credit 
of  the  holder  at  the  maturity  of  the  paper,  will  not  constitute  such  payment  as 
to  discharge  the  acceptor.     Pacific  Bank  v.  Mitchell,  9  Met.  297. 

It  is  no  discharge  of  a  note  given  with  security  to  a  bank  for  the  purpose  of 
obtaining  credit,  which  is  given  to  the  amount  of  the  note,  that  the  maker  at 
one  time  had  a  balance  in  the  bank  exceeding  the  amount  of  the  note.  Pease  v. 
Hirst,  10  Barn.  &  C.  122. 

If  the  drawer  retain  the  acceptor's  funds  in  his  hands,  for  the  express  purpose 
of  meeting  the  bill,  the  holder's  releasing  the  acceptor  does  not  discharge  the 
drawer.  Sargent  v.  Appleton,  6  Mass.  85.  Upon  this  subject,  see  Discharging 
Indorser  ob  Drawer,  post. 


BURKE  V.  m'kay.  355 


PROCEEDINGS   ON   NON-PAYMENT. 


Glendy  Burke  v.  Robert  McKay. 

(2  Howard,  66.     Supreme  Court  of  the  United  States,  January,  1844.) 

Protest  of  promissory  note.  —  It  is  not  necessary  in  Mississippi,  or  by  the  general  law 
merchant,  that  a  promissory  note  siiould  be  protested  by  a  notary,  or  that  he  should 
give  notice  of  dishonor. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Story,  J.  This  is  a  writ  of  error  to  the  Circuit  Court  of  the 
District  of  Mississippi.  The  plaintiff  in  error  brought  an  action 
of  assumpsit  in  that  Court,  against  the  defendant  in  error,  as  in- 
dorsee upon  a  promissory  note,  dated  at  Clinton,  Mississippi,  Jan- 
uary 20,  1837,  whereby  R.  E.  Stratton,  Samuel  W.  Dickson,  and 
B.  Garland,  or  either  of  them,  on  the  first  day  of  January,  1840, 
promised  to  pay  Robert  Mathews,  or  order,  $2800,  for  value  re- 
ceived. The  note  was  indorsed  by  Mathews  as  follows  :  "  I  assign 
the  within  note  to  Robert  McKay,  and  hold  myself  responsible  for 
the  same,  waiving  notice  of  demand  and  protest,  if  not  paid  at 
maturity."  The  note  was  afterward  indorsed  by  McKay  (the 
defendant),  as  it  should  seem,  in  blank,  and  the  plaintiff  in  error, 
in  his  declaration,  made  title  as  immediate  indorsee  to  McKay. 

At  the  trial  of  the  cause,  upon  the  general  issue,  the  plaintiff 
read  the  note  and  the  indorsement,  and  also  proved  that,  at  the 
maturity  of  the  note,  due  demand  of  payment  was  made  of  the 
makers  by  S.  W.  Humphreys,  a  justice  of  the  peace  of  Hinds 
county,  Mississippi,  styling  himself  "acting  notary  public;"  who, 
upon  the  non-payment,  made  due  protest  thereof  (the  protest  being 
by  consent  admitted  as  evidence  of  the  facts),  and  gave  due  notice 
thereof  to  the  payee  of  the  note  and  to  all  the  indorsers.     The 


356  PROCEEDINGS   ON   NON-PAYMENT. 

defendant  (McKay)  also  admitted  that,  in  £^  settlement  with  the 
makers  of  the  note,  in  some  other  transactions,  the  present  note 
was  included,  and  the  defendant  released  the  makers  from  all  lia- 
bility thereon,  but  he  denied  that  he  had  ever  received  of  the 
makers  full  payment  of  the  said  note  ;  and  that,  upon  a  compro- 
mise of  all  claims  and  controversies  between  them,  he  released  the 
makers  from  all  liability  to  the  defendant ;  and  he  agreed  that  the 
same  statement  should  be  read  and  received  at  the  trial  of  the  case 
by  the  Court  and  the  jury.  Tiie  district  judge  (who  alone  sat  in 
the  cause)  instructed  the  jury  that,  in  order  to  charge  the  indorser 
of  a  promissory  note,  the  plaintiff  must  prove  that  it  was  protested 
on  the  day  of  its  maturity  by  a  notary  public,  and  demand  made, 
and  notice  of  non-payment  given  by  him ;  that  the  statement  of 
Humphreys  admitted  as  evidence,  not  proving  that  fact,  they  must 
find  for  the  defendant.  Whereupon  the  jury  returned  a  verdict 
for  the  defendant,  and  judgment  passed  accordingly.  A  bill  of 
exceptions  was  taken  by  the  plaintiff,  to  the  instruction  of  the 
Court  at  the  trial ;  and  the  cause  now  comes  before  us  upon  the 
writ  of  error  to  examine  the  correctness  of  that  instruction. 

And  we  are  all  of  opinion  that  the  instruction  was  incorrect,  and 
not  maintainable  in  point  of  law.  In  the  first  place,  by  the  gen- 
eral law  merchant,  no  protest  is  required  to  be  made  upon  tlie 
dishonor  of  any  promissory  note,  but  it  is  exclusively  confined  to 
foreign  bills  of  exchange.  This  is  so  well  known  that  nothing 
more  need  be  said  upon  the  subject  than  to  cite  the  case  of  Young 
V.  Bryan,  6  Wheat.  146,  where  the  very  point  was  decided.  It  is 
true  tliat  it  is  a  very  common  practice  for  a  notary  public  to  be 
employed  to  make  demand  of  payment  of  promissory  notes  from 
the  makers,  and  also  to  give  notice  of  the  dishonor  to  the  indorsers 
thereon.  But  this  is  a  mere  matter  of  convenience  and  arrange- 
ment between  the  holder  and  the  notary,  and  is  by  no  means  a 
requisite  imposed  or  recognized  by  law  as  binding  upon  the  holder. 
Unless,  therefore,  there  be  some  statute  in  Mississippi  requiring 
the  intervention  of  a  notary  in  such  cases  (as  we  understand  there 
is  not),  or  some  general  usage  equally  binding,  it  is  clear  that  the 
instruction  proceeded  upon  a  mistaken  ground.  In  the  next  place, 
it  is  no  necessary  part  of  the  official  duty  of  a  notary  (subject  to 
the  like  exceptions)  to  give  notice  to  the  indorsers  of  the  dishonor 
of  a  promissory  note,  although  certainly  it  is  a  very  convenient  and 
useful  course  in  the  transactions  of  such  affairs  in  commercial 


BTIRKE  V.   m'kay.  357 

cities.  In  the  next  place,  if  a  protest  were  necessary,  it  is  equally 
clear  that  it  is  not  indispensable  in  all  cases  that  the  same  sliould 
he  actually  made  by  a  person  who  is  in  fact  a  notary.  In  many 
cases,  even  with  regard  to'  foreign  bills  of  exchange,  the  protest 
may,  in  the  absence  of  a  notary,  be  made  by  other  functionaries, 
and  even  by  merchants.  IJut  where,  as  in  Mississippi,  a  justice  of 
the  peace  is  authorized  by  positive  law  to  perform  the  functions 
and  duties  of  a  notary,  there  is  no  ground  to  say  that  his  act  of 
protest  is  not  equally  valid  with  that  of  a  notary.  Quoad  hoc  he 
acts  as  a  notary.  See  Howard  and  Hutchinson's  Statutes  of  Mis- 
sissippi, c.  37,  §  24,  p.  430. 

In  the  next  place,  in  the  present  case,  under  the  circumstances, 
the  indorser  (McKay)  was  not  entitled  to  any  notice  whatsoever  of 
the  dishonor.  He  had  actually  discharged  the  makers  from  all 
liability  for  the  payment  of  the  note  by  his  release  and  settlement 
with  them.  Of  course,  the  notice  could  be  of  no  use  or  value  to 
him ;  for  he  would  in  no  event  be  entitled  to  any  recourse  over 
against  them  ;  and,  therefore,  no  notice  to  him  would  have  been 
necessary,  although  it  fully  appears  that  he 'had  received  due  notice 
of  the  dishonor. 

For  these  reasons,  we  are  of  opinion  that  the  judgment  ought  to 
be  reversed  and  venire  facias  de  novo  awarded. 

Nor  is  a  protest  of  inland  bills  necessary ;  and  a  protest  either  of  a  promis- 
sory note  or  inland  bill  of  exchange  is  not  evidence  of  the  statements  made  in 
it.     Union  Bank  v.  Hyde,  6  Wheat.  572. 

Fees  for  protesting  promissory  notes  or  inland  bills  cannot  be  recovered. 
City  Bank  v.  Cutter,  3  Pick.  414. 


358  PROCEEDINGS    ON    NON-PAYMENT. 


Mills,  Plaintiff  in  Error,  v.  The  President,  Directors, 
«&c.,  OF  the  Bank  of  the  United  States,  Defendants  in 
Error. 

(11  Whcaton,  431.     Supreme  Court  of  the  United  States,  February,  1826.) 

Form  of  notice.  —  Notice  to  an  indorser  is  not  defective  by  reason  of  not  stating  the 
name  of  the  iiolder,  or  by  reason  of  a  misdescription  of  the  date  of  the  note  in 
question,  provided  tliere  was  no  other  note  payable  at  the  same  place  and  made 
and  indorsed  by  the  same  parties.  Nor  is  it  fatal  to  the  notice  that^it  did  not  con- 
tain a  formal  allegation  that  payment  was  demanded  at  the  bank  when  the  note 
became  due.  It  is  sufficient  that  it  states  the  fact  of  the  non-payment  of  the  note, 
and  that  the  holder  looks  to  the  indorser  for  indemnity.  "Whether  the  demand 
was  duly  and  regularly  made  is  matter  of  evidence  to  be  established  on  the  trial. 


The  case  is  stated  in  the  opinion  of  the  Court. 


Story,  J.  This  is  a  suit  originally  brought  in  the  Circuit  Court 
of  Ohio,  by  the  Bank  of  the  United  States,  against  A.  G.  Wood 
and  George  Ebert,  doing  business  under  the  firm  of  Wood  and 
Ebert,  Alexander  Adair,  Horace  Reed,  and  the  plaintiff  in  error, 
Peter  Mills.  The  declaration  was  for  $3600,  money  lent  and  ad- 
vanced. During  the  pendency  of  the  suit.  Reed  and  Adair  died. 
Mills  filed  a  separate  plea  of  non-assumpsit  upon  which  issue  was 
joined  ;  and,  upon  the  trial,  the  jury  returned  a  verdict  for  the 
Bank  of  the  United  States,  for  $4641,  upon  which  judgment  was 
rendered  in  their  favor.  At  the  trial,  a  bill  of  exceptions  was 
taken  by  Mills,  for  the  consideration  of  the  matter  of  which  the 
present  writ  of  error  has  been  brought  to  this  Court. 

By  the  bill  of  exceptions,  it  appears  that  the  evidence  offered  by 
the  plaintiffs  in  support  of  the  action,  "  was,  by  consent  of  counsel, 
permitted  to  go  to  the  jury,  saving  all  exceptions  to  its  competence 
and  admissibility,  which  the  counsel  for  the  defendant  reserved  the 
right  to  insist  in  claiming  the  instructions  of  the  Court  to  the  jury 
on  the  whole  case."   , 

The  plaintiffs  offered  in  evidence  a  promissory  note,  signed  Wood 
and  Ebert,  and  purporting  to  be  indorsed  in  blank  by  Peter  Mills, 
Alexander  Adair,  and  Horace  Reed,  as  successive  indorsers  ;  which 
note,  with  the  indorsements  thereon,  is  as  follows  ;  to  wit :  "  Chili- 
cothe,  20th  July,  1819.     $3600.     Sixty  days  after  date,  I  promise 


MILLS    V.    BANK    OF    THE    UNITED    STATES.  359 

to  pay  to  Peter  Mills,  or  order,  at  the  office  of  discount  and  deposit 
of  the  Bani<  of  the  United  States,  at  Chilicothe,  -"ji^fJOO,  for  value 
received.  Wood  and  Ebert."  Indorsed,  "  Pay  to  A.  Adair,  or 
order,  Peter  Mills."  "  Pay  to  Horace  Reed,  or  order,  A.  Adair." 
"  Pay  to  the  President,  Directors,  and  Company  of  the  Bank  of 
the  United  States,  or  order,  Horace  Reed."  On  the  upper  riglit- 
hand  corner  of  tiie  note  is  also  indorsed :  "  3185.  Wood  and 
Ebert,  '^oOOO,  Sept.  l.S-21."  It  was  proven  that  this  note  had 
been  sent  to  the  office  at  Chilicothe,  to  renew  a  note  wiiich  had  been 
five  or  six  times  previously  renewed  by  the  same  parties.  It  was 
proven,  Ity  the  deposition  of  Levin  Belt,  Esq.,  Mayor  of  the  town 
of  Chilicothe,  that,  on  the  22d  September,  1819,  immediately 
after  the  commencement  of  the  hours  of  business,  he  duly  pre- 
sented the  said  note  at  the  said  office  of  discount  and  deposit,  and 
there  demanded  payment  of  the  said  note,  but  there  was  no  person 
there  ready  or  willing  to  pay  the  same,  and  the  said  note  was  not 
paid,  in  consequence  of  which  the  said  deponent  immediately  pro- 
tested the  said  note  for  the  non-payment  and  dishonor  thereof,  and 
immediately  thereafter  prepared  a  notice  foV  each  of  the  indorsers 
respectively,  and  immediately,  on  the  same  day,  deposited  one  of 
said  notices  in  the  post-office,  directed  to  Peter  Mills,  at  Zanesville 
(his  place  of  residence),  of  which  notice  the  following  is  a  copy: 
"  Chilicothe,  22d  of  September,  1819.  Sir,  —  You  will  hereby  take 
notice  that  a  note  drawn  by  Wood  and  Ebert,  dated  20th  day  of 
September,  1819,  for  ."JBGOO,  payable  to  you,  or  order,  in  sixty  days, 
at  the  office  of  discount  and  deposit  of  the  Bank  of  the  United 
States  at  Chilicothe,  and  on  which  you  are  indorser,  has  been 
protested  for  non-payment,  and  the  holders  thereof  look  to  you. 
Yours,  respectfully.  Levin  Bolt,  Mayor  of  Chilicothe."  (^Peter 
Mills,  Esq.)  It  was  further  proven  by  the  plaintiffs,  that  it  had 
been  the  custom  of  the  banks  in  Chilicothe,  for  a  long  time  pre- 
viously to  the  establishment  of  a  branch  in  that  place,  to  make 
demand  of  promissory  notes  and  bills  of  exchange  on  the  day  after  the 
last  day  of  grace  (that  is,  on  the  sixty-fourth  day),  that  the  Branch 
Bank,  on  its  establishment  at  Chilicothe,  adopted  that  custom,  and 
that  such  had  been  the  uniform  usage  in  the  several  banks  in  that 
place  ever  since.  No  evidence  was  given  of  the  handwriting  of 
either  of  the  indorsers.  The  Court  charged  the  jury  :  1.  That  the 
notice,  being  sufficient  to  put  the  defendant  upon  inquiry,  was 
good,  in  point  of  form,  to  charge  him,  although  it  did  not  name  the 


360  PROCEEDINGS   ON   NON-PAYMENT. 

# 

person  who  was  holder  of  the  said  note,  nor  state  that  a  demand 
had  been  made  at  the  bank  when  the  note  was  due ;  2.  That  if 
the  jury  find  that  there  was  no  other  note  payable  in  the  office  at 
Chilicothe,  drawn  by  Wood  and  Ebert,  and  indorsed  by  defendant, 
except  the  note  in  controversy,  the  mistake  in  the  date  of  the  note, 
made  by  the  notary  in  the  notice  given  to  that  defendant,  does  not 
impair  the  liability  of  the  said  defendant,  and  the  plaintiffs  have  a 
right  to  recover  ;  8.  That,  should  the  jury  find  that  the  usage  of 
banks,  and  of  the  office  of  discount  and  deposit  in  Chilicothe,  was 
to  make  demand  of  payment,  and  to  protest  and  give  notice  on  the 
sixty-fourth  day,  sucli  demand  and  notice  are  sufficient. 

The  counsel  on  the  part  of  the  defendant  prayed  the  Court  to 
instruct  the  jury,  "  that  before  the  common  principles  of  the  law 
relating  to  the  demand  and  notice  necessary  to  charge  the  indorser, 
can  be  varied  by  a  usage  and  custom  of  the  plaintiffs,  the  jury 
must  be  satisfied  that  the  defendant  had  personal  knowledge  of  the 
usage  or  custom  at  the  time  he  indorsed  the  note  ;  and  also  that 
before  the  plaintiffs  can  recover  as  the  holder  and  indorser  of  a 
promissory  note,  they  must  prove  their  title  to  the  proceeds  by 
evidence  of  the  indorsements  on  the  note,"  which  instructions 
were  refused  by  the  Court. 

Upon  this  posture  of  the  case  no  questions  arise  for  determina- 
tion here,  except  such  as  grow  out  of  the  charge  of  the  Court,  or 
the  instructions  refused  on  the  prayer  of  the  defendant's  (Mills') 
counsel.  Whether  the  evidence  was,  in  other  respects,  sufficient 
to  establish  tlie  joint  promise  stated  in  the  declaration,  or  the  joint 
consideration  of  money  lent,  are  matters  not  submitted  to  us  upon 
the  recprd,  and  were  proper  for  argument  to  the  jury. 

The  first  point  is,  whether  the  notice  sent  to  the  defendant  at 
Chilicothe  was  sufficient  to  charge  him  as  indorser.  The  Court 
was  of  opinion  that  it  was  sufficient,  if  there  was  no  other  note 
payable  in  the  office  at  Chilicothe,  drawn  by  Wood  and  Ebert,  and 
indorsed  by  the  defendant. 

It  is  contended  that  this  opinion  is  erroneous,  because  the  notice 
was  fatally  defective,  by  reason  of  its  not  stating  who  was  the 
holder  ;  by  reason  of  its  misdescription  of  the  date  of  the  note  ;  and 
by  reason  of  its  not  stating  that  a  demand  had  been  made  at  the 
bank  when  the  note  was  due.  The  first  objection  proceeds  upon  a 
doctrine  which  is  not  admitted  to  be  correct ;  and  no  authority  is 
produced  to  support  it.     No  form  of  notice  to  an  indorser  has  been 


MILLS   V.    BANK   OF   THE    UNITED   STATES.  3G1 

prescribed  by  law,  'J'lie  wliolu  object  of  it  is  to  iiifonn  the  party 
to  whom  it  is  scut  that  jjayiuent  lias  been  refused  by  the  maker  ; 
that  he  is  considered  liable  ;  and  that  payment  is  expected  of  him. 
It  is  of  no  consequence  to  the  indorscr  who  is  the  holder,  as  he  is 
equally  bound  by  the  notice,  whomsoever  he  may  be  ;  and  it  is 
time  enough  for  him  to  ascertain  the  true  title  of  the  holder  when 
he  is  called  upon  for  payment. 

The  objection  of  misdescription  may  be  disposed  of  in  a  few 
words.  It  cannot  be  for  a  moment  maintained  that  every  variance, 
however  immaterial,  is  fatal  to  the  notice.  It  must  be  such  a  vari- 
ance as  conveys  no  sulTicient  knowledge  to  the  party  of  the  par- 
ticular note  which  has  been  dishonored.  If  it  docs  not  mislead 
him,  if  it  conveys  to  iiim  the  real  fact,  without  any  doubt,  the 
variance  cannot  be  material,  either  to  guard  his  rights  or  avoid  his 
responsibility.  In  the  present  case  the  misdescription  was  merely 
in  the  date.  The  sum,  the  parties,  the  time  and  place  of  payment, 
and  the  indorsement,  were  truly  and  accift'ately  described.  The 
error,  too,  was  api)arent  on  the  face  of  the  notice.  The  party  was 
informed  that,  on  the  22d  September,  a  note  indorsed  by  him, 
payable  in  sixty  days,  was  protested  for  non-payment ;  and  yet  the 
note  itself  was  stated  to  be  dated  on  the  20th  of  the  same  month, 
and,  of  course,  only  two  days  before.  Under  these  circumstances, 
the  Court  laid  down  a  rule  most  favorable  to  the  defendant.  It 
directed  the  jury  to  fnid  the  notice  good,  if  there  was  no  other  note 
payable  in  the  office  of  Chilicothe,  drawn  by  Wood  and  El)ert,  and 
indorsed  by  the  defendant.  If  there  was  no  other  note,  how  could 
the  mistake  of  date  possibly  mislead  the  defendant?  If  he  had 
indorsed  but  one  note  for  Wood  and  Ebcrt,  how  could  the  notice 
fail  to  be  full  and  unexceptionable  in  fact  ? 

The  last  objection  to  the  notice  is,  that  it  does  not  state  that 
payment  was  demanded  at  the  bank  when  the  note  became  due. 
It  is  certainly  not  necessary  that  the  notice  should  contain  such  a 
formal  allegation.  It  is  sufficient  that  it  states  the  fact  of  non- 
payment of  the  note,  and  tliat  the  holder  looks  to  the  indorscr  for 
indemnity.  Whetlier  the  demand  was  duly  and  reguhiily  made, 
is  matter  of  evidence  to  be  estal)lishcd  at  the  trial.  If  it  be  not 
legally  made,  no  averment,  however  accurate,  will  iielp  the  case  ; 
and  a  statement  of  non-payment  and  notice  is,  by  necessary  impli- 
cation, an  assertion  of  right  by  the  holder,  founded  upon  his  having 
complied  with   the  requisitions  of  law  against  the   indorscr.     In 


3G2  PROCEEDINGS    ON    NON-PAYMENT. 

point  of  fact,  in  commercial  cities,  the  general  if  not  universal 
practice  is,  not  to  state  in  the  notice  the  mode  or  place  of  demand, 
but  the  mere  naked  non-payment. 

Upon  the  point  then,  of  notice,  we  tliink  there  is  no  error  in  the 
opinion  of  the  Circuit  Court. 

As  to  the  deci.sion  in  this  case  respecting  usage,  see  note  to  Renner  v.  Bank  of 
Cokimbia,  ante,  308. 

Tlie  concluding  portion  of  the  opinion  in  the  case  of  Bank  of  Alexandria  v. 
Swann,  9  Peters,  33,  post,  383,  relates  to  this  subject  of  the  fonn  of  notice,  and  is 
given  here  in  further  illustj-ation  of  the  doctrine  of  the  principal  case. 

Per  Thompson,  J.  :  "The  next  question  is,  whether,  in  the  notice  sent  to  the 
indorser,  the  dishonored  note  is  described  with  sufficient  certainty. 

"  The  law  has  prescribed  no  particular  form  for  such  notice.  The  object  of  it 
is  niertdy  to  inform  the  indorser  of  the  non-payment  by  the  maker,  and  that  he 
is  held  liable  for  the  payment  thereof. 

"  The  misdescription  complained  of  in  this  ease,  is  in  the  amount  of  the  note. 
The  note  is  for  $1400,  and  the  notice  describes  it  as  for  the  sum  of  $1457.  In 
all  other  respects  the  description  is  correct ;  and  in  the  margin  of  the  note  is  set 
down  in  figures  1457,  and  the  special  verdict  finds  that  the  note  in  question  was 
discounted  at  the  bank,  as  and  for  a  note  of  $1457  ;  and  the  question  is,  whether 
this  was  such  a  variance  or  misdescription  as  might  reasonably  mislead  the  in- 
dorser as  to  the  note,  for  payment  of  which  he  was  held  responsible.  If  the 
defendant  had  been  an  indoi-ser  of  a  number  of  notes  for  Humphrey  Peake, 
there  might  be  some  plausible  grounds  for  contending  that  this  variance  was 
calculated  to  mislead  him.  But  the  special  verdict  finds  that  from  the  filth  of 
February,  1828  (the  date  of  a  note  for  which  the  one  now  in  question  was  a 
renewal),  down  to  the  day  of  the  trial  of  this  cause,  there  was  no  other  note  of 
the  said  Humphrey  Peake,  indorsed  by  the  defendant,  discounted  by  the  bank, 
or  placed  in  the  bank  for  collection  or  otherwise.  There  was,  therefore,  no 
room  for  any  mistake  by  the  indorser  as  to  the  identity  of  the  note.  The  case 
falls  witbin  the  rule  laid  down  by  this  Court  in  the  case  of  Mills  v.  The  Bank  of 
the  United  States,  11  Wheat.  431  [the  principal  case],  that  every  variance, 
however  immaterial,  is  not  fatal  to  the  notice.  It  must  be  such  a  variance  as 
conveys  no  sufficient  knowledge  to  the  party  of  the  particular  note  which  has 
been  dishonored.  If  it  does  not  mislead  him,  if  it  conveys  to  him  the  real  fact 
without  any  doubt,  the  variance  cannot  be  material,  either  to  guard  his  rights  or 
avoid  his  resj)onsibility.  In  that  case,  as  in  the  one  now  before  the  Court,  it 
appeared  that  there  was  no  other  note  in  the  bank  indorsed  by  Mills ;  and  this 
the  Court  considered  a  controlling  fact  to  show  that  the  indorser  could  not  have 
been  misled  by  the  variance  in  the  date  of  the  note,  which  was  the  misdescrip- 
tion there  complained  of" 

Mr.  Justice  Story,  in  his  Treatise  on  Promissory  Notes,  §  348,  after  stating 
the  general  rule  thai  no  precise  form  of  words  is  necessary  to  the  notice,  states 
that  it  should,  however,  either  expressly,  or  by  just  and  natural  implication,  con- 
tain in  substance  these  matters  :  — 

1.  A  true  description  of  the  paper,  so  as  to  ascertain  its  identity. 

2.  An  assertion  that  it  has  been  duly  presented  at  maturity  and  dishonored. 


GILBERT    V.    DENNIS.  363 

3.  That  the  liolder,  or  otlier  person  givinj^  the  notice,  looks  to  the  person  to 
wlioni  the  notice  is  given,  lor  reimbursement  and  indemnity. 

The  first  rule  lias  been  sufBeiently  considered  in  the  principal  cas«  and  note, 
supra.  The  following  authorities,  collected  in  Story,  Promissory  Notes,  §§  348, 
349,  are  added  as  throwing  additional  light  on  the  rule.  Hartley  ».  Case,  4  Bam. 
&  C.  3;>ti ;  Heauchamp  r.  Cash,  Dowl.  tt  R.  C.  N.  P.  3  ;  lleedy  v.  Seixas,  2. Johns. 
Cas.  337  ;  Bank  uf  Rochester  v.  (iould,  9  Wend.  279  ;  Smith  v.  Whiting,  12  Mass. 
6,  7;  Cook  v.  Litchfield,  9  N.  Y.  (5  Seld.)  279;  Cayuga  Bank  v.  Warden, 
1  Comst.  413;  Ransom  i;.  Mack,  2  Hill,  .087-593;  Bradley  v.  Davis,  13  Shepl. 
45;  Clark  v.  Eldridge,  13  Met.  96;  Wheaton  v.  Wilraarth,  13  Met.  422; 
Young.s  V.  Lee,  18  Barb.  187.  In  the  last  case  it  was  held  sufficient  that  the  no- 
tice gave  the  names  of  the  maker  and  indorser,  and  the  amount.  See  to  the  same 
effect,  Beals  v.  Peck,  12  Barb.  245.  See  also  Bank  of  Cooperstown  v.  Woods, 
28  N.  Y.  545;  Snow  r.  Perkins,  2  Mich.  238,  a  misdescription  in  the  amount, 
as  in  Bank  of  Alexandria  i;.  Swann,  supra,  and  held  not  fatal  for  the  same  rea- 
son, that  the  indorser  could  not  have  been  misled.  Dennistoun  v.  Stewart,  17 
How.  606,  a  misdescription  of  the  name  of  the  acceptor  held  not  fatal.  But  if 
the  name  were  omitted,  that  would  vitiate  the  notice.  Home  Ins.  Co.  J^.  Green, 
19  N.  Y.  (5  Smith)  518.     See  also  Stockman  v.  Parr,  11  Mees.  &  W.  809 ;  8.  C, 

I  Car.  &  K.  41  ;  Rowan  v.  Odenheimer,  5  Sm.  &  M.  44;  Routh  v.  Robertson, 

II  Sm.  &  M.  382. 

The  second  rule  is  illustrated  in  the  following  case. 


Caleb  C.  Gilbert  v.  Louis  Dennis. 

(3  Metcalf,  495.     Supreme  Court  of  Massachusetts,  March,  1842.) 

Form  oftiolicn.  —  jMere  notice  of  non-paj'nient,  wliicli  does  not  express  or  imply  demand 
and  dislionor,  is  not  such  notice  as  will  render  the  indorser  liable. 

The  case  is  stated  in  the  opinion  of  the  Court. 

After  considering  the  subject  of  presentment,  the  Court  say,  — 

Shaw,  C.  J.  But  tlie  more  formidable  objection  to  the  plaintiff's 
right  of  recovering  is,  that  the  notice,  wiiich  is  recited  in  the  report, 
did  not  inform  tlie  defendant  that  demand  had  been  made  of  the 
promisor,  and  payment  refused,  or  in  any  otiier  way,  by  express 
declaration  or  reasonable  implication,  inform  the  indorser  that  the 
note  was  in  fact  dishonored. 

No  particular  form  of  notice  is  necessary.  It  may  be  either 
written  or  verbal.  Tindal  v.  Brown,  1  T.  R.  1G7.  Nor  will  a 
mistake  or  misdescription  of  the  note  render  the  notice  insuffi- 
cient, if  on  the  whole  it  cannot  mislead  the  indorser,  and  if  it  so 


364  PROCEEDINGS   ON    NON-PAYMENT. 

designates  and  distinguishes  the  note,  as  to  leave  no  reasonable 
doubt  in  the  mind  of  the  indorser,  what  note  was  intended,  and 
that  it  was  the  same  with  the  note  in  suit.  Smith  v.  Whiting,  12 
Mass.  6  ;  Bank  of  United  States  v.  Carneal,  2  Peters,  543. 

But  though  no  special  form  of  notice  is  requisite,  still  in  some 
form  the  fact  to  be  notified  is,  that  the  note  is  dishonored  by  the 
default  of  the  promisor  ;  and  this  may  be  done  verbally  or  in 
writing,  in  any  language  which  communicates  the  information  to 
the  indorser,  in  terms,  or  by  reasonable  implication.  Indeed  the 
same  formula,  in  terms,  may  communicate  this  information  or  not, 
according  to  circumstances.  Suppose  a  note  payable  at  a  bank,  in 
terms,  or  by  the  agreement  of  parties,  or  tacit  agreement  arising 
from  usage  or  otherwise  ;  it  is  the  duty  of  the  promisor  to  pay  it  at 
such  bank  on  the  last  day  of  grace.  The  dishonor  of  such  note 
by  the  promisor  consists  in  the  non-payment  at  the  bank.  If  then, 
after  the  time  of  payment  has  elapsed,  notice  be  given  to  the  in- 
dorser that  the  note  is  unpaid,  it  is  notice  that  it  is  dishonored  ; 
whereas,  in  case  of  a  private  holder,  in  regard  to  a  note,  which 
requires  presentment  and  demand  to  fix  the  holder  with  a  default, 
notice  in  the  same  words,  that  the  note  is  unpaid,  would  not  neces- 
sarily imply  that  it  was  dishonored,  because  that  fact  might  be 
strictly  true,  though  the  note  had  never  been  presented,  nor  pre- 
sentment waived  or  excused. 

But  whatever  may  be  the  form  of  the  notice,  whether  written  or 
verbal,  we  think  the  result  of  the  decided  cases  is  this :  that  the 
notice  should  be  such  that  it  will  inform  the  indorser  that  the 
note  has  become  due  and  be^n  dishonored,  and  that  the  holder 
relies  on  the  indorser  for  payment ;  that  this  information  may  be 
express,  or  may  be  inferred  by  necessary  implication,  or  reason- 
able intendment,  from  the  language  ;  construing  such  language  in 
reference  to  its  accustomed  meaning,  when  applied  to  similar  sub- 
jects, and  with  reference  to  the  terms  of  the  note,  the  time  and 
place  at  which  the  note  is  to  be  paid,  as  fixed  by  express  or  tacit 
agreement,  or  inferred  from  general  or  particular  usages.  It  is 
not  necessary  to  inform  the  indorser  of  the  time,  place,  or  mode  of 
presentment  and  demand,  nor  the  means  by  which  it  was  dishon- 
ored, nor  matter  of  excuse  or  waiver.  Whatever  legally  fixes  the 
promisor  with  dishonor,  is  sufficient,  on  due  notice  given,  to  charge 
the  indorser.  If,  for  instance,  the  promisor  had  absconded  before 
the  note  is  due,  without  having  made  provision  for  its  payment, 


GILBERT   V.    DENNIS.  365 

80  that  no  presentment  and  demand  can  be  made,  that  is  a  dis- 
honor, of  which  the  holder  may,  immediately  after  the  note  has 
become  due,  notify  the  indorser;  or  if  the  promisor  has  agreed 
that  notice  left  at  a  particular  place  shall  be  deemed  a  good  sub- 
stitute, and  notwithstanding  notice  is  so  left,  he  does  not  make 
payment,  this  is  likewise  a  dishonor. 

But  without  considering  further  what  constitutes  a  dishonor,  it 
may  be  useful  to  examine  more  particularly,  in  reference  to  the 
present  case,  the  authorities  in  relation  to  the  effect  and  purport 
of  the  notice  to  be  given  to  an  indorser.  The  rule  is  laid  down  in 
general  terms  by  the  text-writers,  that  notice  is  to  be  given  of  the 
fact  of  dishonor.  Bayley  states  the  duty  of  the  holder.  He  is 
under  an  implied  undertaking  to  every  party  to  the  bill  or  note, 
who  would  be  entitled  to  bring  an  action  on  paying  it,  to  present, 
in  proper  time,  the  one  for  acceptance  and  each  for  payment ;  to 
allow  no  extra  time  for  payment,  and  to  give  notice  without  delay 
to  such  person,  of  a  failure  in  the  attempt  to  procure  a  proper 
accej)tancc  or  payment.     Bayley,  Bills,  1st  Am.  ed.  124. 

In  general,  it  is  incuml)cnt  on  the  holder  to  give  notice  of  the 
dishonor  to  those  persons  to  whom  he  means  to  resort  for  payment ; 
otherwise  they  will  be  discharged.     Chitty,  Bills,  893. 

In  Tindal  v.  Brown,  1  T.  R.  167,  and  2  T.  R.  186,  note,  it  was 
held  that  no  particular  form  of  notice  was  necessary,  but  that  such 
notice  must  come  from  the  holder  of  the  bill  or  note,  or  some 
party  to  it,  and  that  mere  knowledge  of  the  fact  of  non-payment, 
coming  to  the  indorser  from  any  other  source,  would  not  be  suffi- 
cient. It  ought  to  purport  that  the*  holder  looks  to  him  for  pay- 
ment. The  Court  do  not  say,  in  terms,  that  the  notice  mugt 
directly,  or  by  implication,  state  the  fact  of  dishonor,  but  it  is  im- 
plied. The  case  decides  that  the  holder  must  do  an  act,  electing 
to  assert  his  right  to  recover  the  note  of  tiic  indorser,  whicli  right 
can  only  exist  in  case  of  a  dishonor  of  the  promisor.  The  case 
did  not  call  for  a  decision  as  to  what  must  be  the  tenor  or  purjjort 
of  the  notice,  as  to  the  fact  of  dishonor.  It  ought,  said  Mr.  Jus- 
tice BuUer,  to  purport  that  the  holder  looks  to  him  (the  indorser) 
for  payment.  In  regard  to  this  it  may  be  remarked,  that  when 
notice  is  given  by  the  holder  to  the  indorser,  of  the  dishonor  of  a 
note,  it  necessarily  implies  that  he  looks  to  him  for  payment. 
That  is  the  natural,  and  may  in  general  be  regarded  as  the  neces- 
sary inference  from  the  fact  of  giving  such  notice. 


366  PROCEEDINGS   ON    NON-PAYMENT. 

This  question  seems  not  to  have  arisen  in  England  until  a  re- 
cent period  ;  but  since  the  point  has  been  started,  there  have  been 
a  series  of  decisions  on  the  subject.  The  first  was  Hartley  v.  Case, 
4  Barn.  &  C.  339  ;  s.  c,  6  Dowl.  &  Ryl.  505.  The  notice  from 
the  holder  was,  "  I  am  desired  to  apply  to  you  for  the  payment  of 
the  sum  of  £150,  due  to  myself  on  a  draft  drawn  by  Mr.  Case  on 
Mr.  Case,  which  1  hope  you  will  on  receipt  discharge,  to  prevent 
the  necessity  of  law  proceedings,  which  otherwise  will  immediately 
take  place."  The  Court  held  it  insufficient,  because  it  did  not 
apprise  the  party  of  the  fact  of  dishonor.  They  said,  the  lan- 
guage used  must  be  such  as  to  convey  notice  to  the  party  what 
the  bill  is,  and  that  payment  of  it  has  been  refused  by  the  ac- 
ceptor.    This  was  in  1825. 

The  next  case  was  that  of  Solarte  v.  Palmer.  On  a  trial  before 
Lord  Tenterde7i,  he  expressed  an  opinion,  that  the  notice  was  in- 
sufficient. A  bill  of  exceptions  was  taken,  and  the  case  brought 
before  the  Exchequer  Chamber,  who  confirmed  the  decision.  7 
Bing.  530 ;  5  Moore  &  P.  475  ;  1  Cromp.  &  J.  417  ;  1  Tyr.  371 ; 
On  appeal  to  the  House  of  Lords,  the  judgment  was  affirmed.  8 
Bligh,  N.  R.  371,  874 ;  s.  c,  2  CI.  &  Fin.  93  ;  1  Bing.  N.  R.  194  ; 
1  Scott,  1. 

The  action  was  brought  by  the  assignees  of  a  bankrupt,  and  the 
notice  was  given  by  the  attorneys  of  the  assignees.  It  described 
the  bill,  and  stated  that  it  had  been  put  into  their  hands  by  the 
assignees,  with  directions  to  take  legal  measures  for  the  recovery 
thereof,  unless  immediately  paid. 

In  giving  judgment  in  the  'Exchequer  Chamber,  Tindal,  C.  J., 
states  the  rule  to  be,  that  the  notice  does  not  require  the  formality 
of  a  regular  protest,  but  it  should  at  least  inform  the  party  to 
whom  it  is  addressed,  either  in  express  terms,  or  by  necessary 
implication,  that  the  bill  has  been  dishonored,  and  that  the  holder 
looks  to  him  for  payment.  This  was  decided  in  the  House  of 
Lords,  June,  1834. 

The  next  case,  I  believe,  is  that  of  Boulton  v.  Welsh,  3  Bing. 
N.  R.  688  ;  s.  c,  4  Scott,  425.  The  notice  to  the  ihdorser  was 
thus :  "  The  promissory  note  for  .£200,  drawn  by,  &c.,  dated 
18th  July  last,  payable  three  mouths  after  date,  and  indorsed 
by  you,  became  due  yesterday,  and  is  returned  to  me  unpaid. 
I  therefore  give  you  notice  thereof,  and  request  you  will  let  me 
have   the   amount   thereof    forthwith."       It   was    strongly    urged 


GILBERT   V.    DENNIS.  3G7 

that  the  words  returned  nnjiaid  would  import  to  the  understaiiditig 
of  mercantile  men  that  the  note  had  been  dishonored.  But  the 
Court  held  themselves  bound  by  the  case  of  Solarte  v.  Palmer,  and 
l)elicving  this  case  to  be  within  it,  held  the  notice  insufficient, 
although  all  the  judges  expressed  their  regret  at  the  result.  But 
they  state  the  rule  of  law,  as  it  had  before  been  stated,  that  the 
notice  should  show  a  presentment  to  the  maker,  a  demand  of  pay- 
ment, and  a  refusal.  As  to  any  thing  further  than  the  general 
rule,  this  case  is  of  no  autiioiity,  unless  in  a  case  where  the  form 
of  notice  is  precisely  the  same.  Whether  in  such  case  the  words 
retnrmd  loi/mid  would  import  the  fact  of  dishonor,  would  depend 
much  upon  the  usage  of  each  mercantile  community  in  which 
they  should  be  used,  and  the  conventional  use  and  meaning  of 
particular  forms  of  expression  used  in  such  community.  This 
was  a  decision  of  the  Court  of  Common  Pleas,  Easter  term,  1<S87.^ 

About  the  same  time  was  decided,  in  the  Court  of  Exchequer, 
the  case  of  Hedger  v.  Steavenson,  2  Mees.  &  W,  799,  where  the 
attorney  addressed  a  letter  to  the  defendant,  informing  him  that  his 
note,  describing  it,  became  due  the  day  before,  and  had  been  re- 
turned unpaid,  and  requested  him  to  remit  the  amount,  with  Is. 
Qd.  noting  ;  and  the  notice  was  held  to  be  good. 

The  case  of  Messenger  v.  Southey,  1  Man.  &  G.  76,  and  1 
Scott,  N.  R.  180,  was  decided  in  the  Court  of  Common  Pleas,  in 
1840.  The  notice  was  as  follows  :  "  This  is  to  inform  you  tliat  the 
bill  I  took  of  you  for  15/.  28.  6d.  is  not  took  up,  and  4s.  ijd.  ex- 
pense ;  and  the  money  I  must  pay  immediately."  Held,  it  was 
insufficient,  because  it  did  not  state  or  intimate,  by  intelligible  in- 
ference, that  the  note  had  been  dishonored. 

About  the  same  time,  the  case  of  Lewis  v.  Gompertz,  G  Mees. 
&  W.  899,  came  before  the  Court  of  Exchequer.  The  notice  from 
the  holder  to  the  indorser  stated  that  the  bill  bearing  iiis  indorse- 
ment had  been  presented  to  the  acceptor,  and  returned  dislionored, 
"  and  now  lies  overdue  and  unpaid  with  me,  as  above,  of  wlucb  I 
give  you  notice."  This  was  held  sufficient,  as  giving  all  the  re- 
quisite information,  although  it  did  not,  in  terms,  require  payment 
of  tJie  indorser. 

The  remarks  of  Mr.  Baron  Pfirkc,  in  this  case,  are  well  worthy 
of  consideration,  as  showing  the  extent  to  which  the  Court  con- 
sidered the  authority  of  Solarte  /'.  P^mer  as  going,  and  the  qual- 
ifications with  which  it  is  to  be  taken. 

1  Boultoii  V.  Welsh  was  overruled  in  1842  by  Uobson  v.  Curlewis,  Car.  &  M.  378. 


368  PROCEEDINGS   ON   NON-PAYMENT. 

In  Grugeon  v.  Smith,  6  Adol.  <fe  Ellis,  499,  the  notice  to  the 
drawer  of  a  bill  was,  that  the  bill  had  been  returned  with  charges  ; 
and  the  immediate  attention  of  the  drawer  to  it  was  requested. 
This  was  held  sufficient,  as  implying  a  demand  and  refusal,  and 
noting  for  non-payment. 

See  Houlditch  v.  Cauty,  4  Bing.  N.  E.  411 ;  s.  c,  6  Scott,  209 ; 
Strange  v.  Price,  10  Adol.  &  Ellis,  125  ;  Burgh  v.  Legge,  5 
Mecs.  &  W.  418  ;  Shelton  v.  Brothwaite,  7  Mees.  &  W.  436  ;  Cooke 
V.  French,  3  Per.  &  D.  596;  s.  c,  10  Adol.  &  Ellis,  131, 
note. 

These  are  all  recent  cases,  bearing  more  or  less  directly  upon 
the  question,  but  do  not  essentially  vary  the  result.  Where,  in 
the  notice,  it  is  stated  that  the  bill  has  been  noted,  or  returned 
with  charges  of  protest,  or  the  like,  it  is  held  to  be  notice,  by  rea- 
sonable implication  of  the  fact  of  dishonor. 

It  was  contended  at  the  argument,  that  although  it  has  been 
settled  by  recent  authorities  in  England,  that  the  notice  to  the 
indorser  must  state  the  fact  of  dishonor,  yet  that  the  American 
authorities  would  show  that  it  was  unnecessary.  It  becomes 
therefore  necessary  to  examine  and  compare  them. 

Mills,  in  error,  v.  U.  S.  Bank,  11  Wheat.  431.^  The  note  was  in 
terms  payable  at  the  branch  of  the  U.  S.  Bank  at  Chilicothe,  and 
indorsed  by  the  original  defendant,  plaintiff  in  error.  It  was  de- 
manded at  the  proper  time  at  the  bank,  but  there  being  no  person 
there  ready  and  willing  to  pay  the  same  ,  it  was  immediately  pro- 
tested, and  notice  given  to  the  defendants.  The  notice  described 
the  note  by  the  date  and  amount,  the  time  and  place  of  payment, 
and  as  a  note  on  which  the  defendant  was  indorser,  and  stated 
thus  :  "  which  has  been  protested  for  non-payment  and  the  holders 
thereof  look  to  you  "  (Signed  by  the  Mayor  of  Chilicothe  acting 
as  notary,  and  addressed  to  the  defendant).  It  was  objected  that 
the  notice  was  defective,  because  it  did  not  state  who  was  the 
holder ;  because  there  was  a  misdescription  of  the  date  ;  and  be- 
cause it  did  not  state  that  a  demand  had  been  made  at  the  bank, 
when  the  note  was  due.  As  to  the  misdescription,  it  was  held  to 
be  of  no  importance,  if  there  was  no  other  note  to  which  it  could 
apply,  if  it  was  so  described  as  to  indicate  the  note  in  suit,  and  if 
it  did  not  mislead. 

As  to  the  sufficiency  of  tlie  notice,  the  opinion  was  delivered 
by  Mr.  Justice  Story.     Some  particular  expressions,  taken  alone, 

1  Ante,  358. 


GILBERT   V.    DENNIS.  3G9 

would  seem  to  warrant  the  position  for  which  it  is  cited.  But  taking 
the  whole  together,  and  in  reference  to  the  case  then  before  the  Court, 
we  think  it  is  not  opposed  to  the  rule  as  stated  in  the  English 
cases.  Speaking  in  reference  to  the  first  objection,  that  the  no- 
tice did  not  state  who  was  the  holder,  the  judge  says,  "  no  form 
of  notice  to  an  indorser  has  been  prescribed  by  law.  The  whole 
object  of  it  is  to  inform  the  party  to  whom  it  is  sent,  that  payment 
has  been  refused  by  the  maker  ;  that  he  is  considered  liable ;  and 
tiiat  payment  is  expected  of  him." 

In  reference  to  the  objection,  that  it  did  not  state  that  payment 
was  demanded  at  the  bank  when  the  note  became  due,  he  says: 
"  It  is  certainly  not  necessary  that  the  notice  should  contain  such 
a  formal  allegation.  It  is  sufficient  that  it  states  the  fact  of  non- 
payment of  the  note,  and  that  the  holder  looks  to  the  indorser  for 
indemnity."  He  then  speaks  of  the  fact  of  presentment  and  de- 
mand, as  matter  of  fact  to  be  proved,  and  adds,  "  a  statement  of 
non-payment  and  notice  is,  by  necessary  implication,  an  assertion 
of  right  by  the  holder,  founded  on  his  having  complied  with  the 
requisitions  of  law  against  the  indorser."  One  of  these  requisi- 
tions is,  of  course,  presentment  and  demand.  And  the  learned 
judge  concludes,  upon  this  point,  by  adding,  that  "  in  point  of  fact 
the  general,  if  not  universal  practice  is,  not  to  state  in  the  notice 
the  mode  or  place  of  demand,  but  the  mere  naked  non-payment." 

In  the  case  then  before  the  Court,  the  notice  contained  a  full  and 
precise  statement  of  the  presentment,  demand,  and  non-payment 
by  the  maker.  The  objection  with  which  the  Court  were  dealing 
was,  that  the  notice  did  not  specify  the  time  and  place  of  demand. 
The  answer  made  was,  that  such  particularity  was  unnecessary, 
and  that  it  is  sufficient  that  it  states  the  fact  of  non-payment.  Ap- 
plied to  the  facts  of  that  case,  it  may  be  construed  to  mean  non- 
payment after  due  presentment.  So  when  the  learned  jndge 
speaks  of  the  practice  of  commercial  cities,  he  speaks  of  notice  of 
the  mere  naked  non-payment,  in  contradistinction  to  stating,  in  the 
notice,  the  mode  and  place  of  demand.  That  such  is  the  mean- 
ing, may  be  inferred  from  the  passage  before  cited,  in  wliich  he 
speaks  of  the  object  of  the  notice,  which  is  to  inform  the  indorser 
that  payment  has  been  refused  by  the  maker.  Refusal  inqilies 
non-payment  on  demand,  or  under  such  circumstances  as  render  a 
presentment  and  demand  unnecessary.  Indeed,  in  many  cases, 
simple  notice  of  non-payment  is  notice  of  dishonor ;  as  where  the 

24 


370  PROCEEDINGS   ON   NON-PAYMENT. 

note  is  in  terms,  or  by  usage  or  special  agreement,  payable  at  a 
bank,  a  notice  stating  tlie  date  and  terms  of  the  note,  showing  that 
it  has  become  due,  and  averring  that  it  is  unpaid,  is  equivalent  to 
an  averment  that  it  is  dishonored. 

In  Smith  v.  Whiting,  12  Mass.  6,  no  question  was  raised  as  to 
the  sufficiency  of  the  notice.  It  was  notice  from  a  bank.  It  de- 
scribed the  note  as  due  and  unpaid ;  and  by  usage  it  was  held  to 
be  payable  at  the  bank.  Of  course  it  was  dishonored,  by  not  being 
paid  at  the  bank  by  the  maker. 

So  in  State  Bank  v.  Hurd,  12  Mass.  172,  notice  was  left  at  a 
place  agreed  l)y  the  parties  as  a  substitute  for  notice  at  the  house 
or  place  of  business  of  the  maker  ;  and  it  was  licld  sufficient, 
being  equivalent  to  a  more  formal  demand  ;  and  failure  of  the 
promisor  to  pay,  on  such  notice,  rendered  the  indorser  liable. 

The  case  of  Bank  of  Rochester  v.  Gould,  9  Wend.  279,  is  a 
case  of  mere  misdescription.  The  notice  to  the  indorser  stated 
expressly  that  the  note  had  been  protested  for  non-payment ;  and 
the  only  qiiestion  was,  whether  it  was  well  described.  It  there- 
fore does  not  affect  the  present  question. 

The  case  of  Bank  of  United  States  v.  Carneal,  2  Peters,  543, 
may  be  considered  as  throwing  some  light  on  the  subject  of  in- 
quiry. It  is  lield,  that  when  the  note  is  payable  at  a  bank,  and 
the  bank  is  itself  the  holder  of  it,  no  demand  is  necessary.  It  is 
the  duty  of  the  maker  to  go  to  the  bank  within  the  usual  hours  of 
business  and  pay  it ;  and  if  he  fail  to  do  so,  the  note  is  dishonored. 
Towards  the  close  of  tlie  opinion,  given  by  Mr.  Justice  Story^  it  is 
stated  thus  :  "  A  suggestion  has  been  made  at  the  bar,  that  a  letter 
to  the  indorser,  stating  the  demand  and  dishonor  of  the  note,  is 
not  sufficient,  unless  the  party  sending  it  also  informs  the  indorser 
that  he  is  looked  to  for  payment.  But  where  such  notice  is  sent 
by  the  holder,  or  by  his  order,  it  necessarily  implies  such  respon- 
sibility over.  The  purpose  may  be  reasonably  inferred  from  the 
nature  of  the  notice." 

We  have  thus  attempted,  at  the  risk  of  being  somewhat  tedious, 
to  ascertain  what  the  rule  is  upon  this  subject,  on  account  of  the 
extreme  importance  of  certainty  and  uniformity  in  the  rules  of 
law  applicable  to  the  rights  and  duties  of  holders  and  other  parties 
to  notes  and  bills  of  exchange.  And  we  take  that  rule  to  be,  that 
as  an  indorser  is  liable  only  conditionally  for  the  payment,  in  case 
of  a  dishonor  of  the  note  at  its  maturity  by  the  maker,  and  notice 


niLBERT   V.    DENNIS.  371 

• 

thereof  to  the  indorser,  in  order  to  charge  him,  notice  of  such 
dishonor  must  be  given  him  by  the  holder  or  his  agent,  or  some 
party  to  the  bill ;  that  mere  notice  of  non-payment,  which  does  not 
express  or  imply  notice  of  dishonor,  is  not  such  notice  as  will  ren- 
der the  indorser  lia)»le. 

In  order  to  apply  tlu;  rule  thus  stated,  to  the  present  case,  it 
will  be  necessary  to  look  at  the  facts  stated  in  the  report.  It  ap- 
pears that  the  presentment  and  demand  on  the  promisor  were 
made  on  the  morning  of  the  day  on  which  the  note  fell  due. 
Afterwards,  at  about  eleven  o'clock,  the  plaintiff  caused  a  written , 
notice  to  be  left  at  the  defendant's  dwelling-house,  of  which  the 
following  is  a  copy :  "  Boston,  May  4,  1838.  Mr.  Louis  Dennis. 
Sir,  —  I  have  a  note  signed  by  C.  E.  Bowers  and  indorsed  by  you 
for  seven  hundred  dollars,  which  is  due  this  day  and  unpaid ;  pay- 
ment is  demanded  of  you.     C.  C.  Gilbert." 

This  notice  comes  from  an  individual,  not  from  a  l)ank.  It  was 
delivered  at  eleven  a.m.  There  would  then  be  no  defiiult  and  no 
dishonor,  unless  a  demand  had  been  made  on  the  j)romisor.  An 
averment,  therefore,  that  it  was  unpaid,  did  not,  by  necessary  im- 
])licatiou  or  reasonable  intendment,  amount  to  an  averment  or  in- 
timation that  payment  had  been  demanded  and  refused,  or  that 
the  note  had  been  otherwise  dishonored.  The  Court  are  therefore 
of  opinion,  that  the  notice  was  not  sufficient  to  render  the  indorser 
legally  liable.   . 

It  will  be  seen  that  there  is  some  confusion  among  the  English  authorities  on 
this  subject ;  and  we  cannot  perhaps  do  better  than  to  add  to  Chief  Justice 
Shaw's  review  the  opinion  of  Lord  I>cnham,  in  Furze  v.  Sliarwood,  2  Q.  B. 
388,  409.     lie  says  :  — 

"Lord  Mannfield,  after  observing,  in  the  case  of  Tindal  v.  15rown  [1  T.  R. 
167  ;  2  T.  R.  186],  that  certainty  is  of  the  highest  importance  in  mercantile  trans- 
actions proceeded  to  settle  the  question  there  raisfed,  whether  the  notice  of  dis- 
honor was,  in  point  of  law,  too  late.  The  whole  Court  alhrmed  that  proposition, 
and  more  than  once  set  aside  a  verdict  founded  on  the  opposite  assumption.  Noth- 
ing more  was  required  for  the  decision.  lUit  i\Ir.  Justice  WiUca  took  a  second 
objection  ;  and  Mr.  Justice  Ashhurst  a  third.  '  Notice,'  said  his  lordship,  '  means 
something  more  than  knowledge  ;  because  it  is  competent  to  the  holder  to  give 
credit  to  the  maker.  It  is  not  enough  to  say  that  the  maker  does  not  intend  to 
pay  ;  but  (it  ought  to  be  further  said)  that  he  (the  holder)  does  not  intend  to  give 
credit.  In  the  present  case,  there  is  no  notice  :  for  tlie  party  ought  to  kit)w  wiiether 
the  holder  intends  to  give  credit  to  the  maker,  or  whether  he  intends  to  resort  to  the 
indorser.'  This  is  repeated  with  great  approbation  by  Biillcr,  J.  Near  forty  years 
after,  the  sufficiency  of  a  notice  of  dishonor  was  canvassed  in  an  action  between 


372  PROCEEDINGS   ON   NON-PAYMENT. 

« 

Hartley  v.  Case  [4  Barn.  &  C.  339] ,  decided  by  Lord  Tenterden  at  Nisi  Prius.  It 
ran  tlms  :  '  I  am  desired  to  apply  to  you  for  the  payment  of  the  sum  of  £150,  due  to 
myself  on  a  draft  drawn  by  Mr.  Case,  which  I  hope  you  will  on  receipt  discharge, 
to  prevent  the  necessity  of  law  proceedings,  which  otherwise  will  immediately  take 
place.'  The  report  says  :  '  The  Lord  Chief  Justice  was  of  opinion,  as  this  letter  did 
not  apprise  the  party  of  the  fact  of  dishonor,  but  contained  a  mere  demand  of  pay- 
ment, it  was  not  sufficient ;  and  the  plaintiff  was  nonsuited.'  After  argument,  on 
a  rule  for  setting  aside  the  nonsuit,  his  lordship  said  :  '  There  is  no  precise  form 
of  words  necessary  to  be  used  in  giving  notice  '  of  dishonor,  '  but  the  language 
used  must  be  such  as  to  convey  notice  to  the  party  what  the  bill  is,  and  that  payment 
of  it  has  been  refused  by  the  acceptor.  Here  the  letter  in  question  did  not  convey 
to  the  defendant  any  such  notice ;  it  does  not  even  say  that  the  bill  was  ever 
accepted.  We  therefore  think  the  notice  was  insufficient.'  This  short  judg- 
ment, in  which  the  whole  Court  concurred,  comprising  Bayleij,  HoJrotjd,  and  Lit- 
tledale,  JJ.,  is  perfectly  correct  in  Its  statement  of  the  fact  and  the  law,  and  has 
the  merit  of  adhering  closely  to  the  point  raised  In  argument.  It  has  never  been 
questioned  by  any  judicial  authority.  The  same  learned  Chief  Justice  was  after- 
■  wards  called  upon  to  decide  on  the  sufficiency  of  the  following  notice :  '  A  bill  of 
£683,  drawn  by '  A,  upon  B  C,  '  and  bearing  your  indorsement,  has  been  put 
into  our  hands  by  the  assignees  of  Mr.  J.  R.  de  Alzedo,  with  directions  to  take 
legal  measures  for  the  recovery  thereof,  unless  immediately  paid  to,  gentlemen, 
your  very  obedient  servants,  J.  and  S.  P.'  Here  was  no  statement  of  the  dis- 
honor, the  presentment,  or  the  acceptance.  If  any  notice  of  the  dishonor,  as  a 
distinct  fact,  is  necessary,  this  document  is  plainly  worthless.  It  was  so  held  by 
Lord  Tenterden ;  but,  from  the  magnitude  of  the  sum  and  the  importance  of  the 
question,  his  lordship  suggested  that  a  bill  of  exceptions  might  be  tendered. 
This  was  done,  and  the  case  brought  by  writ  of  error  into  the  Exchequer  Cham- 
ber, when,  as  might  have  been  expected,  the  Lord  Chief  Justice  delivered  a 
unanimous  judgment,  that  Lord  Tenterden^s  direction  to  the  jury  was  right,  and 
the  notice  insufficient.  It  was,  however,  thought  right  to  bring  the  matter  before 
the  House  of  Lords,  where  the  late  Mr.  Justice  Parke  delivered  the  opinion  of 
all  the  judges  present  (nine  in  number)  to  the  same  effect.  Thus,  without  one 
dissentient  voice,  the  judges  of  all  the  courts,  on  these  different  occasions,  con- 
curred with  Lord  Tenterden  in  holding  express  notice  of  the  fact  of  dishonor  to 
be  necessary;  the  only  point  on  which  he  had  given  an  opinion.  This  Avas  the 
celebrated  case  of  Solarte  v.  Palmer  [7  Bing.  530  ;  s.  c,  1  Bing.  N.  C.  194].  The 
Lord  Chief  Justice,  in  the  Exchequer  Chamber,  laid  down  this  rule,  that  '  The  no- 
tice of  dishonor  should  at  least  inform  the  party  to  whom  it  is  addressed,  either  in 
express  terms,  or  by  necessary  implication,  that  the  bill  has  been  dishonored,  and 
that  the  holder  looks  to  him  for  payment  of  the  amount.'  Parke,  J.,  when  deliver- 
ing the  judges'  opinion  to  the  lords,  omits  the  latter  clause,  and  merely  says,  that 
'  such  a  notice  ought.  In  express  terms,  or  by  necessary  implication,  to  convey  full 
information  that  the  bill  had  been  dishonored.'  This  decision,  therefore,  did  not  turn 
upon  or  require  any  allusion  to  the  doctrine  of  Ashliurst  and  Duller,  JJ.,  in  TIndal 
V.  Brown,  on  the  necessity  of  stating  that  the  holder  looks  to  the  party  addressed, 
and  does  not  give  credit  to  any  other  person.  But  much  controversy  has  arisen  on 
the  branch  of  the  notice,  as  to  which  the  Lord  Chief  Justice  and  Parke,  J.,  agree, 
requiring  notice  of  dishonor  in  express  terms,  or  by  necessary  implication  ;  and 


GILBERT    V.    DENNIS.  373 

« 
hence  the  task  of  examiniiifr  all  the  tlecisions  is  imposed  upon  us.  In  Grugeon  v. 
Suiitli,  tliisCourt  held  the  dishonor  of  a  bill  to  he  suniciently  notified  hythe  phrase 
*  The  1)111  is  this  day  returned  with  charges.'  A  few  days  after,  but  without  being 
aware  of  this  decision,  the  Court  of  Common  Pleas,  Boulton  v.  Welsh  pj  Bing.  N. 
C.  G88],  held  the  notice  insuilicient,  where  it  is  said  :  '  The  promissory  note '  '  be- 
came due  yesterday,  and  is  returned  to  me  unpaid  ; '  the  Lord  Chief  Justice  there 
observing,  that  he  did  not  sec  how  it  was  '  possible  to  escape  from  the  rule  estab- 
lished by  the  two  decided  cases,  without  resorting  to  such  subtile  distinctions  as 
would  make  the  rule  itself  useless  in  practice.  The  rule  requires  that,  either 
expressly  or  by  necessary  inference,  the  notice  shall  disclose  that  the  bill  or  note 
has  been  dishonored.'  Upon  which  we  will  merely  observe  in  passing,  that  there 
is  no  necessary  difference  of  opinion  between  the  two  courts,  as  Parke,  B.,  sup- 
posed in  Iledger  v.  Steavenson  [2  Mees.  &  W.  799].  The  Common  Pleas  might 
have  held,  that  '  returned  with  charges'  did  necessarily  imply  presentment  and  dis- 
honor. And  it  does  not  follow  from  any  thing  we  said,  that  we  nn'ght  not  have 
thought  '  returned  to  me  unpaid  '  insuUicient.  But  the  case  of  Hedger  v.  Steaven- 
son brought  the  Court  of  Exchequer  into  direct  collision  with  the  Common  Pleas, 
not  indeed  on  the  sufficiency  of  the  notice,  for  it  was  not  identical  in  the  two  cases,, 
but  on  the  principle  of  decidmg.  The  note,  &c.,  '  is  returned  impaid,'  was  the  form 
which  the  Common  Pleas  held  wrong.  The  same  form,  with  the  addition  of  \s.  Qd. 
for  noting,  the  Exchequer  held  right;  and  Parke,  B.,  while  submitting  to  the  au- 
thority of  Solarte  r.  Palmer,  excej)ts  to  the  reasons  given  for  the  judgment,  and  the 
language  in  which  they  are  couched,  and  doubts  whether  he  could  go  so  far  as  to 
say  that'  it  ought  to  appear  upon  the  face  of  the  instrument  "  by  express  terms 
or  necessary  implication,  that  the  bill  was  presented  and  dishonored  "  ; '  thinking 
it  '  enough  if  it  appear  by  reasonable  intendment,  and  would  be  inferred  b}-  any 
man  of  business,  that  the  bill  has  been  presented  to  the  acceptor,  and  not  paid 
by  him.'  lie  remarks,  however,  that,  even  if  the  rule  were  properly  laid  down 
in  those  words,  it  ought  to  receive  a  more  liberal  construction  than  the  Common 
Pleas  appeared  to  have  adopted,  in  which  sentiments  Barons  Bolland  and  Alder- 
son  agreed,  having  been  two  of  the  judges  consulted  by  the  lords  when  Parke,  J., 
promulgated  their  opinion  there.  The  next  case,  in  order  of  time,  is  Iloulditch 
V.  Cauty.  There  the  general  doctrine  was  discussed  ;  and  the  Lord  Chief  Justice 
declared  his  adherence  to  Boulton  r.  Welsh,  but  distinguished  the  case  then 
before  him.  The  sulUciency  of  the  written  notice  was  not  directly  in  question  ; 
for  it  had  been  followed  by  a  verbal  communication  between  the  plaintiff  and 
defendant.  Strange  r.  Price  [10  Ad.  &  E.  125]  followed.  This  Court  there  held 
it  insufficient  to  '  inform  Mr.  James  Price '  *  that  Mr.  John  Betterton's  acceptance, 
£87  0,9.,  is  not  paid.'  A  fortiori,  the  Common  Pleas  would  have  agreed  with  us.  I 
do  not  believe  that  the  Exchequer  would  have  differed.  In  Easter  term,  1840, 
doubts  springing  from  the  same  fruitful  source  were  stirred  in  the  C  ourt  of 
Common  Pleas  (Messenger  r.  Southey,  1  Man.  &  G.  76),  and  the  Exchequer 
(Lewis  V.  Gompertz,  6  Mees.  &  W.  399)  ;  the  former  condemning,  the  latter 
supporting,  the  notice  in  those  respective  cases  but  the  forms  were  so  entirely 
different,  that  the  judgments  given  might  have  been  consistently  formed 
by  either  Court.  But  Messenger  v.  Southey  shows  a  great  relaxation  of 
the  rigor  of  the  rule  laid  down  in  the  Exchequer  Chamber  and  House  of 
Lords,  on  the  part  of  the  Lord  Chief  Justice,  who  admits  that  Grugeon 
V.  Smith   might  have  been  well  decided  bv  force  of  the  words  '  returned  with 


374  PROCEEDINGS   ON   NON-PAYMENT. 

charges,'  and  possibly  Hedger  v.  Stcavenson  also,  because  the  notice  declared 
the  bill  to  have  been  '  returned  unpaid.'  But  these  are  the  very  words  which 
were  held  insufficient  under  the  operation  of  the  rule  in  Boulton  v.  Welsh,  a 
case  decided  by  the  Common  Pleas  reluctantly,  from  deference  to  what  was 
decided  in  Solarte  v.  Palmer,  and  which  can  hardly  be  now  deemed  a  satisfactory 
authority.  Upon  the  whole,  it  is  to  be  feared,  that  none  of  the  rules  for  con- 
struing this  brancli  of  the  instrument  designed  to  be  a  notice  of  dishonor  will  be 
found  capable  of  very  general  application.  The  advantage  of  clear-  and  certain 
rules,  where  it  can  be  secured,  is,  indeed,  inestimable.  Perhaps  Lord  Mansfield 
never  conferred  so  great  a  benefit  on  the  commercial  world  as  by  his  decision  of 
Tindal  r.  Brown,  where  his  perseverance  compelled  them,  in  spite  of  themselves, 
to  submit  to  the  doctrine  of  requiring  immediate  notice  as  a  matter  of  law.  But 
in  the  matter  in  hand  we  can  scarcely  hope  to  attain  such  a  rule.  For  if  we  are 
to  refer  the  question  to  a  reasonable  intendment,  and  what  a  man  of  business 
would  naturally  conclude  from  the  words,  we  can  hardly  decide  it  without  the 
intervention  of  a  jury,  whose  opinions  will  naturally  vary  with  the  circumstances 
of  each  case ;  and  if,  on  the  other  hand,  the  Court  must  decide  on  examination  of 
4the  document  according  to  legal  and  grammatical  rules  of  interpretation,  we  shall 
frequently  give  it  a  sense  in  which  neither  party  could  ever  have  understood  it. 
If  we  adopt  the  middle  course,  requiring  at  least  a  necessary  implication,  but 
qualifying  these  words  by  Lord  Eldoii's  comment  in  Wilkinson  v.  Adam,  we  have 
just  seen  that  (if  the  reports  be  accurate)  the  same  eminent  judge,  who  gave 
them  one  sense  in  Boulton  v.  Welsh,  may  admit  them  to  be  susceptible  of  a  sense 
directly  opposite  in  Hedger  v.  Steavenson.  This  rule,  however,  was  recom- 
mended by  great  authority,  twice  asserted  by  the  Court  of  Exchequer,  not  repu- 
diated by  the  Court  of  Common  Pleas.  Perhaps  it  goes  no  farther  than  to 
require  that  the  Court  must  see  that,  by  some  words  or  other,  notice  of  dishonor 
has  been  given.  We  have  entirely  excluded  the  supposition,  that  the  mere  fact 
of  making  a  communication  respecting  the  non-payment  of  the  bill  at  the  proper 
season  can  extend  the  meaning  of  the  words  conveying  notice  of  dishonor.  This 
exists  in  almost  every  case ;  and,  as  one  can  hardly  conjecture  any  other  motive 
for  giving  the  information,  so  the  party  addressed  can  hardly  fail  to  infer  that  it 
is  given  in  order  to  fix  hiui  with  liability.  Yet  no  one  disputes  that  the  fact  must 
be  stated,  the  notice  of  dishonor  plainly  given.  But,  if  this  be  done,  we  may 
now  inquire  where  is  the  authority  establishing  the  position  oi  Ashliurstdind  Bul- 
ler,  JJ.  (unnecessary  for  the  case  before  them),  that  the  notice  must  also  tell 
the  party  addressed  that  he  looks  to  him  for  payment  ?  If  not,  why  send  the 
notice  ?  True,  he  may  have  sonie  other  reasons  for  informing  the  party  ad- 
dressed of  the  dishonor,  while  looking  elsewhere  for  his  money.  But,  unless  he 
tells  him  this,  the  receiver  of  such  a  notice  cannot  but  be  certain  that  the  sender 
means  to  call  upon  iu'm  for  payment.  The  protest,  for  which  notice  was  substi- 
tuted, has  no  such  clause,  but  begins  and  ends  with  the  history  of  the  dishonored 
bill,  including  the  protest  itself.  Where  notice  has  been  given  by  another  party 
than  the  holder,  there  may  be  good  sense  in  requiring  that  it  shall  be  accom- 
panied by  a  direct  demand  of  payment,  or  a  statement  that  it  will  be  required 
of  the  party  addressed ;  but  in  no  case  has  the  absence  of  such  information  been 
held  to  vitiate  a  notice  in  other  respects  complete,  and  which  has  come  dirfectly 
from  the  holder.  Nothing  now  remains  but  to  declare  our  opinion  on  the  several 
forms  of  notice  set  forth  in  the  special  verdict.     And  the  second,  of  July  11th  ; 


GILBERT   V.    DENNIS.  375 

the  third,  July  20th;  the  fourth,  July  13th;  the  fifth,  September  11th;  the 
sixth,  September  2oth  ;  and  the  eighth,  September  2Gth  ;  we  think  bad,  because 
they  contain  no  notice  of  dishonor  according  to  any  of  the  decisions,  or  within 
any  of  the  rules.  Consistently  with  all  that  is  set  forth,  the  plaintiff,  either  from 
ignorance  or  inadvertence,  or  because  he  may  really  have  looked  to  another,  may 
have  abstained  altogether  from  presenting  any  one  of  these  bills.  But  this 
amount  reduces  the  plaintid's  claim  below  the  defendants'  set-off.  Our  judgment 
must  then  be  for  the  latter,  even  on  the  supposition  that  it  would  be  against  them 
on  all  the  important  general  points  that  have  been  raised." 

Boulton  V.  Welsh,  cited  so  frequently  above,  was  overruled  in  Robson  v.  Cur- 
lewis,  Car.  &  M.  .378;  s.  c,  2  Q.  B.  421.  So  the  English  rule  now  is  not  so 
strict  perhaps  as  the  American  rule  declared  in  Gilbert  v.  Dennis. 

Ramieij,  J.,  in  Townsend  v.  Lorain  Bank,  2  Ohio  State,  355,  quotes  the  rule 
in  the  principal  case  of  Gilbert  v.  Dennis  witli  approval,  and  states  that  to  be 
the  present  rule  in  New  York,  Massachusetts,  Pennsylvania,  and  Ohio.  See 
also  Pinkham  v.  Macy,  9  Met.  174;  Clark  v.  Eldridge,  13  Met.  96;  Ransom  v. 
Mack,  2  Hill,  587 ;  Arnold  r.  Kinloch,  50  Barb.  44 ;  Dole  v.  Gold,  5  Barb. 
490;  Ettingu.  Schuylkill  Bank,  2  Barr,  356;  Sinclair  v.  Lynch,  1  Spears,  244; 
Graham  v.  Sangston,  1  Md.  60;  Armstrong  v.  Thruston,  11  Md.  118,  157; 
Lockwood  r.  Crawford,  18  Conn.  361. 

That  the  rigor  of  the  early  Englisii  rule  in  Solarte  v.  Palmer,  has  been  con- 
siderably relaxed,  may  be  seen  in  Caunt  v.  Thompson,  7  Com.  B.  400,  410, 
decided  in  1849,  and  in  Metcalfe  v.  Richardson,  20  Eng.  L.  &  Eq.  301 ;  11 
Com.  B.  1011,  decided  in  1853.  In  the  former  case,  Cresswell,  J.,  said:  "In 
Solarte  v.  Palmer,  which  was  finally  decided  in  the  House  of  Lords,  a  very  strict 
rule  was  adopted  ;  but  that  has  not  been  adhered  to."  And  it  was  held  in  this 
case  that  knowledge  derived  from  the  holder  that  the  bill  has  been  dishonored, 
where  the  drawer  is  himself  the  party  who  is  to  pay  the  bill,  as  when  he  is 
executor  of  the  acceptor,  amounts  to  notice.  See  jjost,  p.  428.  In  Metcalfe  v. 
Richardson,  supra,  it  was  held  that  the  jury  might  infer  dishonor  from  a  state- 
ment that  the  .icceptor  "  could  not  pay."  See  also  Lewis  v.  Gompertz,  6  Mees. 
«fe  W.  399  ;  Armstrong  v.  Christiani,  5  Com.  B.  687  ;  Houlditch  r.  Cauty,  4  Bing. 
N.  C.  411  ;  Smith  v.  Boulton,  1  Hurl.  &  W.  3. 

Notice  without  date,  stating  that  the  paper  has  been  "  this  day  presented  for 
payment  "  is  fatally  defective.     Wynn  v.  Alden,  4  Denio,  163. 

The  word  "  protested  "  in  the  notice,  clearly  implies  dishonor.  1  Parsons,  Notes 
and  Bills,  471  ;  citing  Crawford  v.  Branch  Bank,  7  Ala.  205  ;  Spies  r.  Newbury,  2 
Doug.  Mich.  495  ;  DeWolf  v.  Murray,  2  Sandf.  166,  and  other  authorities. 

See  further  upon  this  branch  of  the  subject,  Clark  i'.  Eldridge,  13  Met.  96; 
Everard  v.  Watson,  18  Eng.  L.  &  Ec}.  194  ;  Dole  v.  Gold,  5  Barb.  490 ;  Cayuga 
Bank  v.  Warden,  1  Comst.  413  ;  Story,  Promissory  Notes,  §§  350,  et  .sr*^. 

The  third  rule,  which  was  also  followed  ([uite  strictly  at  one  time,  —  requiring 
the  notice  to  state  that  the  holder  looks  to  the  party  to  whom  it  is  addressed  for 
indemnity, — has  lost  much  of  its  force,  and  become  nearly  ob.«olete.  Story, 
Promissory  Notes,  §  353. 

It  is  stated  in  Solarte  i'.  Palmer,  7  Bing.  530,  supra,  that  such  information 
should  be  given  to  the  drawer  or  indorser  either  expressly  or  by  necessary  im- 
plication ;  but  it  is  the  more  recent  doctrine  that  the  very  fact  of  notice  necessa- 
rily implies  that  the  holder  looks  to  the  party  notified  for  payment.     Chard  v. 


376  PROCEEDINGS   ON   NON-PAYMENT. 

Fox,  14  Q.  B.  200;  Furze  v.  Sharwood,  supra  ;  King  v.  Bickley,  2  Q.  B.  419; 
Micrs  V.  Brown,  11  ]\Iees.  &  W.  372;  Metcalfe  v.  Richardson,  20  Eng.  L.  & 
Eq.  301 ;  Caunt  v.  Thompson,  7  Com.  B.  400  ;  Townsend  v.  Lorain  Bank,  2  Ohio 
State,  354;  Bank  of  the  United  States  v.  Carneal,  2  Peters,  543;  Cowles  v. 
Harte,  3  Conn.  316;  Warren  v.  Gilman,  17  Maine,  360;  Barstow  v.  Hiriart,  6 
La.  An.  98  ;  Burgess  t'.  Vreeland,  4  Zabr.  71  ;  Story,  Promissory  Notes,  §  354; 
1  Parsons,  Notes  and  Bills,  472. 


Stephen  B.  M.unn  v.  Luke  Baldwin  et  al. 

"         (6  Massachusetts,  316.     Supreme  Court,  March,  1810.) 

Manner  of  sending)  notice.  Post-office.  —  Putting  a  letter  into  the  post-oflSce,  directed  to 
the  indorserof  a  bill  of  exchange,  and  containing  notice  of  protest  for  non-payment, 
is  sufficient,  though  it  does  not  appear  that  the  letter  was  ever  received. 

Assumpsit  upon  a  bill  of  exchange  drawn  in  Boston  on  Justin 
Smith,  of  Philadelphia,  in  favor  of  the  defendants,  and  by  them 
indorsed  to  the  plaintiff. 

The  facts  agreed  were,  that  the  notary  in  Philadelphia,  who  pro- 
tested the  bill  for  non-payment,  on  the  day  of  the  protest,  or  on 
the  morning  of  the  next  day,  before  the  mail  for  Boston  was  closed, 
put  a  letter  into  the  post-office  in  Philadelphia  directed  to  the  de- 
fendants in  Boston,  and  containing  the  necessary  notice ;  but  the 
case  adds :  "  It  does  not  appear  that  the  defendants  ever  received 
that  letter." 

Parsons,  C.  J.  The  only  question  in  this  action  is,  whether  the 
defendants  had  legal  notice  of  the  protest  for  non-payment  of  the 
bill  of  exchange.  After  taking  a  little  time  to  advise,  we  are  all 
of  opinion  that  the  notice  is  prima  facie  sufficient.  The  holder  of 
the  bill  made  use  of  the  usual  mode  of  conveying  notice,  by  put- 
ting the  letter  containing  it  into  the  post-office  ;  and  a  mode  to 
which- the  indorsers  must  be  considered  as  assenting,  or  the  nego- 
tiating of  bills  payable  at  a  distance  would  be  greatly  embarrassed, 
if  not  obstructed.  For  who  would  buy  a  bill,  to  be  presented  for 
payment  in  a  remote  part  of  the  United  States,  if  it  was  to  be  un- 
derstood, that  if  not  paid,  he  must  be  at  the  expense  of  some  private 
messenger,  whose  accidental  sickness  or  detention  on  the  road  would 
defeat  his  remedy  ? 

When  a  letter  is  put  into  the  regular  post-office,  we  presume  that 


,  MUNN   V.    BALDWIN.  377 

it  was  sent  and  received  agreeably  to  its  direction,  unless  the  con- 
trary is  proved.  Here  there  is  no  evidence  on  tliat  point ;  the  case 
only  stating,  that  it  does  not  appear  that  the  letter  was  received  by 
the  defendants;  and  vet,  they  might,  in  fact,  have  received  it.  If 
it  was  agreed  that  the  letter  miscarried,  and  that  the  defendants 
did  not  receive  it,  it  might  l>c  a  question  at  whose  risk  the  letter 
was  sent  by  the  mail ;  and  whether,  the  regular  mail  being  the 
method  of  conveyance  assented  to  by  the  defendants,  they  must 
not  be  answerable  for  the  miscarriage,  in  the  same  manner  as  if  a 
letter  sent  by  their  private  servant  had  not  been  delivered  by  him. 
On  this  last  point,  however,  it  is  not  necessary  now  to  decide.  But 
on  the  facts  stated,  we  are  satisfied  that  the  notice  must  be  consid- 
ered as  sufficient  to  make  the  indorsers  liable,  and  that  the  plaintiflf 
ought  to  recover. 

Therefore,  conformably  to  the  agreement  of  the  parties,  let  the 
defendants  be  called. 

See  the  following  authorities  :  Saunderson  v.  Judge,  2  H.  Bl.  500;  Scott  v. 
Lifford,  9  East,  347 ;  Leftley  v.  Mills,  4  Term,  174  ;  Shed  v.  Brett,  1  Pick.  401 ; 
Jones  t'.  Warden,  6  Watts  &  S.  399  ;  Walker  v.  Stetson,  post,  397  ;  Chitty,  Bills, 
Co8 :  Story,  Promissory  Notes,  §  328;  Ibid.,  Bills  of  Exchange,  §  300  and  cases 
cited.  These  authorities  further  show  that  it  is  wholly  immaterial  whether  the 
notice  ever  reached  the  indorser  or  drawer  or  not.  If  the  notice  is  duly  mailed, 
the  liability  is  absolutely  fixed.  This  of  course  is  said  of  the  case  of  an  indorser 
residing  in  a  different  town  from  that  of  the  holder.  If  he  lives  in  the  same 
town  the  notice  should  not  be  sent  by  mail,  except  where  there  is  a  penny-post. 
Pierce  v.  Pendar,  5  Met.  352 ;  Ransom  v.  Mack,  2  Hill,  587  ;  Bank  of  Colum- 
bia i\  Lawrence,  1  Peters,  578,  post,  404,  407.  This  subject  is  more  fully  consid- 
ered, in  Bowling  v.  Harrison,  infra.  As  to  the  employment  of  messengers  to 
serve  notice,  it  is  decided  that  if  the  holder  resorts  to  this  method,  instead  of 
using  the  public  mail,  his  responsibility  continue*  until  delivery  of  th«  notice, 
either  personally  to  the  party  to  be  charged,  or  at  his  place  of  business  or  resi- 
dence.    See  pvst,  pp.  408,  409,  410. 


378  PROCEEDINGS   ON   NON-PAYMENT. 


John  D.  Bowling,  Plaintiff  in  Error,  v.  Jilson  P. 
Harrison. 

(6  Howard,  248.     Supreme  Court  of  the  United  States,  December,  1847.) 

Notice  to  be  given  personaUy,  when.  —  If  the  parties  reside  in  the  same  city  or  town  the 
indorser  is  entitled  to  personal  notice  of  the  dishonor  of  the  bill  or  note,  either  ver- 
bally or  in  writing,  or  a  written  notice  must  be  left  at  his  dwelling-house  or  place 
of  business.  Notice  by  the  mail  in  such  case  is  not  sufficient.  And  a  memoran- 
dum on  a  note,  in  these  words  :  "  Third  indorser,  J.  P.  Harrison,  lives  at  Vicks- 
burg,"  is  not  an  agreement  to  receive  notice  through  the  post-office. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Grier,  J.  The  first  assignment  of  error  in  this  case  is  to  the 
instruction  given  by  the  Court  to  the  jury:  "That,  to  charge  an 
indorser  if  he  lived  in  the  town  in  which  the  note  was  made  paya- 
ble, the  notice  must  be  personal,  unless  he  had  agreed  to  receive 
it  elsewhere,  or  unless,  by  custom  and  usage  of  the  bank  at  which 
the  note  is  payable,  the  notice  of  «on-payment  was  left  at  the  post- 
office." 

As  the  only  question  on  the  trial  of  the  cause  was  the  sufficiency 
of  notice  left  at  the  post-office  at  Vicksburg,  to  charge  an  indorser 
residing  there,  and  not  whether  a  copy  left  at  his  dwelling-house  or 
place  of  business  would  be  proper,  the  phrase  "  personal  notice  " 
was  evidently  intended  and  understood  to  include  the  latter  in 
opposition  to  the  former.  This  instruction  is,  therefore,  not  ob- 
jected to  on  the  ground  of  any  inaccuracy  of  expression  on  that 
point.  But  the  complaint  is,  that  the  rule  of  law  on  this  subject 
was  erroneously  enunciated  by  the  Court,  in  stating  the  conditions 
under  which  a  personal  service  of  notice  on  an  indorser  is  required 
to  be  "  residence  in  the  town  where  the  note  was  made  payable." 

It  is  true,  the  terms  in  which  the  rule  of  law  on  that  subject  is 
usually  stated  differ  from  those  used  by  the  Court  on  this  occasion. 
In  Williams  v.  United  States  Bank,  2  Peters,  96,  101,  it  is  thus 
stated  by  this  Court :  "  If  the  parties  reside  in  the  same  city  or 
town,  the  indorser  must  be  personally  noticed  of  the  dishonor  of 
the  bill  or  note,  either  verbally  or  in  writing,  or  a  written  notice 
must  be  left  at  his  dwelling-house  or  place  of  business." 

Mr.  Justice  Story^  Story,  Bills,  §  312,  states  the  rule  in  these 
words :  "  Where  the  party  entitled  to  notice  and  the  holder  reside 


•  BOWLING    V.    HARRISON.  379 

in  the  same  town  or  city,  the  general  rule  is,  that  the  notice  should 
be  given  to  the  party  entitled  to  it,  either  i)Crsonally,  or  at  his 
domicile  or  place  of  business." 

The  indorsee  or  owner  of  the  note  in  this  case  resided  in  Mary- 
land, and  the  indorser  in  Vicksburg ;  and  it  is  contended  that,  as 
they  are  the  only  parties,  and  do  not  reside  in  the  same  place,  the 
rule  is  inapplicable  to  the  case. 

But  we  are  of  opinion  that,  whether  we  regard  the  reasons  upon 
which  this  rule  is  founded,  or  a  correct  construction  of  the  terms 
in  which  it  is  usually  stated,  the  instruction  given  by  the  Court 
below  was  correct,  and  not  such  as  to  mislead  the  jury  in  the 
application  of  the  law  to  the  circumstances  of  the  case  before 
them. 

The  best  evidence  of  notice  is  proof  of  personal  service  on  the 
party  to  be  alTccted  by  it,  or  by  leaving  a  copy  at  his  dwelling. 
Depositing  a  notice  in  the  post-oflfice  affords  but  presumptive  evi- 
dence of  its  reception,  and  is  permitted  to  be  substituted  for  the 
former  only  where  the  latter  would  be  too  inconvenient  or  expen- 
sive. Hence,  when  the  convenience  of  the  public  post  is  not  needed 
for  the  purpose  of  transmission  or  conveyance,  there  is  no  reason 
for  its  use,  or  for  waiving  the  more  stringent  and  certain  evidence 
of  notice ;  and  therefore,  in  the  practical  application  of  the  rule, 
the  relative  position  of  tlie  person  giving  the  notice  and  the  party 
receiving  it  forms  the  only  criterion  of  the  necessity  for  relax- 
ing it. 

A  very  large  portion  of  the  commercial  paper  used  in  this  coun- 
try is  similar  to  that  which  is  the  subject  of  the  present  suit. 
They  are  notes  made  payable  at  a  certain  bank.  The  last  indorsee 
or  owner  transmits  it  to  that  bank  for  collection  ;  if  funds  are  not 
deposited  there  to  meet  it  when  due,  it  is  handed  to  a  notary  or 
agent  of  the  bank,  who  makes  demaird  and  protest,  and  gives 
notice  of  its  dishonor  to  the  indorsers ;  if  they  live  in  the  same 
town  or  city  where  the  bank  is  situated  and  the  demand  made, 
and  "  where  the  note  was  payable,"  he  serves  it  personally,  or  at 
their  residence  or  place  of  business ;  if  they  live  at  a  distance,  so 
that  such  a  service  would  be  inconvenient  and  expensive,  lie  sends 
the  notice  by  mail  to  the  nearest  post-office,  or  such  other  place  as 
may  have  been  designated  by  the  party  on  whom  it  is  to  be  served. 
This  is  and  has  been  the  daily  practice  and  construction  of  the  rule 
in  question  over  the  whole  country,  and  the  only  one  consonant 
with  reason. 


380  PROCEEDINGS   ON   NON-PAYMENT.    • 

This  practical  application  of  the  rule  is  correctly  stated  by  the 
Court  in  their  instruction  to  the  jury  as  connected  with  the  circum- 
stances of  the  case  before  them,  and  also  within  its  terms  as  it  is 
usually  stated  in  the  books.  The  term  "  holder  "  is  properly  ap- 
••if,  plied  to  the  person  having  possession  of  the  paper  and  making  the 
demand,  whether  in  his  own  right  or  as  agent  for  another.  The 
Planters'  Bank  of  Yicksburg  were  the  "  holders  "  of  this  note  for 
collection,  and  were  bound  to  give  notice  to  all  the  indorsers. 
Smedes  v.  The  Utica  Bank,  20  Johns.  372.  The  notary,  also,  who 
held  the  note  as  agent  of  the  owner  for  the  purpose  of  making 
demand  and  protest,  may  be  properly  considered  as  the  "  holder  " 
within  the  letter  and  spirit  of  this  rule.  On  a  careful  examination 
of  the  very  numerous  cases  in  the  books  in  which  the  rule  under 
consideration  has  been  enunciated  in  the  terms  above  stated,  they 
will  be  found  not  essentially  to  differ  from  the  present  in  their  cir- 
cumstances. In  some  instances,  also,  the  rule  has  been  stated  in 
the  terms  used  by  the  Court  below.     See  Bayley,  Bills. 

An  exception  is  taken,  also,  to  the  instruction  of  the  Court : 
"  Tliat  the  memorandum  attached  to  the  note  in  this  case  was  not 
a  sufficient  agreement  to  receive  notice  at  the  post-office,  and  to 
dispense  with  personal  notice  on  the  iudorser  ;  and  that  tlie  custom 
and  usage  of  the  bank,  as  proved  in  this  case,  were  not  sufficient 
to  dispense  with  personal  notice." 

The  memorandum  is  in  the  following  words :  "  Third  iudorser, 
J.  P.  Harrison,  lives  at  Vicksburg."  The  only  direct  evidence  of 
usage  was,  "  that,  for  several  years  prior  to  the  maturity  of  said 
note,  it  had  been  the  usage  of  the  Planters'  Bank  of  Vicksburg  to 
have  notice  served  personally  upon  the  indorsers  resident  in  Vicks- 
burg, unless  there  was  a  memorandum  on  the  note  designating  a 
place  where  notice  was  to  be  served ;  then  the  notice  was  left  at 
such  place."  This  is,  in  fact,  no  usage  peculiar  to  Vicksburg,  but 
the  general  rule  of  commercial  law.  The  notary  appears  to  have 
mistaken  this  memorandum  for  an  agreement  to  receive  notice  at 
the  Vicksburg  post-office ;  and,  however  willing  to  excuse  himself, 
he  has  not  ventured  to  swear  directly  that  there  was  any  known 
usage  to  justify  this  construction,  or  rather  misconstruction,  of  this 
memorandum.  The  counsel  for  plaintiff  in  error  complain  that 
the  Court  did  not  submit  it  to  the  jury  to  say  whether  an  inference 
might  not  be  drawn,  from  some  equivocal  or  obscure  expressions 
of  the  witness,  that  there  was  such  a  usage. 


BOWLING   V.    HARRISON.  381 

It  is  true,  the  jury  are  the  proper  judges  of  the  credibility  and 
weight  of  testimony,  Ijut  the  Court  should  not  instruct  them  to 
presume  or  infer  important  facts,  unless  there  be  testimony  which, 
if  believed,  would  justify  such  a  conclusion. 

It  is  of  the  utmost  importance  to  commercial  transactions,  tliat 
the  rules  of  law  on  the  subject  of  notice  which  is  to  charge  an  in- 
dorser  be  stable  and  certain,  and  not  suffered  to  fluctuate  and  vary 
with  the  notions  or  caprice  of  banking  corporations  or  village  nota- 
ries. A  usage,  to  be  binding,  should  be  definite,  uniform,  and  well 
known.  It  should  be  established  by  clear  and  satisfactory  evi- 
dence, so  tiiat  it  may  be  justly  presumed  that  the  parties  had  ref- 
erence to  it  in  making  their  contract.  Every  day's  experience 
shows  •  that  notaries,  in  many  places,  fall  into  loose  ways  of  per- 
forming their  duties,  either  through  negligence  or  ignorance  ;  and 
courts  should  be  cautious  how  they  encourage  juries  to  presume 
usages  and  customs  contrary  to  the  settled  rules  of  law,  in  order 
to  sanction  the  mistakes  or  misconceptions  of  careless  or  incompe- 
tent officers.  It  was  as  easy  to  have  written  the  memorandum  on 
this  note :  "  The  indorser,  J.  P.  Harrison,  agrees  to  receive  notice 
at  the  Vicksburg  post-office,"  as  to  write  it  in  its  present  form  ;  and 
one  can  hardly  conceive  of  the  possibility  of  a  well-known  and  es- 
tablished usage,  that  a  written  memorandum  should  be  construed 
without  any  regard  to  its  terms  or  plain  meaning.  Those  who 
affirm  the  existence  of  such  a  strange  usage  should  be  held  to  strict 
proof  of  it ;  and  the  Court  were  right  in  not  submitting  it  to  the 
jury  to  infer  such  an  improbable  and  unreasonable  custom,  by 
forced  or  astute  construction  of  equivocal  expressions  from  a  willing 
witness. 

Let  the  Judgment  be  affirmed. 

The  rule  established  in  the  above  case  has  beenfollowed  throughout  the  Union, 
though  its  reasonableness  has  in  several  instanees  been  questioned  ;  and  tlu-  rule 
itself  has  been  circumscribed  within  narrow  limits. 

In  1  American  Leading  Cases,  40.),  it  is  said  that  the  rule  "  has  lost  its  rea- 
sonable force,  and  exists  only  by  authority." 

In  Eagle  Bank  v.  Hathaway,  5  Met.  212  (1842),  the  rule  is  qualified  to  this 
extent :  That  where  the  parties  to  the  transaction  to  be  notified  live  in  different 
places,  a  holder  may  send  notice  to  an  indorser  residing  in  a  different  place,  and 
the  latter  may  use  the  mail  to  notify  a  prior  party  in  the  same  place.  The  same 
doctrine  substantially  is  held  in  ^Manchester  Bank  v.  Fellows,  S  Foster,  302,  and 
in  Warren  D.  Gilman,  17  Me.  (5  Shepl.)  .%0.  In  Eagle  Bank  v.  Hathaway, 
Shaw,  C.  J.,  said :  ♦'  Were  it  an  original  question,  it  is  far  from  certain  that  no- 


382  PROCEEDINGS    ON    NON-PAYMENT. 

tice  by  the  post-ofTice  would  not  frequently  reach  an  indorser  as  soon  and  as 
certainly  as  notice  at  his  domicile.  Perhaps  in  large  commercial  cities,  where 
bankers,  merchants,  and  active  men  of  Ijiisincss  usually  send  to  the  post-office 
several  times  a  day,  notice  by  the  post-oflice  would  be  as  prompt  as  any  other. 
In  smaller  communities,  however,  and  places  more  sparsely  settled,  such  notice 
might  be  likely  to  linger  in  the  post-office.  But  it  is  not  a  new  question.  A 
long  course  of  judicial  decisions,  either  following  or  governing  the  usage  of  mer- 
chants and  men  of  business,  has  settled  it." 

The  rule  is  again  qualified  in  Shaylor  v.  Mix,  4  Allen,  351.  In  tliis  case  the 
cashier  of  the  bank  at  which  the  paper  in  suit  was  payable,  deposited  in  the  post- 
office  at  Stockbridge  a  notice  of  the  non-payment,  addressed  to  the  indorser  at 
Curtisville  (a  distinct  village  within  the  town  of  Stockbridge)  at  which  place  (C.) 
the  indorser  lived,  and  where  there  was  a  post-office  at  which  he  usually  received 
his  letters.  The  notice  was  held  good.  It  is  proper  to  observe,  however,  that  the 
notice  was  duly  received  by  the  indorser.  Bigelow,  C.  J.,  said  :  "  The  general  rule 
that  notice  of  the  dishonor  of  a  bill  or  note  may  be  sent  by  mail  to  a  drawer  or  in- 
dorser who  resides  in  a  different  city  or  town  from  that  in  which  the  holder  resides, 
is  founded  on  the  universal  usage  of  all  persons  engaged  in  commercial  and  other 
business  transactions,  to  resort  to  the  public  post  as  a  safe  and  certain  medium  of 
communication  between  places  from  and  to  which  there  is  a  regular  transmission 
of  the  mails.  Indeed,  if  such  was  not  the  rule,  and  it  was  necessary  in  order 
to  charge  a  drawer  or  indorser  either  to  give  him  personal  notice  of  the  dishonor 
of  a  bill  or  note  or  to  leave  a  notice  at  the  place  of  his  domicile,  it  is  obvious  that 
in  many  eases  a  very  serious  burden  would  be  put  on  the  holder  of  negotiable 
paper,  and  its  free  circulation  beyond  the  limits  of  the  domicile  of  the  parties 
would  become  almost  impracticable.  .  .  . 

"  The  same  reasons  exist  for  holding  a  notice  by  mail  sufficient,  where  the 
drawer  or  indorser  and  the  person  who  is  to  give  the  notice  reside  in  the  same 
town,  municipality,  or  district,  but  in  distinct  and  separate  villages,  parishes,  or 
settlements,  at  a  distance  of  several  miles  from  each  other,  between  which  there 
is  a  regular  intercourse  by  mail,  and  where  it  is  shown  that  the  party  to  whom 
the  notice  is  .addressed  is  in  the  habit  of  receiving  letters  sent  to  him  in  the  course 
of  his  business  at  the  post-office  of  the  village  in  or  near  which  he  resides.  On 
the  question,  the  fact  that  the  parties  both  live  within  the  territorial  limits  of  a 
large  town  and  under  the  same  municipal  government,  may  be  quite  immaterial. 
The  real  inquiry  is,  whether  there  are  regular  communications  by  mail  from  the 
place  where  the  notice  is  deposited  to  that  where  the  drawer  or  indorser  resides, 
and  a  separate  post-office  in  the  latter  place,  to  which  he  is  in  the  habit  of  re- 
sorting to  receive  letters  which  are  forwarded  to  him  there  by  mail." 

We  have  quoted  so  much  at  length  from  these  important  cases  as  indicating 
the  tendency  of  the  courts  to  take  a  departure  from  the  old  rule.  See  also  note 
to  Bank  of  Columbia  v.  Lawrence,  ]jost,  p.  404. 

The  reasons  set  forth  above  for  the  exceptions  mentioned,  Avill  apply  with  equal 
force  to  all  our  large  cities  in  which  letters  are  delivered  by  carriers  several  times 
a  day ;  and  so  are  the  authorities.  See  Story,  Promissory  Notes,  §  323 ;  Ibid. 
Bills  of  Exchange,  §§  289,  291,  882;  Chitty,  BiUs,  473;  3  Kent,  Com.  107; 
Pierce  v.  Pendar,  5  Met.  352,  356 ;  Smith  v.  Mullett,  2  Camp.  208 ;  Ransom  v. 
Mack,  2  Hill,  587  ;  Sheldon  v.  Benham,  4  Hill,  129,  133 ;  Bank  of  Columbia  v. 
Lawrence,  j^ost,  404,  408. 


CHANOINE  V.  FOWLER.  383 

F.  &  II.  Chanoine  v.  Fowler. 

(3  Wendell,  173.     Supreme  Court  of  New  York,  August,  1829.) 

By  whom  notice  should  be  given.  —  Notice  of  dishonor  cannot  be  given  by  a  stranger  ;  it 
sliould  be  given  by  tiie  liolder,  or  by  one  who  is  a  party  to  it,  and  who  would,  on 
the  same  being  returned  to  liim,  iiave  a  rigiit  of  action  on  it. 

Assumpsit  by  the  payees  against  the  drawer  of  a  bill  of  ex- 
change. The  circuit  judge,  in  charging  the  jury,  instructed  them 
that  if  the  defendant  had  information  in  due  season  of  the  non- 
acceptance  of  the  bill,  it  was  good,  no  matter  who  sent  it. 

Marcy,  J.     To  determine  whether  the  defendant  had  legal  no- 
tice of  the  non-acceptance  of  the  bill,  it  will  be  necessary  to  see 
when  it  was  given,  and  from  whom  it  came.     Messrs.  Sewalls  had 
transmitted  the  bill  to  France,  and  received  information  of  its  non- 
acceptance  on  the  fourth  or  fifth  of  April.     H.  D.  Sewall  says  he 
did  not  himself  give  notice  thereof  to  the  defendant,  nor  does  he 
know  that  notice  was  given  by  his  house ;  although  it  was  their 
custom  to  give  notice  in  such  cases,  and  he  has  no  doubt  the  de- 
fendant received  it.     He  learned,  from  a  conversation  with  the 
defendant  between  the  time  of  receiving  notice  and  the  fourteenth 
of  April,  that  he  had  knowledge  that  the  bill  was  dishonored. 
The  judge,  at  the  trial,  ruled  that  if  the  defendant  had  notice  in 
due  time  of   the  non-acceptance  of   the  bill,   it  was  no  matter 
whence  it  came,  it  was  available  to  the  plaintiffs.     The  rule  of  law 
in  relation  to  the  notice  was,  I  apprehend,  laid  down  in  a  manner 
too  broad  and  uncjualified.     Tlie  rule  has  heretofore  fluctuated  ; 
but  it  never  has  been  authoritatively  stated,  as  I  can  find,  to  be  as 
the  judge  laid  it  down  on  the  trial,  except  in  tlie  case  of  Shaw  v. 
Coates,  at  the  sittings  Ijefore  Lord  Kenyon^  mentioned  in  Selwyn's 
N.  P.  320,  n.  25.^     Repeated  decisions  since,  both  in  term  and  at 
nisi  prius,  have  qualified  and  restricted  the  broad  proposition  of 
the  judge  in  tliis  case,  and  of  Lord  Kenyon  in  the  case  of  Sliaw  v. 
Coates.     In  some  instances,  it  has  been  decided  that  the  holders 
or  their  agents  are  the  only  persons  to  give  notice  of  the  disiionor 
of  bills  ;  but  it  seems  to  be  now  settled  that  it  is  not  absolutely 
1  This  citation  should  probably  be  Shaw  v.  Croft,  cited  in  Selwyn's  N.  P.  354. 


384  PROCEEDINGS   ON   NON-PAYMENT. 

necessary  that  the  notice  should  come  from  the  holder  of  a  bill, 
but  may  be  given  by  any  person  who  is  a  party  to  it,  and  who 
would,  on  the  same  being  returned  to  him,  have  a  right  of  action 
on  it.  Chitty,  Bills,  229 ;  2  Camp.  373  ;  1  Stark.  29  ;  Bayley, 
Bills,  161.  A  notice  from  a  mere  stranger  is  not  sufficient; 
and  the  charge  of  the  judge  was  broad  enough  to  sanction  such  a 
notice.  Nevj  trial  granted. 

The  point  determined  in  this  case,  that  a  stranger  cannot  give  notice  of  dis- 
honor, is  well  settled.  See  Story,  Promissory  Notes,  §  301,  and  authorities 
cited.  See  also  Juniata  Bank  v.  Hale,  post,  423,  and  note,  428.  But  as  indi- 
cated by  the  Court,  there  has  been  some  conflict  in  the  cases  upon  the  question 
•whether  a  prior  party  having  notice  from  the  holder,  may  give  notice  to  antece- 
dent parties  which  shall  be  binding  in  favor  of  the  holder.  The  earlier  cases, 
however,  of  which  Tindal  v.  Brown,  1  T.  R.  167;  s.  c,  2  T.  R.  186,  is  the 
leading  case,  may  now  be  considered  as  overruled,  and  the  doctrine  established 
as  stated  in  the  principal  case.  Chapman  v.  Keane,  3  Adol.  &  Ellis,  193, 
decided  in  1835,  Lord  Chief  Justice  Denman,  in  delivering  the  judgment 
of  the  Court  in  this  case,  said:  "On  the  trial  of  this  action  by  the  indorsee 
against  the  drawer  of  a  bill  of  exchange,  the  Lord  Chief  Justice  of  the  Common 
Pleas  directed  a  nonsuit  for  want  of  due  notice  of  dishonor.  The  bill  had  been 
indorsed  by  the  plaintiff  by  the  desire  of  Wiltshire,  who  had  discounted  it  and 
left  it  in  the  hands  of  the  plaintiff's  clerk,  with  instructions  to  obtain  payment  or 
give  notice  of  dishonor.  He  did  give  notice  to  the  defendant,  but  in  the  name 
of  the  plaintiff,  not  in  that  of  Wiltshire,  the  then  holder,  who  had  deposited  the 
bill  with  him." 

The  objection  to  the  plaintiff's  recovery  was  founded  on  the  case  of  Tindal  v. 
Brown,  1  T.  R.  167  ;  2  T.  R.  186 ;  in  which  all  the  Judges  of  this  Court,  except 
Lord  Mansfield,  considered  a  notice  given  by  one  who  was  not  the  holder  as  no 
notice,  on  the  ground  that  the  drawer  was  not  thereby  apprised  of  the  holder's 
intention  to  look  to  him  for  payment ;  and  this  case  was  distinctly  recognized 
and  its  principle  adopted  by  Lord  Eldon,  in  Ex  parte  Barclay,  7  Ves.  597. 

Notwithstanding  these  high  authorities,  it  is  clear  from  Jameson  v.  Swinton, 
2  Camp.  373,  Wilson  v.  Swabey,  1  Stark.  34,  and  also  from  the  learned  trea- 
tises on  Bills  of  Exchange,  that  the  contrary  doctrine  has  prevailed  in  the  pro- 
fession ;  and  we  must  presume  a  contrary  practice  in  the  commercial  world.  It 
is  universally  considered  that  the  party  entitled  as  holder  to  sue  upon  the  bill 
may  avail  himself  of  notice  given  in  due  time  by  any  party  to  it.  In  the  nisi 
prius  cases  just  referred  to,  no  express  allusion  was  made  to  Tindal  v.  Brown, 
or  Ex'parte  Barclay  ;  but  we  can  hardly  conceive  that  they  were  not  present  to 
the  recollection  of  Lord  Ellenborour/h  and  Mr.  Justice  Laurence,  or  the  counsel 
engaged.  These  learned  judges  indeed  decided  tlieni  at  nisi  ]iTius,  but  without 
question.  We  are  now  compelled  to  determine  whether  the  case  of  Tindal  v. 
Brown,  as  to  this  point,  be  good  law.  We  think  that  it  is  not.  If  it  were,  the 
holder  might  secure  his  own  right  against  his  immediate  indorser  by  regular  no- 
tice ;  but  the  latter  and  every  other  party  to  the  bill  would  be  deprived  of  all 
remedy  against  anterior  indorsers  and  the  drawer,  unless  each  of  those  parties 


CHANOINE    V.    FOWLER.  385 

should  in  succession  take  up  tlie  bill  iiiniieiliately  on  receiving  notice  of  dishonor, 
:i  supposition  which  cannot  reasonably  be  uiado.  We  may  add  that  this  point 
was  not  necessary  for  the  decision  of  the  case,  as  this  Court,  including  Lord 
Manxjitld,  granted  a  new  trial  on  a  different  ground." 

The  rule  in  this  case  is  declared  the  settled  law  in  Harrison  v.  Ituscoc,  15 
Mees.  &  W.  231,  234,  and  in  l\owe  v.  Tijjper,  20  Eng.  L.  &  Eq.  220,  222  ;  o[.in- 
ion  of  Jeri'is,  C.  J. 

The  rule  declared  in  Tmdal  r.  lirown,  supra,  is  stated  with  approval  in  Harris 
V.  Robinson,  4  How.  33G,  though  that  point  was  not  involved  in  the  latter 
case.  The  question  was  whether  a  notary  acting  for  a  collecting  bank  —  tiie 
agent  of  the  holder  —  might  give  notice  of  dishonor,  and  it  Avas  held  that  he  could. 

The  rule  as  declared  above  by  Lord  Denman,  is  stated  to  be  the  law  in  the  text- 
books. Mr.  Justice  Story,  Promissory  Notes,  §  302,  says:  "But  a  person  who 
is-  a  party  to  the  note,  is  not  ordinarily  to  be  treated  as  a  mere  stranger  in  the 
sense  of  the  rule  [which  denies  the  validity  of  notice  by  a  stranger].  If  he  be 
a  party  to  the  note,  and  at  all  events  if  he  be  at  the  time  entitled  to  call  for 
payment  or  for  reimbursement,  notice  from  him  will  now  be  held  sufficient,  although 
formerly  it  seems  to  have  been  otherwise  held."  See,  to  the  same  effect,  3  Kent 
Com,  108;  Story,  Bills^of  Exchange,  §§  2'J4,  303,  304;  Thompson,  Bills,  357, 
358  (Wilson's  ed.  1«()5)*;  Chitty,  Bills,  494,  495,  and  cases  cited.  ' 

It  is  important  to  observe,  however,  that  for  the  holder  to  avail  himself  of 
notice  by  a  prior  party  to  a  still  earlier  party  not  notified  by  the  holder,  the 
latter  must  have  given  notice  to  such  prior  party.  In  other  words,  notice  by  a 
prior  to  a  still  earlier  party  will  not  avail  the  holder,  if  he  has  neglected  altogether 
to  give  notice.  His  laclies  should  not  be  excused  by  the  diligence  of  another ;  he 
must  have  rendered  this  prior  party  liable  to  himself,  in  order  to  have  the  advan- 
tage of  his  notice.  The  same  in  reason  should  ajjply  to  an  indorser  who  attempts 
to  gain  the  benefit  of  notice  given  to  an  earlier  indorser,  by  a  party  prior  to  him- 
self. It  must  be  admitted  that  the  rule  has  not  in  every  instance  been  clearly 
stated  in  this  way,  though  ]\Ir.  Justice  Bayley  so  states  it.  Bills,  c.  7,  §  2, 
pp.  254-250,  5th  ed.,  where  he  says  :  "  Though  a  holder  or  any  other  party  give 
no  notice  hut  to  the  person  of  tvliom  he  took  the  l>ill,  yet  if  notice  be  cuminuui- 
catcd  without  laches  to  the  prior  parties,  he  may  avail  himself  of  such  communica- 
tion." In  Thompson,  Bills,  357  (Wilson's  ed.  1865),  the  rule  is  thus  stated: 
"Although  the  holder  of  a  bill  or  note  should  give  notice  qnhj  to  his  immediafe 
mdorser,  he  may  avail  himself  of  notice  to  any  prior  party,  whether  it  proceeds 
from  his  indorser  or  from  some  earlier  indorser,  to  whom  the  latter  has  given  no- 
tice." Story,  Promissory  Notes,  §§  302,  303,  states  the  doctrine  in  substantiallv 
the  same  language.     Ibid.,  Bills  of  Exchange,  §§303,  304. 

Bfit  if  there  be  any  doubt  upon  the  point,  the  case  of  Lysaght  v.  Bryant,  9 
Com.  B.  46,  settles  the  question.  It  was  here  held  that  the  holder  of  a  bill  of 
exchange  may,  in  an  action  agai^ist  the  drawer,  avail  himself  of  a  notice  of  dis- 
honor given  in  due  time  liy  any  party  to  the  bill  ichose  lidlnlity  to  the  holder  has 
been  fixed.  Mr.  Justice  Cresswdl  said:  "It  seems,  from  the  cases,  that  the 
holder  of  a  bill  may  avail  himself  ol'  a  notice  given  in  due  time  by  a  prior  in- 
dorsee, provided  he  himself  is  in  a  condition  to  sue  the  party  by  whom  the  notice 
was  given.  Here  Lysaght  the  younger,  hoMing  the  bill  as  his  father's  agent 
duly  presented  it,  and  had  it  returned  to  him  dishonored.     Notice  of  that  fact  to 

26 


386  PROCEEDINGS    ON   NON-PAYMENT. 

bim  therefore,  operating  as  notice  to  the  firm,  the  present  plaintiff  was  entitled 
to  sue  them,  and  consequently  is  in  a  condition  to  avail  himself  of  the  notice  of 
dishonor  given  by  them  to  the  defendant." 

Mr.  Justice  Wilde  said:  "As  to  the  notice  of  dishonor,  the  case  seems  to  fall 
within  the  authorities.  The  facts  show  that  Lysaght  and  Smithett  had  due  notice 
of  the  dishonor  of  the  bill,  —  one  of  them  having  caused  it  to  be  presented,  and 
having  liad  it  returned  to  him.  A  notice  therefore  by  Lysaght  and  Smithett, 
then  being  under  a  liability  to  the  present  plaintiff,  atcording  to  the  authorities 
inures  as  a  notice  to  the  defendant."  See  also  United  States  Bank  v.  Goddard, 
6  Mason,  366,  372.  Turner  v.  Leech,  4  Barn.  &  Aid.  451 ;  Roscow  v.  Hardy, 
12  East,  434. 

The  rule  in  the  principal  case  will  exclude  the  holder  from  taking  advantage 
of  notice  from  a  party  who  has  been  discharged  by  laches  or  otherwise.  Harri- 
son V.  Ruscoe,  15  Mees.  &  W.  231. 

In  two  English  cases  it  seems  to  have  been  held  that  notice  by  the  acceptor 
of  a  bill  will  avail  the  holder.  Shaw  v.  Croft,  per  Lord  Kenyan,  Chitty,  Bills, 
494  (1798);  Rosher  v.  Kieran,  4  Camp.  87  (1814).  But  Mr.  Justice  Bayley 
explains  this  on  the  supposition  that  the  acceptor  in  these  cases  had  a  special 
authority  to  give  notice.  Bills,  254,  5th  ed.  And  it  is  said  in  Thompson, .Bills, 
359  (Wilson's  ed.  1865),  that  "this  explanation  is  now  considered  satisfactory, 
it  being  held  as  settled  that  an  indorser  is  not  bound  to  regard  a  notice  unless 
it  come  from  a  party  who  would  be  entitled,  on  paying  the  bills,  to  demand  reim- 
bursement from  him."  Certainly  the  notice  is  bad  if  given  by  a  drawee  who 
refuses  acceptance.     Stanton  v.  Blossom,  14  Mass.  116. 

As  to  the  effect  of  notice  to  anterior  parties  in  favor  of  intermediate  indors- 
ers,  see  next  case. 


Simpson  v.  Turney. 

(5  Humphreys,  419.     Supreme  Court  of  Tennessee,  December,  1844.) 

Intermediate  parties.  —  Notice  given  by  the  holder  of  a  promissory  note  to  the  second 
indorser  too  late  to  fix  his  responsibility,  will  not  avail  an  intermediate  indorser, 
though  it  would  have  been  in  due  time  if  given  by  him. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Reese,  J.  The  Branch  Bank  of  the  State  of  Tennessee  was  the 
holder  of  a  promissory  note,  payable  at  said  bank,  made  by  James 
H.  Jenkins,  to  Anthony  Dibrell,  and  indorsed  in  the  following 
order:  A.  Dibrell,  S.  Turney,  and  Jno.  W.  Simpson.  Turney's 
residence  is  within  one  mile  of  the  bank  at  Sparta,  so  known  to 
be  to  the  bank,  and  to  all  the  other  parties  to  the  note.     The  note 


SIMPSON    V.    TURNEY.  387 

was  legally  due  on  the  first  day  of  February,  1843,  that  being  the 
third  day  of  grace.  It  was  on  that  day  protested.  On  the  second 
day  of  February  no  notice  of  tiie  protest  for  the  non-payment  of 
the  note  was  either  served  upon  Turney  personally,  or  left  at  his 
residence.  He  had  notice  from  the  bank,  the  holder,  on  the  third 
day  of  February.  John  W.  Simpson,  the  plainti^,  the  immediate 
indorser  of  Turney,  gave  him  no  notice  whatever. 

Tiiese  facts  being  specially  found  by  the  jury  in  the  case,  the 
Circuit  Court  gave  judgment  for  Turney,  and  the  plaintiff  has 
appealed  in  error  to  this  Court. 

It  is  not  insisted  for  the  plaintiff  here  that  the  notice  of  the 
bank  to  Turney,  the  only  notice  he  received,  was  in  time.  But  it 
is  urged,  that  if  Simpson  had  given  him  notice  on  the  day  he 
received  notice  from  the  bank,  such  notice  would  have  been  good ; 
and  that  is  certainly  so :  and  tlie  plaintiff  further  insists,  that  the 
notice  given  by  the  bank  shall  inure  to  his  l>enefit.  If  the  notice 
had  been  in  time  and  valid,  it  would  by  law  have  inured  to  his 
benefit,  he  being  an  intermediate  party.  But  a  notice  of  no  benefit 
to  the  bank,  because  not  fixing  the  liability  of  the  party  notified, 
cannot  inure  to  the  benefit  of  another.  So  to  hold,  would  be  to 
introduce  a  new  principle  into  the  law  merchant.  Suppose  there 
were  ten  indorsers  upon  a  note :  if  the  holder  ten  days  after 
the  protest  gave  notice  to  the  first  indorser,  this,  according  to  the 
argument,  would  fix  all  the  indorsers,  for  it  would  be  just  the 
time  necessary  to  them  to  have  given  notice  to  each  other  succes- 
sively. 

It  is  perhaps  a  universal  principle,  where  substitution  exists  at 
all,  that  the  matter  or  thing  to  be  substituted  to  must  be  valid  and 
effective  in  behalf  of  the  principal ;  if  it  be  ineffectual  in  his  behalf, 
it  is  difficult  to  see  how  it  can  inure  to  the  benefit  of  others. 

Upon  the  direct  question  raised  in  tliis  case,  Bayley  on  Bills 
expressly  says  :  "  Nor  is  it  any  excuse  that  there  are  several 
intervening  parties  between  him  who  gives  the  notice  and  the 
defendant  to  whom  it  is  given  ;  and  if  the  notice  had  been  commu- 
nicated through  those  intervening  parties,  and  each  had  taken 
the  time  the  law  allows,  the  defendant  would  not  have  had  the 
notice  the  sooner." 

The  same  principle  is  also  decided  in  the  case  of  Turner  v.  Leech, 
4  Barn.  &  Aid.  454. 

We  have  been  referred  by  the  plaintiff  to  what  has  been  said  by 


388  ,  PROCEEDINGS   ON   NON-PAYMENT. 

this  Court  in  the  case  of  McNeil  v.  Wyatt,  3  Humph.  125, 128.  The 
bank  at  Lagrange  in  that  case  gave  notice  to  one  Glover  on  the 
14th,  to  be  served  on  Wyatt  and  McNeil.  Wyatt  was  served  on 
the  14th,  and  McNeil  on  the  15th.  But  Glover  proved  in  the  Cir- 
cuit Court  that  he  was  the  general  agent  of  Wyatt,  to  serve  notices 
for  him  when  his  name  was  on  paper.  And  the  Circuit  Court  left 
it  to  the  jury  to  say  whether  Glover,  who  served  the  notice,  was 
not  Wyatt's  agent  as  well  as  the  agent  of  the  bank ;  and  if  he  was, 
then  the  notice  to  McNeil  on  the  15th,  one  day  after  Wyatt  re- 
ceived notice,  was  sufficient. 

This  Court  held  that  there  was  not  any  error  in  this  part  of  the 
charge ;  and  placing  the  validity  of  the  notice,  as  this  Court  did, 
upon  that  special  ground,  is  a  distinct  recognition  of  the  general 
principle  maintained  by  us  in  this  case. 

Upon  the  whole,  we  affirm  the  judgment. 

That  notice  by  the  holder  or  any  other  party  inures  to  the  benefit  of  all  inter- 
mediate indorsers,  though  they  may  not  have  notified  the  prior  parties,  when 
given  in  time  to  fix  the  liability  of  the  notified  party  to  him  who  gives  notice,  see 
Marr  v.  Johnson,  9  Yerg.  1 ;  Beale  v.  Parrish,  20  N.  Y.  407  ;  Palen  v.  Shurt- 
leflF,  9  Met.  .581;  Stanton  v.  Blossom,  14  Mass.  116;  Chitty,  Bills,  494;  Story, 
Promissory  Notes,  §  303 ;  Story,  Bills  of  Exchange,  §  294.  See  also  Etting  v. 
Schuylkill  Bank,  2  Penn.  State,  355. 


The  President,  Directors,  &c.,  of  the  Bank  of  Alexan- 
dria, Plaintiffs  in  Error,  v.  Thomas  Swann. 

(9  Peters,  33.     Supreme  Court  of  the  United  States,  January,  1835.) 

When  the  notice  should  be  sent.  —  It  is  sufficient  to  charge  an  indorser  that  notice  of  the 
default  of  the  maker  of  a  note  be  put  into  the  post-office  early  enough  to  be  sent  by 
the  mail  of  the  succeeding  day.  The  holder  is  not  required  to  give  notice  the  day 
upon  which  the  demand  was  made. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Thompson,  J.  This  suit  was  brought  in  the  Circuit  Court  of 
the  District  of  Columbia,  for  the  county  of  Alexandria,  upon  a 
promissory  note  made  by  Humphrey  Peake,  and  indorsed  by  the 


BANK   OF   ALEXANDRIA    V.   SWANN.  389 

defendant  in  error.  Upon  the  trial  the  jury  found  a  special  ver- 
dict, upon  which  the  Court  gave  judgment  for  the  defendant,  and 
the  case  conies  here  upon  a  writ  of  error. 

The  points  upon  which  the  decision  of  tlie  case  turns,  resolve 
themselves  into  two  questions. 

1.  Whether  notice  of  the  dishonor  of  the  note  was  given  to  the 
indorscr  in  due  time  ? 

2.  Wiiether  such  notice  contained  the  requisite  certainty  in  the 
description  of  the  note  ? 

The  note  bears  date  on  the  twenty-third  day  of  June,  1829,  and 
is  for  the  sum  of  -f'HOO,  payable  sixty  days  after  date  at  the  Bank 
of  Alexandria.  The  last  day  of  grace  expired  on  the  twenty-hfth 
of  August,  and  on  that  day  the  note  was  duly  presented,  and 
demand  of  payment  made  at  the  bank,  and  protested  for  non-pay- 
ment ;  and  on  the  next  day  notice  thereof  was  sent  by  mail  to  the 
indorser,  who  resided  in  the  city  of  Washington. 

The  general  rule,  as  laid  down  by  this  Court  in  Lenox  v.  Rob- 
erts, 2  Wheat.  373,  4  Cond.  163,  is,  that  the  demand  of  payment 
should  be  made  on  the  last  day  of  grace,  and  notice  of  the  default 
of  the  maker  be  put  into  the  post-office  early  enough  to  be  sent  by 
the  mail  of  the  succeeding  day.  The  special  verdict  in  the  present 
case  finds,  that  according  to  the  course  of  the  mail  from  Alexan- 
dria to  the  city  of  Washington,  all  letters  put  into  the  mail  before 
half-past  eight  o'clock  p.m.,  at  Alexandria,  would  leave  there 
some  time  during  that  night,  and  would  be  deliverable  at  Wash- 
ington the  next  day,  at  any  time  after  eight  o'clock  a.m.  ;  and  it 
is  argued  on  the  part  of  tlie  defendant  in  error,  that  as  demand  of 
payment  was  made  before  three  o'clock  p.m.,  notice  of  the  non- 
payment of  the  note  should  have  been  put  into  the  post-office  on 
the  same  day  it  was  dishonored,  early  enougii  to  have  gone  with 
the  mail  of  that  evening.  The  law  does  not  require  the  utmost 
possible  diligence  in  the  holder  in  giving  notice  of  the  dishonor  of 
the  note ;  all  that  is  required  is  ordinary  reasonable  diligence ; 
and  what  shall  constitute  reasonable  diligence  ought  to  be  regulated 
with  a  view  to  practical  convenience,  and  the  usual  course  of  busi- 
ness. In  the  case  of  the  Bank  of  Columbia  v.  Lawrence,  1  Peters, 
578,  583,1  it;  ig  gaid  by  this  Court  to  be  well  settled  at  this  day,  that 
when  the  facts  are  ascertained,  and  are  undisputed,  what  shall 
constitute  due  diligence  is  a  question  of  law;  that  this  is  best  cal- 

l  Post,  404. 


390  PROCEEDINGS   ON   NON-PAYMENT. 

Ciliated  for  the  establishment  of  fixed  and  uniform  rules  on  the 
subject,  and  is  highly  important  for  the  safety  of  holders  of  com- 
mercial paper.  The  law,  generally  speaking,  does  not  regard  the 
fractions  of  a  day  ;  and,  although  the  demand  of  payment  at  the 
bank  was  required  to  be  made  during  banking  hours,  it  would  be 
unreasonable,  and  against  what  the  special  verdict  finds  to  have 
been  the  usage  of  the  bank  at  that  time,  to  require  notice  of  non- 
payment to  be  sent  to  the  indorser  on  the  same  day.  This  usage 
of  the  bank  corresponds  with  the  rule  of  law  on  the  subject.  If 
the  time  of  sending  the  notice  is  limited  to  a  fractional  part  of  a 
day,  it  is  well  observed  by  Chief  Justice  ITosmer,  in  the  case  of  the 
Hartford  Bank  v.  Stedman  and  Gordon,  3  Conn.  489,  495,  that  it 
will  always  come  to  a  question,  how  swiftly  the  notice  can  be  con- 
veyed. We  think,  therefore,  that  the  notice  sent  by  the  mail,  the 
next  day  after  the  dishonor  of  the  note,  was  in  due  time. 

The  second  point  in  this  case  is  given  in  full  in  the  note  to  the  case  of  Mills  v. 
Bank  of  the  United  States,  ante,  p.  358,  as  illustrating  the  subject  of  misdescription 
in  the  notice.  There  is  nothing  in  this  pai't  of  the  case  relating  to  the  time  of 
sending  notice. 

In  the  case  of  several  successive  indorsements,  the  rule  is  that  each  indorser 
has  the  same  time  within  which  to  notify  antecedent  parties,  after  the  receipt  of 
notice  himself,  that  the  holder  has ;  and  this,  in  the  case  of  a  daily  mail  to  the 
place  in  which  the  party  to  be  notified  resides,  is  until  the  next  day.  But  if  no 
mail  leaves  the  next  day,  or  if  a  mail  leaves  before  business  hours,  he  need  not 
post  the  notice  until  the  next  regular  mail. 

But  the  party,  whether  holder  or  indorser,  must  in  all  cases  send  his  notices  to 
antecedent  parties  at  the  same  time  that  he  would  to  his  immediate  indorser  ;  he  will 
not  be  allowed  as  many  days  as  there  are  intermediate  parties.  These  rules  are  so 
well  settled  that  it  will  not  be  necessary  to  cite  the  cases.  They  will  be  found 
in  1  Parsons,  Notes  and  Bills,  506,  et  seq.  ;  Story,  Promissory  Notes,  §§  319, 
et  seq. 

The  holder,  however,  will  have  the  advantage  of  every  notice  duly  sent  by  a 
prior  party  whose  liability  he  has  fixed  by  notice.  See  note  to  Chanoine  v.  Fow- 
ler, ante,  p.  383. 

There  has  been  some  doubt  concerning  the  proper  interpretation  of  the  term 
"  one  day,"  used  by  some  of  the  text- writers,  whether  it  means  that  the  party 
giving  notice  has  twenty-four  hours  within  which  to  do  so,  or  whether  the  ex- 
pression means  that  he  shall  only  have  until  a  seasonable  mail  of  the  next  day. 
The  subject  is  learnedly  discussed  by  Mr.  Justice  Bartley,  in  Lawson  v.  Farmers' 
Bank,  1  Ohio  State,  206,  212.     He  said:  — 

"  Touching  the  second  question,  then,  did  the  Court  of  Common  Pleas  err  in 
charging  the  jury  that,  if  the  notice  to  the  indorsers  of  the  demand  and  non- 
payment of  the  bill  was  deposited  in  the  post-office  at  Pittsburgh  at  any  time 
durinj  the  day  after  the  day  of  dishonor,  without  regard  to  the  time  of  the 


BANK    OF    ALEXANDRIA    V.   SWANN.  391 

departure  of  the  mail  for  that  day,  it  would  be  sufficient  notice  ;  and,  moreover, 
that  if  it  was  found  inconvenient  to  deposit  tlie  notice  in  the  post-ofh<e  in  time 
for  the  mail  of  tliat  day,  it  was  in  proper  time  if  the  notice  was  depositeil  in  time 
to  be  sent  otF  by  the  next  mail  of  the  day  next  after  the  day  following  the  day  of 
the  dishonor  of  the  bill  ? 

Tiiis  involves  a  very  important  question  of  the  law  merchant,  and  it  is  not  a 
little  surprisinj^  tliat  there  should  remain  any  doubt  or  uncertainty  at  this  late 
day,  upon  a  question  of  such  vital  importance  to  the  interest  of  commercial 
countries,  respecting  the  duties  and  liabilities  of  holders  and  parties  to  dishon- 
ored paper.  And  it  is  a  matter  of  no  small  moment,  that  a  question  which  en- 
ters so  largely  as  does  this  into  the  every-day  business  transactions  of  different 
commercial  states  and  countries  should  be  settled,  not  only  upon  a  certain  and 
unvarying,  but  also  upon  a  uniform  basis. 

The  liability  of  the  indor.«er  is  strictly  conditional,  dependent  both  upon  due 
demand  of  payment  upon  the  maker  or  acceptor,  and  also  due  and  legal  notice 
of  the  non-payment.  The  purpose  and  object  of  such  demand  and  notice  is  to 
enable  the  indorser  to  look  to  his  own  interest,  and  take  immediate  measures  for 
his  indemnity.  The  demand  and  notice  being  conditions  precedent  to  the  indors- 
er's  liability,  it  is  incumbent  on  the  holder  to  make  clear  and  satisfactory  proof 
of  them  before  he  can  recover.  The  plaintiffs  in  error  in  this  case,  being  accom- 
modation indorscrs,  may  well  insist  upon  strict  proof  of  due  diligence  in  giving 
notice  of  the  dishonor  of  the  bill. 

The  law  does  not  require  the  utmost  diligence  in  the  holder,  in  giving  notice 
to  the  dishonor  of  a  bill  or  note.  All  that  is  requisite  is  ordinary  or  reasonable 
diligence.  And  this  is  not  only  the  rule  and  requirement  of  the  law  merchant, 
but  a  statutory  provision  of  this  State.  But  what  amounts  to  due  diligence  or 
reasonable  notice  is,  when  the  facts  are  ascertained,  purely  a  question  of  law, 
settled  "  with  a  view  to  practical  convenience,  and  the  usual  course  of  business." 

The  question  was  at  one  time  strenuously  contested,  whether  due  diligence 
did  not  recjuire  that  where  the  parties  reside  in  the  same  place,  the  notice  of  non- 
payment should  be  given  on  the  day  of  the  dishonor  of  the  bill ;  and  where  the 
parties  reside  in  different  places,  should  be  sent  by  the  mail  of  that  day,  or  the 
first  possible  or  practicable  mail  after  the  default.  Tindal  i\  Brown,  1  T.  R.  107  ; 
Darbishire  v.  Parker,  0  East,  ;] ;  iSIarius,  Bills,  24.  But  the  rule  was  established 
and  is  supported  by  great  weight  of  authority,  that,  where  the  parties  reside  in 
different  places,  and  the  post  is  the  mode  of  conveyance  adopted,  —  although  it 
was  in  no  case  necessary  to  send  the  notice  by  the  post  of  the  same  day  of  the 
dishonor,  or  of  the  knowledge  of  the  dishonor,  the  holder  being  entitled  to 
the  whole  of  that  day,  being  the  day  of  the  dishonor,  or  knowledge  of  the  dis- 
honor, to  prepare  his  notice,  —  yet  that  the  notice  would  be  insufficient  unless 
put  into  the  post-office  in  time  to  go  by  the  next  mail  after  that  day.  And  this 
is  in  conformity  with  the  rule  laid  down  by  Mr.  Chitty  in  his  learned  treatise  on 
Bills  of  Exchange,  in  the  following  explicit  language  :  "  When  the  parties  do  not 
reside  in  the  same  place,  and  the  notice  is  to  be  sent  by  general  post,  then 
the  holder  or  party  to  give  the  notice,  must  take  care  to  forward  notice  by  the 
post  of  the  next  day  after  the  dishonor,  or  after  he  receives  notice  of  such  dis- 
honor, whether  that  post  sets  off  from  the  place  where  he  is  early  or  late ;  and 
if  there  be  no  post  on  such  next  day,  then  he  must  send  off  notice  by  the  very 
next  post  that  occurs  after  that  day."     Chitty,  Bills,  485. 


392  PROCEEDINGS   ON   NON-PAYMENT. 

This  is  in  accordance  with  the  rule  as  settled  by  the  Supreme  Court  of  the 
United  States.  In  Lenox  v.  Roberts,  2  Wheat.  37;^,  Chief  Justice  Marshall' 
says:  "  It  is  the  opinion  of  the  Court  that  notice  of  the  default  of  the  maker 
should  be  put  into  the  post-office  early  enough  to  be  sent  by  the  mail  of  the  day 
succeeding  the  last  day  of  grace."  And  in  the  case  of  the  Bank  of  Alexandria 
V.  Swann,  9  Peters,  ."3  [the  principal  case],  Mr.  Justice  Thompson  approved  of 
the  general  rule  laid  down  in  the  case  of  Lenox  v.  Roberts,  holding  that  notice  of 
the  dishonor  need  not  be  forwarded  on  the  last  day  of  grace,  but  should  be  sent  by 
the  mail  of  the  next  day  after  the  dishonor.  The  same  rule  was  adopted  by  Mr. 
Justice  Washington  in  the  case  of  the  United  States  v.  Parker's  Administrators,  4 
Wash.  465  ;  and  in  which  case  subsequently  that  decision  was  affirmed  on  error  by 
the  Supreme  Court,  12  Wheat.  559.  The  same  rule  received  the  sanction  of  Mr. 
Justice  Story,  in  the  case  of  the  Seventh  Ward  Bank  v.  Hanrick,  2  Story,  416, 
although,  in  the  case  of  Mitchell  v.  Degrand,  1  Mason,  180,  he  appears  to  have 
been  disposed  to  even  greater  strictness,  holding  that  when  a  bill  is  once  dishon- 
ored, the  holder  is  bound  to  give  notice  by  the  next  practicable  mail,  to  the  par- 
ties whom  he  means  to  charge  for  the  default.  This,  however,  is  explained  by 
Mr.  Justice  Washington  in  the  case  of  United  States  v.  Parker's  Administrators, 
to  mean  that  the  notice  should  be  put  into  the  office  in  time  to  be  sent  by  the 
mail  of  the  succeeding  day.  This  rule,  adopted  by  the  Supreme  Court  of  the 
United  States,  and  which  is  supported  by  the  great  weight  of  authority  in  Eng- 
land and  in  the  several  States  of  the  Union  in  which  the  question  appears  to 
have  been  settled  by  reported  adjudications,  is  subject  to  some  qualification  re- 
laxing its  rigor.  If  two  mails  leave  the  same  day  on  the  route  to  the  place  of  the 
residence  of  the  indorser,  it  is  sufficient  to  deposit  the  notice  in  the  post-office  in 
time  to  go  by  either  mail  of  that  day,  inasmuch  as  the  fractions  of  the  day  are 
not  counted.  Whitewell  v.  Johnson,  17  Mass.  449,  454;  Howard  v.  Ives,  1  Hill, 
N.  Y.  263. 

And  for  the  reason  that  the  mail  of  the  day  succeeding  the  day  of  the  default 
may  go  out  in  some  places  soon  after  midnight  or  at  a  very  early  hour  in  the 
morning,  and  is  sometimes  made  up  and  closed  the  evening  preceding,  it  has  . 
been  adjudged  that,  inasmuch  as  the  holder  is  allowed  till  the  day  after  the  day 
of  default  to  send  off  the  notice,  reasonable  diligence  would  not  require  him  to 
deposit  the  notice  in  the  post-office  at  an  unseasonably  early  hour,  or  before  a 
reasonable  time  can  be  had  for  depositing  the  notice  in  the  post-office  after  early 
business  hours  of  that  day.  The  rule,  as  qualified  and  settled  by  the  late  author- 
ities, and  which  I  take  to  be  the  correct  one,  is  that  where  the  parties  reside  in 
the  same  place  or  city,  the  notice  may  be  given  on  the  day  of  default ;  but  if 
given  at  any  time  before  the  expiration  of  the  day  thereafter,  it  will  be  sufficient ; 
and  when  the  parties  reside  in  different  places  or  States,  the  notice  may  be  sent 
by  the  mail  of  the  day  of  the  default ;  but  if  not,  it  viust  be  deposited  in  the 
office  in  time  for  the  mail  of  the  next  day,  provided  the  mail  of  that  day  be  not 
made  up  and  closed  at  an  unreasonably  early  hour.  If,  however,  the  mail  of  that  day 
be  closed  before  a  reasonable  time  after  early  business  hours,  or  if  there  be  no 
mail  sent  out  on  that  day,  then  it  must  be  deposited  in  time  for  the  next  possi- 
ble post.  In  the  case  of  Downs  v.  The  Planters'  Bank,  1  Sm.  &  M.  261,  and 
also  the  case  of  Chick  v.  Pillsbury,  24  Me.  458,  the  doctrine  on  this  subject 
has  been  more  fully  examined  than  perhaps  in  any  of  the  older  cases ;  and  the 
rule  adopted  is  that  the  notice,  in  order  to  charge  the  indorser  living  in  another 


BANK   OP   ALEXANDRIA    V.   SWANN.  393 

place  or  State,  mnst  be  dei)osIt('d  in  the  post-olFicc  in  time  to  be  sent  by  tlic  mail 
of  the  (lay  succeeding  the  day  of  the  disiionor,  providin;^  the  mail  of  that  day  be 
not  closed  at  an  unreasonably  early  hour,  or  before  early  and  convenient  business 
hours.  And  this  rule  is  well  sustained  by  authority.  Fullerton  et  al.  v.  The 
Bank  of  the  United  States,  1  Peters,  605,  618 ;  Eagle  Bank  v.  Chapin,  3  Pick. 
180,  183;  Talbot  v.  Clark,  8  Pick.  .01 ;  Carter  v.  Burley,  9  N.  Ilamp.  559,  570; 
Farmers'  Bank  of  Maryland  v.  Duvall,  7  Gill  &  Johnson,  79 ;  Freemans'  Bank 
V.  Perkins,  18  Me.  292 ;  Mead  v.  Engs,  5  Cowen,  303 ;  Sewall  v.  Russell,  3 
Wend.   276  ;  Brown  v.  Ferguson,  4  Leigh,  37  ;  Dodge  v.  Bank  of  Kentucky, 

2  Marshall,  610;  Hickman  v.  Ryan,  5  Littell,  24;  Hartford  Bank  v.  Steedman, 

3  Conn.  489 ;  Brenzer  v.  Wightraan,  7  Watts  &  S.  264 ;  Townsley  v.  Sprin- 
ger, 1  La.  122;  Bank  of  Natchez  v.  King,  3  Robinson,  243;  Brown  v.  Turner, 
1  Ala.  752;  Lockwood  v.  Crawford,  18  Conn.  361,  363;  Bayley,  Bills,  262; 
Story,  Promissory  Notes,  §  325 ;  and  Hyles,  Bills,  160. 

Some  obscurity  and  uncertainty  have  been  created  on  this  subject,  by  the 
expression  used  in  some  of  the  cases,  and  by  some  of  the  elementary  writers, 
that  the  holder  or  person  giving  the  notice,  has  "  one  day"  or  "  an  entire  day" 
in  which  to  give  the  notice  after  the  day  of  the  dishonor.  The  term  one  day  or 
an  entire  day,  seems  not  to  have  been  used  always  in  the  same  sense ;  and  the 
confusion  appears  to  have  in  part  arisen  from  the  fact,  that  where  the  parties 
reside  in  the  same  place,  notice  at  any  time  before  the  e.xpiration  of  the  day 
after  the  day  of  the  default,  will  be  sufficient,  while  where  the  parties  reside  in 
different  places,  the  notice  must  frequently  be  mailed  early  in  the  day,  to  be  in 
time  for  the  mail  of  that  day. 

The  defendant  in  error  relies  upon  the  doctrine  laid  down  in  the  elementary 
works  of  Chancellor  Kent  and  ]\Ir.  Justice  Story,  as  fully  sustaining  the  charge 
of  the  Court  below.  Inasmuch  as  precision  and  certainty,  in  the  settlement  of 
this  rule,  are  of  very  great  importance,  a  careful  examination  of  the  subject 
seems  to  be  required. 

Chancellor  Kent,  whose  accuracy  in  his  Commentaries  on  American  Law,  is 
never  to  be  questioned  without  graye  consideration,  in  the  late  editions  of  his 
works,  3  Kent's  Com.  106,  states  the  rule  as  follows :  — 

"According  to  the  modern  doctrine,  the  notice  must  be  given  by  the  first 
direct  and  regular  conveyance.  This  means  the  first  mail  that  goes  after  the 
day  next  to  the  third  day  of  grace  so  that,  if  the  third  day  of  grace  be  on 
Thursday,  and  the  drawer  or  indorser  reside  out  of  town,  the  notice  may  indeed 
be  sent  on  Thursday,  but  must  be  put  into  the  post-office,  or  mailed  on  Friday, 
so  as  to  be  forwarded  as  soon  as  possible  thereafter." 

And  in  a  note  by  the  learned  author  explanatory  of  the  text,  it  is  said,  that,  — 

"The  principle  that  ordinary  reasonable  diligence  is  suflicient,  and  that  the 
law  does  not  regard  the  fractious  of  the  day  in  sending  notice,  will  sustain  the 
rule  as  it  is  now  generally  and  best  understood  in  England  and  in  the  commercial 
part  of  the  United  States,  that  notice  put  into  the  post-office  on  the  next  day  at 
any  time  of  the  day,  so  as  to  be  ready  for  the  first  mail  that  goes  thereafter,  is 
due  notice,  though  it  may  not  I)e  mailed  in  season  to  go  by  the  mail  of  the  day 
next  after  the  day  of  the  default." 

Several  cases  are  cited  by  the  U-arned  author,  but  they  do  not  sustain  his 
position.     The  case  of  Jackson  v.  Richards,  2  Caines  Cases,  343,  referred  to,  is 


394  PROCEEDINGS   ON   NON-PAYMENT. 

not  in  point;  Haynes  v.  Birks,  3  Bos.  &  Pul.  r)99,  decides  that  when  the  note 
fell  due  on  Saturday,  the  notice  sent  by  the  post  on  Monday,  was  sufficient. 
Sunday  being  excluded  and  not  taken  into  the  account,  the  notice  was  sent  by 
the  post  of  the  next  legal  day.  In  the  cases  of  Bray  v.  Hadwen,  5  Maule  & 
Sel.  08,  and  Wright  v.  Sliawcross,  2  Barn.  &  Aid.  501,  it  was  decided  that 
the  notice  having  arrived  on  Sunday,  was  to  be  considered  as  having  been 
received  on  Monday,  and  then  the  party  had  till  Tuesday,  the  next  post  day  for 
giving  the  notice.  In  Geill  v.  Jeremy,  1  M.  &  M.  61,  where  no  mail  went  out 
on  the  day  next  after  the  day  of  the  default,  it  was  held  that  the  rule  being  an 
impossible  one  on  that  day,  a  notice  sent  by  the  next  succeeding  mail  da:y  would 
be  in  season.  The  case  of  Firth  v.  Thrush,  8  Barn.  &  C.  387,  turned  upon  the 
question  whether  the  attorney  employed  to  ascertain  the  residence  of  the  de- 
fendant, should  be  allowed  a  day  to  consult  his  client  after  information  of  the 
defendant's  residence.  And  Lord  Tenterden  said,  "if  the  letter  (giving  informa- 
tion of  the  defendant's  residence)  had  been  sent  to  the  principal,  he  would 
have  been  bound  to  give  notice  on  the  next  day."  The  only  other  case  referred 
to,  is  that  of  Hawkes  v.  Salter,  4  Bing.  715 ;  and  this  is  the  only  one  which  even 
tends  to  sustain  the  position  of  the  learned  author.  In  that  case  the  bill  was 
dishonored  on  Saturday,  and  the  mail  left  at  half-past  nine  o'clock  on  Monday 
morning ;  and  an  unsuccessful  attempt  was  made  to  prove  that  the  notice  was 
put  into  the  post-office  on  Tuesday  morning.  Best,  C.  J.,  expressed  himself 
clearly  of  opinion,  "  that  it  would  have  been  sufficient  if  the  letter  had  been  put 
into  the  post-office  before  the  mail  started  on  the  Tuesday  morning,  but  that 
there  was  no  sufficient  evidence  that  it  had  been  put  in  even  on  Tuesday  morn- 
ing.''' The  opinion  in  this  case  was,  therefore,  a  mere  dictum,  which  determined 
nothing,  the  case  being  decided  upon  a  different  ground. 

But  the  position  of  Chancellor  Kent,  above  referred  to,  is  in  direct  conflict 
with  the  rule  as  laid  down  by  himself  in  the  first  edition  of  his  work.  In  the 
edition  of  1828,  3  Kent's  Com.  73,  the  rule  is  stated  in  these  words  :  — 

"  According  to  the  modern  doctrine  the  notice  must  be  given  by  the  first 
direct  regular  conveyance.  This  means  the  first  convenient  and  practicable  mail 
that  goes  on  the  day  next  to  the  third  day  of  grace ;  so  that  if  the  third  day  of 
grace  be  on  Thursday,  and  the  drawer  or  indorser  reside  out  of  town,  the  notice 
may  indeed  be  sent  on  Thursday,  but  must  be  sent  by  the  mail  that  goes  on  Friday." 

In  the  last  edition  of  this  work,  published  in  1851,  the  editor,  Mr.  William 
Kent,  admits  the  weight  of  authority  to  be  in  favor  of  the  rule  as  laid  down  in 
Chick  V.  Pillsbury  and  Downs  v.  Planters'  Bank  above  referred  to ;  and  he  says, 
that,  — 

"The  opinion  of  C.  J.  Best,  in  4  Bing.  715,  is  the  only  one  that  sustains  the 
rule  suggested,  and  that  the  observations  of  Mr.  Justice  Story  were  too  latitu- 
dinarian  in  allowing  the  entire  whole  day  next  after  the  dishonor." 

It  is  true,  that  Mr.  Justice  Story  in  his  work  on  Bills  of  Exchange,  §  291, 
says  that  an  indorser  need  not  give  notice  to  his  antecedent  indorser,  till  twenty- 
four  hours  have  elapsed  after  the  receipt  of  his  own  notice  of  the  dishonor. 
And  in  his  note  to  §  290,  of  the  same  work,  the  author  says,  that,  — 

"  The  rule  does  not  appear  to  be  so  strict  as  it  is  laid  down  by  Mr.  Chitty, 
and  that  it  would  be  more  correct  to  saj',  that  the  holder  is  entitled  to  one  whole 
day  to  prepare  his  notice,  and  that,  therefore,  it  will  be  sufficient,  if  he  sends 


BANK   OF   ALEXANDRIA    V.    SWANN.  395 

it  liy  the  next  post  that  goes  after  twenty-four  liours  from  the  time  of  the  dis- 
'  honor,"  «fec. 

And  he  adds,  — 

"  I  have  seen  no  late  case  wliich  imports  a  different  doctrine ;  on  the  contrarj-, 
they  appear  to  me  to  sustain  it ;  but  as  I  do  not  know  of  any  direct  authority 
which  positively  so  decides,  this  remark  is  merely  propounded  for  the  considera- 
tion of  the  learned  reader." 

It  is  not  necessary  here  to  inquire  wlieth^  the  ])Osition  taken  by  the  learned 
author  is  in  c'onHiet  with  the  decisions  made  by  himself  in  1  Mason,  180,  and 
2  Story,  416,  above  referred  to.  In  his  same  work  on  Bills  of  Exchan<(e,  he 
has  stated  the  rule  with  great  precision  and  accuracy  in  the  following  language, 
in  §  382  :  — 

"In  all  cases  where  notice  is  required  to  be  given,  it  is  sufficient,  if  the 
notice  is  personal,  that  it  is  given  on  the  day  succeeding  the  day  of  the  dishonor, 
early  enough  for  the  party  to  receive  it  on  tiiat  day.  If  sent  by  the  mail,  it  is 
sufficient  if  it  is  sent  by  the  mail  of  the  next  day,  or  the  next  practicable  mail." 
And  in  §  288:  "  If  the  post  or  mail  leaves  the  next  day  after  the  dishonor, 
tlic  notice  should  be  sent  by  that  post  or  mail,  if  the  time  of  its  closing  or  de- 
parture, is  not  at  too  early  an  hour  to  disable  the  holder  from  a  reasonable  per- 
fdrmance  of  tlie  duty.  So  that  the  rule  may  be  fairly  stated  in  more  general 
terms  to  be,  that  the  notice  is  in  all  cases  to  be  sent  by  the  next  practical  post 
or  mail  after  the  day  of  tiie  dishonor,  having  a  due  reference  to  all  the  circum- 
stances of  the  case." 

The  same  learned  author  has  laid  down  the  rule  very  fully  to  the  same  effect 
in  his  work  on  Promissory  Notes,  §  32-1. 

The  statement  of  the  rule  in  the  last  extract,  is  consistent  with  the  doctrine 
estal)lished  by  the  Supreme  Court  of  the  United  States,  and  fully  sustained  by 
authority. 

The  discrepancies  which  have  arisen  on  this  subject  appear  to  have  grown  out 
of  an  inaccurate  use  in  some  of  the  books  and  decisions  of  the  terms  "  his  day," 
"an  entire  day,"  and  "a  whole  day,"  &c.,  these  phrases  being  at  one  time 
understood  or  taken  literally,  and  at  another  time  to  mean  a  space  of  time  equal 
to  a  full  day.  If  these  phrases  are  to  be  taken  to  mean  the  duration  of  a  full 
day  instead  of  tiie  day  itself,  in  their  general  application,  the  effect  would  be  to 
change  and  break  down  numerous  well-settled  and  useful  rules.  The  law  as  a 
general  thing  does  not  have  regard  to  the  fractions  of  a  day,  and  thus  compel 
parties  to  resort  to  nice  questions  of  the  sufficiency  of  a  certain  number  of  hours 
or  minutes,  and  to  the  taking  of  the  parts  of  two  different  days  to  make  up  what 
may  be  considered  in  one  sense  a  day,  because  equal  in  duration  to  one  entire 
day.  If  this  Avere  the  case  the  indorscr,  after  having  been  notified,  would  often 
be  unable  to  determine  whether  he  had  been  notified  in  season  or  not,  until  he 
had  learned  the  hour  of  the  day  when  the  default  occurred;  and  the  holder  would 
have  it  in  his  power  at  times  of  affecting  injuriously  the  right  of  the  indorser  to 
an  early  notice,  by  delaying  the  presentment  until  a  late  hour  in  the  day.  Noth- 
ing more  could  have  been  intemled  by  the  use  of  these  phrases  than  that  each 
party  should  have  a  specified  day  upon  which  the  act  enjoined  upon  him  should 
be  performed.  This  is  the  sense  in  which  Lord  EUenboroufih  used  it  in  the  case 
of  Smith  V.  MuUett,  2  Camp.  208,  when  he  said  :  "  Ka  party  has  an  entire  day, 


396  PROCEEDINGS   ON   NON-PAYMENT. 

he  must  send  ofF  his  letter  conveying  the  notice  -within  post  time  of  that 
day."  And  it  is  said  by  a  learned  elementary  author,  "  if  a  party  has  an  entire 
day,  he  must  send  off  his  letter  conveying  the  notice  of  the  dishonor  of  the  bill 
•within  post  time  of  that  day."     Byles,  Bills,  101. 

The  rule  laid  down  in  Smith's  Mercantile  Law,  to  which  the  defendant  in  error 
has  referred,  will  not,  as  I  apprehend,  be  found  on  close  examination  to  be  at 
variance  with  the  doctrine  here  adopted.     Smith's  Mercantile  Law,  310. 

It  is  claimed  on  behalf  of  the  plaintiffs  in  error  in  this  case,  that  the  notice  of 
the  dishonor  of  the  bill  should  have  been  sent  immediately  to  them,  instead  of 
being  sent,  as  it  was  in  the  first  place,  to  the  Bank  of  Salem.  The  holder  is  not 
bound  to  give  notice  of  the  dishonor  to  any  more  than  his  immediate  indorser ; 
and  each  party  to  a  bill  has  the  same  time  after  notice  to  himself  for  giving 
notice  to  other  parties  beyond  him,  that  was  allowed  to  the  holder  after  the 
default.  Sheldon  v.  Benham,  4  Hill,  N.  Y.  129 ;  Eagle  Bank  v.  Hathaway, 
5  Met.  213.  And  when  a  bill  is  sent  to  an  agent  for  collection,  the  agent 
is  required  simply  to  give  notice  of  the  dishonor  in  due  time  to  his  prin- 
cipal ;  and  the  principal  then  has  the  same  time  for  giving  notice  to  the  indors- 
ers  after  such  notice  from  his  agent,  as  if  he  had  been  himself  an  indorser 
receiving  notice  from  a  holder.  Bank  of  the  United  States  v.  Davis,  2  Hill,  N. 
Y.  452;  Church  v.  Barlow,  9  Pick.  547.  The  party  in  this  case,  therefore,  was 
not  at  fault  by  sending  the  notice  directly  to  the  Bank  of  Salem,  leaving  that  bank 
to  send  the  notice  to  the  plaintiffs  in  error. 

Applying  the  rule,  therefore,  which  we  have  adopted  as  the  correct  one,  to 
this  case,  it  was  incumbent  on  the  plaintiff  below,  in  order  to  be  entitled  to  a  re- 
covery, to  show  that  the  notice  of  the  dishonor  of  the  bill  was  deposited  in  the 
post-office  in  Pittsburgh,  in  time  to  be  sent  by  the  mail  of  the  twenty-eighth  day 
of  July.  Ten  minutes  past  nine  o'clock  in  the  morning  was  not  an  unreasona- 
bly early  hour,  or  before  a  reasonable  and  convenient  time  after  the  commence- 
ment of  early  business  hours  of  the  day.  The  neglect,  therefore,  to  send  the 
notice  by  the  mail  of  the  next  day  after  the  day  of  the  default,  operated  to  dis- 
charge the  plaintiffs  in  error  as  indorsers,  unless  from  some  other  cause  no- 
tice had  been  dispensed  with  or  rendered  unnecessary.  And  for  the  charge  of 
the  Court  of  Common  Pleas  to  the  jury  to  the  contrary,  the  judgment  is  reversed, 
and  the  cause  remanded  for  further  proceedings." 

See  Stephenson  v.  Dickson,  24  Penn.  State,  148  ;  Prideaux  v.  Criddle,  Law 
Rep.  4  Q.  B.  455 ;  also  Simpson  v.  Turney,  ante,  p.  386. 

If  notice  is  sent  by  private  conveyance,  the  holder's  responsibility  continues 
until  delivery ;  and  this  must  not  be  later  than  the  day  on  which  it  would  have 
arrived  if  sent  by  mail.  Van  Vechten  v.  Pruyn,  13  N.  Y,  (3  Kern.)  549,  555. 
See  post,  p,  410. 


WALKER   V.    STETSON.  397 


Frederick  W.  Walker  v.  Charles  Stetson. 

(l-l  Ohio  State,  89.     Supreme  Court,  December,  1862.) 

Domicile.  Where  notice  should  be  sent.  —  Tlie  fact  that  a  drawer  or  indorser  gws  from 
the  place  of  his  actual  residence  to  another  place  to  dispose  of  property,  which 
occupies  him  for  several  weeks  of  time,  does  not  make  such  town  his  place  of 
business  within  the  moaning  of  the  rule  upon  the  subject  of  notice,  in  the  absence 
of  all  explanation  as  to  the  mode  of  doing  the  business,  or  of  his  relations  to  the 
post-office  there. 

The  case  is  stated  in  the  opinion  of  tlie  Court. 

Ranney,  J.  The  bills  of  exchange  upon  which  this  action  was 
brought,  were  drawn  and  indorsed  by  the  plaintiff  in  error.  His 
liability  upon  them  was  conditional,  and  his  obligation  to  pay 
them  depended  upon  their  being  duly  dishonored,  and  legal  notice 
of  such  dishonor  ;  unless,  indeed,  he  had  waived  such  diligence 
on  the  part  of  the  holder.  The  bills  were  legally  dishonored  and 
properly  protested,  and  notices  for  all  the  parties  conditionally 
liable  were  in  due  time  forwarded  to  the  defendant  in  error,  a 
subsequent  indorser  of  the  bills.  The  right  to  recover  was  placed 
upon  two  grounds  :  1.  That  the  defendant  in  error  had,  on  the  day 
he  received  these  notices,  forwarded  by  mail,  those  directed  to  the 
plaintiff  in  error,  to  his  place  of  business  at  Chicago  ;  and,  2.  That 
a  few  days  thereafter,  in  a  personal  interview  with  the  defendant 
in  error,  he  had  recognized  his  liability  as  still  existing,  and  had 
expressly  promised  to  pay  the  bills.  The  verdict  of  the  Jury  may 
have  been  founded  upon  the  ground  last  stated,  but,  as  there  was 
a  conflict  in  the  evidence  upon  it,  there  is  nothing  in  the  record  to 
show  that  it  was ;  and  we  are,  consequently,  compelled  to  examine 
the  facts  applicable  to  the  first  ground,  and  the  instructions  of  the 
Court  based  upon  that  state  of  facts. 

Stating  these  facts  as  broadly  as  any  thing  in  the  evidence  will 
warrant,  they  amounted  to  this :  The  plaintiff"  in  error  was  a  resi- 
dent of  Morristown,  New  Jersey,  and  had  no  fixed  residence  in 
the  State  of  Ohio,  or  at  Chicago  ;  but  during  most  of  the  season 
of  1856  had  been  engaged  in  the  lumber  business,  staying  at 
Cleveland,  and  in  Ottowa  county,  where  he  owned  a  saw-mill.    That 


398  PROCEEDINGS   ON   NON-PAYMENT. 

about  the  first  of  November  he  left  Cleveland,  and,  before  doing 
so,  informed  the  defendant  in  error  that  he  was  going  to  Chicago 
to  disjiose  of  a  quantity  of  lumber  which  he  w-as  about  shipping  to 
that  place,  and  should  return  from  there  to  Cleveland  ;  and  had 
not  returned  when  the  notices  were  mailed  to  him  at  Chicago  on 
the  22d  of  that  month,  —  that  being  the  very  day  upon  which 
they  were  received  by  the  defendant  in  error  from  the  notary  in 
New  York.  In  point  of  fact,  the  plaintiff  in  error  was  in  Chicago 
when  the  notices  were  mailed  to  him,  but  probably  left  there  before 
they  arrived,  and  shortly  after  was  in  Cleveland,  where  he  was 
met  by  the  defendant  in  error,  and  fully  informed  of  all  that  had 
transpired. 

Upon  this  state  of  the  facts,  counsel  for  the  plaintiff  in  error 
requested  the  Court  to  charge  the  jury,  "  That  if  the  defendant's 
residence  was  not  in  Chicago,  or  he  was  not  engaged  in  any  per- 
manent business  there,  but  was  there  temporarily,  and  for  a  tem- 
porary purpose  only,  the  sending  to  him,  at  Chicago,  notices  of  the 
protest  of  said  bills  of  exchange  would  not  be,  unless  the  defendant 
actually  received  them,  due  diligence,  and  sufficient  to  charge  the 
defendant  with  the  payment  of  said  bills." 

To  which  the  Court  responded  as  follows :  "  That  if  the  defend- 
ant did  not  reside  in  Chicago,  and  was  not  engaged  in  any  perma- 
nent business  there,  but  was  there  for  a  purpose  merely  temporary, 
sending  notices  of  protest  to  him  at  Chicago  would  not,  as  a  propo- 
sition of  law,  constitute  due  diligence  sufficient  to  charge  the 
defendant.  But  if  the  defendant  had  gone  to  Chicago  on  business 
which  would  detain  him  an  indefinite  period  of  time,  and  might 
occupy  him  there  during  the  remainder  of  the  season  of  navigation 
on  the  lakes,  that  might  be  the  proper  place  to  send  the  notices  to 
him ;  and  it  was  a  question  of  fact  for  the  jury  to  find,  referring 
to  all  the  testimony  on  tliat  question,  whether  the  business  of  the 
defendant  at  Chicago  was  of  that  character,  or  whether  the  plaintiff 
had  sufficient  reason  from  his  information  derived  from  the  defend- 
ant, or  from  his  own  knowledge  of  the  defendant's  business,  to  believe 
the  defendant  was  at  Chicago  at  the  time  the  notices  were  sent  by 
him,  such  notices  would  be  due  diligence  on  the  part  of  the  plain- 
tiff, and  sufficient  to  charge  the  defendant." 

If  we  were  permitted  to  treat  the  matter  as  a  question  of  injury 
to  the  plaintiff  in  error,  there  would  be  no  difficulty  whatever  in 
saying  that  he  lost  nothing  by  the  course  pursued  by  the  defendant 


WALKER    V.    STETSON.  399 

in  error,  and  probably  was  actually  informed  of  the  dishonor  of 
the  bills  sooner  than  he  could  have  been,  if  the  notices  had  been 
sent  to  his  residence  in  New  Jersey.  But  we  are  not  at  liberty  to 
take  so  wide  a  view  of  the  suliject.  The  law  has  very  definitely 
settled  what  shall  constitute  due  diligence  in  such  cases,  and  when 
the  facts  are  ascertained,  it  is  the  duty  of  the  Court  to  determine, 
as  a  question  of  law,  whether  reasonable  diligence  has  been  used ; 
and  it  cannot  be  submitted  to  the  jury  as  a  question  of  fact.  Bank 
of  Columl)ia  r.  Lawrence,  1  Peters,  578  ;  ^  Bank  of  Utica  v.  Bender, 
21  Wend.  643  ;''^  Carroll  v.  Upton,  3  Com.  272  ;  Wheeler  v.  Field, 
.  6  Met.  290  ;  Belden  v.  Lamb,  17  Conn.  442  ;  Lorain  Bank  of  Elyria 
V.  Townsend,  2  Ohio  .State,  343.  The  object  has  been  to  attain 
the  greatest  possible  certainty  in  a  matter  so  vital  to  the  interests 
of  the  mercantile  community,  and  the  equities  of  particular  cases 
have  not  been  allowed  to  interfere  with  the  attainment  of  this 
object.  In  this  State,  these  rules  have  been  fully  adopted  and 
constantly  enforced,  and  if  we  saw  reason  now  to  doubt  their 
justice  or  policy,  we  should  find  ourselves  unable  to  change  them, 
without  a  corresponding  change  should  take  place  in  States  and 
countries  with  which  our  commercial  relations  are  so  extensive 
and  important. 

The  parties  in  this  case  not  residing  in  the  same  place,  there  is 
no  doubt  that  it  was  a  proper  case  for  sending  the  notices  by  mail, 
and  in  such  cases  it  is  well  settled,  that  putting  into  the  post-office 
seasonably  a  notice  properly  directed  is,  in  itself,  due  diligence,  or 
constructive  notice,  and  will  be  sufficient,  although  it  never  reaches 
the  party  to  whom  it  is  directed.  Woodcock  v.  Ilouldsworth,  16  Mees. 
&  W.  124  ;  Dickens  v.  Beal,  10  Peters,  570  ;  Jones  v.  Lewis,  8  Watts 
&  S.  14.  As  to  the  itlace  to  which  the  notice  should  be  directed, 
it  is  equally  well  settled,  that  it  should  be  sent  to  the  drawer  or 
indorscr's  residence  or  place  of  business,  if  either  is  known  to 
the  holder,  or,  upon  diligent  inquiry,  can  be  ascertained ;  and  if 
neither  are  known  nor  can  be  found,  the  law  dispenses  with  any 
notice  whatever.  Bank  of  the  United  States  v.  Carneal,  2  Peters, 
543  ;  Chitty,  Bills,  486  ;  Bayley,  Bills,  280.  But  while  this  is  the 
general  principle,  the  spirit  of  the  rule  certainly  is,  that  the  notice 
should^  be  sent  to  such  place  that  it  will  be  most  likely  promptly  to 
reach  the  person  for  whom  it  is  intended;  and  hence,  in  its  appli- 
cation to  particular  cases,  it  has  often  been  held  that  a  notice  is 

.'  Post,  -404.  .»  Post,  410. 


400  PROCEEDINGS    ON   NON-PAYMENT. 

sufficient  if  sent  to  the  post-oAicc  where  the  party  usually  receives 
his  letters,  although  not  that  of  his  residence,  as  well  as  to  that 
where  he  resides ;  and  in  all  cases  the  notice  may  be  sent  to  the 
place  pointed  out  by  the  drawer  or  indorscr,  and  in  general  will 
be  sufficient,  both  in  reference  to  himself  and  parties  who  stand 
behind  him  on  the  bill.  Reid  v.  Payne,  16  Johns.  218  ;  Bank  of 
Geneva  v.  Howlett,  4  Wend.  328  ;  Bank  of  United  States  v.  Lane, 
3  Hawks,  453  ;  Shelton  v.  Braithwaite,  8  Mees.  &  W.  252.  Indeed, 
it  is  suggested  in  the  present  case  that  the  statement  made  by  the 
plaintiff  to  tlie  defendant  in  error,  sufficiently  indicated  Chicago  as 
the  place  to  which  the  notices  might  be  sent.  Whatever  of  weight 
this  suggestion  may  properly  have,  it  can  only  be  considered  by  us 
when  the  case  in  the  Court  below  appears  to  have  been  decided 
upon  that  ground.  As  yet  this  consideration  has  not  been  passed 
upon  in  that  Court. 

How  then,  in  view  of  the  foregoing  principles,  stands  the  case 
before  us  ?  Was  Chicago,  in  the  sense  of  the  legal  rule,  so  far  the 
residence  or  place  of  business  of  the  party  as  to  make  the  notices 
sent  there  constructive  notice  of  the  dishonor  of  the  bills  ?  A  very 
careful  examination  of  all  the  evidence  now  contained  in  the  record 
has  fully  satisfied  us  that  it  was  not.  Upon  this  point  there  is  no 
conflict  in  the  evidence.  The  plaintiff  below  says  the  defendant 
informed  him  he  was  going  to  Chicago  "  to  dispose  of  a  quantity 
of  lumber,  which  he  was  about  shipping  to  that  place,  and  should 
return  from  there  to  Cleveland  ; "  that  he  knew  the  defendant  had 
been  to  Chicago,  but  did  not  know  that  he  was  there  when  the 
notices  were  mailed,  and  had  reason  to  believe  he  did  not  receive 
them  there,  as  he  was  soon  afterward  back  to  Cleveland.  Tlie 
defendant  says  he  went  to  Chicago,  and  was  there  from  the  first  to 
the  twenty-fourth  of  November,  "  disposing  of  a  quantity  of  lum- 
ber," and  in  the  afternoon  of  the  day  last  named,  he  left  Chicago, 
and  arrived  at  Cleveland  on  the  morning  of  the  26th  ;  that  he  had 
no  permanent  business  at  Chicago,  and  was  there  for  a  temporary 
purpose  only,  and  never  received  the  notices  sent. 

The  question  is  then  reduced  to  this:  Does  going  to  a  city  to 
dispose  of  property,  wliicli  occupies  the  party  for  three  weeks  of 
time,  without  one  word  of  explanation  as  to  the  mode  of  dqing  the 
business,  or  his  relations  to  the  post-office,  make  such  city  his  place 
of  business  within  the  meaning  of  the  commercial  rule  ?  If  we 
were  to  affirm  that  it  did,  the  principle  must  have  a  "very  wide, 


WALKER   V.    STETSON.  401 

and  as  we  think  a  very  disastrous,  application  to  a  large  class  of 
business  men,  dealing  more  largely  than  any  other  in  commercial 
paper.  Tlie  stock  and  j)roduce  of  the  West  are  taken  to  the  east- 
ern cities,  by  persons  engaged  in  that  business,  to  be  sold  ;  and 
most  western  merchants,  once  or  twice  in  each  year,  spend  from  a 
few  days  to  a  few  weeks  at  the  same  places,  replenishing  their 
stocks  oi  goods.  Did  anybody  ever  suppose  that  these  persons 
were  bound  to  watch  the  post-oflRces  in  those  cities  for  notices  of 
the  protest  of  their  j)aper  ?  We  think  not  ;  and  yet  if  these  notices 
are  sufficient,  we  see  no  distinction  to  lie  taken  between  this  case 
and  theirs.  It  is  very  certain  tliat  no  decided  case  has  given  any 
countenance  to  the  sujtposition  that  such  a  notice,  not  received  by 
the  party,  would  be  sulhcient. 

The  cases  of  Tunstall  v.  Walker,  2  Sm.  &  M.  »);]8,  and  Chou- 
teau r.  Wel)ster,  G  Met.  1,  have,  perhaps,  gone  to  the  verge  of  the 
law,  but  they  are  very  far  from  reaching  this  case.  In  each  of 
those  cases  the  defendant  was,  at  the  time  the  notice  was  forwarded 
to  him  at  Washington,  a  senator  in  Congress,  and  in  actual  attend- 
ance on  that  body.  The  first  of  these  cases  had  been  before  decided 
by  the  High  Court  of  Errors  and  Appeals,  and  is.  reported  in  1  How. 
Miss.  259.  Upon  the  then  state  of  the  evidence,  the  Court  held 
that  a  notice  sent  to  Washington  city,  when  the  senator  had  a  resi- 
dence in  tiie  .State  which  he  represented,  would  not  l)e  sufficient  to 
charge  him  as  an  indorser ;  and  the  reason  assigned  is,  that  "  his 
absence  was  but  temj)orary,  and  the  duration  of  that  absence  un- 
certain. In  case  of  such  absence  from  home,  the  law  presumes 
that  some  member  of  the  family  is  still  at  the  residence,  and  that 
communications  will  l>e  forwarded  to  the  proper  address."  But, 
upon  a  further  trial  of  the  case,  it  was  proved  that  the  defendant 
had  no  actual  residence  in  Mississippi,  and  had  left  no  agent  at  his 
last  place  of  abode  to  receive  or  forward  his  letters ;  that  from  the 
fourth  of  February,  when  the  notice  was  forwarded,  to  the  fourth  of 
March  ensuing,  he  was  in  the  actual  discharge  of  his  official  duties 
at  Washington,  and  in  the  daily  hal)it  of  receiving  his  letters  at 
the  post-office  in  that  city  ;  and,  upon  this  state  of  facts,  the  Court 
held  the  notice  sent  to  that  city  sufficient.  In  the  case  of  Cliouteau 
V.  Webster,  the  defendant  had  left  an  agent  in  Boston  in  charge  of 
his  business,  but  this  was  unknown  to  the  holder  of  the  paper  ; 
and  upon  an  agreed  statement  of  the  facts  showing  that  the  notice 
was,  in  due  time,  deposited  in  the  post-office  directed  to  the  de- 

26 


402  PROCEEDINGS  ON   NON-PAYMENT. 

fendant  at  Washington,  where  he  was  then,  and  for  some  time 
afterward,  in  attendance  upon  a  session  of  Congress  ;  and  that  all 
letters  addressed  to  members  were  regularly  and  immediately 
taken  from  the  post-office  by  officers  of  the  Senate,  and  delivered 
to  such  members,  the  Court  held  the  notice  sufficient.  C.  J.  Shaw, 
after  premising  the  caution  that  the  "  decision  is  founded  on  the 
circumstances  of  the  particular  case,  and  may  be  varied tby  other 
facts,"  proceeds  to  place  it  upon  the  ground  that,  while  the  de- 
fendant's domicile  was  at  Boston,  his  "  actual  residence  "  was  at 
Washington,  "  to  which,  for  the  time  being,  he  was  fixed  by  his 
public  duty."  We  have  no  doubt  of  the  correctness  of  these 
decisions ;  and  no  comment  can  be  necessary  to  distinguish  them 
from  a  case  where  the  party  simply  visits  a  place  for  a  purpose 
clearly  temporary  and  special,  with  no  proof  to  show  that  he  has 
identified  himself  with  its  business,  or  establish  any  relations  with 
its  post-office.  Regarding  that  as  this  case,  we  are  clearly  of  the 
opinion  that  the  plaintiff  in  error  was  entitled  to  the  instruction 
he  asked,  and  that  the  learned  judge  erred  in  the  qualifications  he 
annexed  to  the  instruction  given. 

If  we  were  entirely  satisfied  of  the  correctness  of  this  qualifica- 
tion in  the  abstract,  we  should  still  be  compelled  to  reverse  the 
judgment,  for  the  reason  that  there  was  no  evidence  to  give  any 
wider  scope  to  the  inquiry  than  that  contemplated  in  the  instruction 
asked  for.  Tliat  this  was  an  error  lias  been  settled  by  this  Court, 
and  the  value  of  jury  trial  will  very  much  depend  upon  the  observ- 
ance of  the  principle.  In  Bain  v.  Wilson,  10  Ohio  State,  16,  the 
instruction  asked  and  given,  as  well  as  the  qualification  annexed 
by  the  Court,  were  all  held  to  be  a  correct  exposition  of  the  law  ; 
and  yet,  as  "  there  was  no  evidence  before  the  jury  which  required 
or  even  authorized  the  qualification  annexed  by  the  Court,"  the 
judgment  was  reversed.  The  Court  say :  "  The  judge  must  con- 
fine himself  in  his  remarks  to  the  law  and  evidence  of  the  case. 
So  far  from  being  under  any  obligation  to  call  the  attention  of  the 
jury  to  a  conjectural  state  of  facts,  it  would  be  highly  improper  for 
him  to  do  so."  And  the  reason  for  this  is  very  pertinently  stated 
in  one  of  the  cases  referred  to  :  "  Jurors  are  constantly  inclined 
to  look  to  the  opinion  of  the  judge  for  instruction  as  to  what  is 
and  what  is  not  evidence.  When  he  tells  them  to  determine  a 
given  problem  from  the  evidence  before  them,  they  can  hardly  do 
otherwise  than  infer  that,  in  his  judgment,  there  is  evidence  upon 


WALKER   V.    STETSON.  403 

wliich  their  verdict,  when  given,  may  rest."  Fa/  v.  Oriuasteed, 
10  Barb.  ;521. 

J3ut  we  are  very  far  from  being  satisfied  that  the  qualification 
annexed  in  this  case  does  contain  a  correct  statement  of  the  law. 
After  stating  that  if  the  plaintifl"  in  error  was  in  Chicago  for  a  pur- 
pose merely  temporary,  the  notices  would  not  be  sufficient,  the  Court 
proceed_to  say,  that  if  his  business  there  was  sucli  as  would  detain 
him  an  indefinite  time,  and  "  might  occupy  him  there  during  the 
remainder  of  the  season  of  navigation  on  the  lakes,"  it  might  be 
proper  to  send  the  notices  to  that  place.  If  he  went  there  for  the 
special  purpose  stated  in  the  evidence,  we  do  not  think  it  would 
make  any  difference  that  he  could  not  tell  precisely  when  he 
would  be  able  to  sell  his  property  ;  and  when  it  is  remembered 
that  this  was  in  the  month  of  November,  we  do  not  think  that  a 
delay  in  effecting  his  object  until  the  navigation  should  close, 
would  ^e  in  any  way  decisive.  At  most,  it  would  be  liut  a  cir- 
cumstance, entitled  to  its  just  weight  with  others  in  determining 
tlie  question  whether  Chicago  was  his  place  of  business,  or  whether 
he  was  a  mere  sojourner  there  for  a  special  and  limited  purpose. 
In  the  one  case,  he  might  be  charged  by  a  notice  sent  to  that  post- 
office,  because  he  is  presumed  to  have  established  relations  with 
it ;  in  the  other,  no  such  presumption  arises,  and  he  can  be  charged 
only  upon  the  actual  receipt  of  the  notice.  Indeed,  when  the 
whole  instruction  is  taken  together,  it  amounts  to  little  less  than  a 
request  to  the  jury  to  go  beyond  the  uncontradicted  and  legally 
insufficient  facts  in  evidence,  and  inquire  into  the  motives  of  the 
plaintifT  below ;  and  concluding  with  the  positive  instruction  that, 
if  he  had  sufficient  reason  "  to  believe  the  defendant  was  at  Chicago 
at  the  time  the  notices  were  sent,"  they  would  be  sufficient  to 
charge  him. 

Without  perhaps  intending  to  do  so,  it  seems  to  us  that  the 
Court  has  incautiously  surrendered  its  rightful  province  to  judge 
of  the  sufficiency  of  the  facts  to  constitute  due  diligence,  and  has 
devolved  that  duty  upon  the  jury.  To  approve  of  that,  would  be 
to  abandon  all  that  has  been  gained  in  the  way  of  certainty,  in  the 
determination  of  questions  of  this  character. 

While  it  is  true  that  the  rules  necessary  to  be  observed  in  charg- 
ing parties  conditionally  liable  upon  negotiable  paper  are  strict, 
and  require  much  care  and  promptitude  on  the  part  of  the  holder ; 
yet  they  are  such  as  long  experience  has  demonstrated  to  be  neces- 


404  PROCEEDINGS   ON   NON-PAYMENT. 

sarj,  and  a  substantial  compliance  with  them  lies  at  the  very  foun- 
dation of  the  contract  into  which  the  drawer  or  indorser  enters. 
His  contract  is  conditional,  and  to  make  it  absolute,  without  a  fair 
performance  of  the  conditions,  would  be  to  make  a  contract  for 
him,  instead  of  enforcing  the  one  he  has  made  for  himself. 

The  judgment  must  be  reversed,  and  the  cause  remanded  to  the 
District  Court  of  Cuyahoga  county  for  further  proceedings. 

At  the  time  a  promissory  note  was  made,  the  maker  and  indorser  both  re- 
sided in  Rochester,  at  which  place  the  note  was  dated,  and  it  was  discounted  at 
the  plaintiffs'  bank,  wliich  was  also  located  there,  and  where  the  plaintiffs  re- 
sided. It  was  held  that  the  plaintiffs  had  the  right,  when  the  note  matured,  to 
assume  that  the  indorser  still  resided  in  Rochester,  and  to  act  accordingly  in 
taking  the  requisite  steps  to  charge  him  as  such,  unless  they  knew  that  in  the 
mean  time  he  had  changed  his  residence.  Ward  v.  Perrin,  54  Barb.  89.  See 
further  upon  this  subject.  Bliss  i\  Nichols,  12  Allen,  443 ;  Berridge  v.  Fitzger- 
ald, Law  Rep.  4  Q.  B.  639;  Bank  of  Columbia  v.  Lawrence,  infra,  and  note. 


The  Bank  of  Columbia,  Use  of  the  Bank  of  tfie  United 
States,  v.   John  Lawrence. 

(1  Peters,  578.     Supreme  Court  of  the  United  States,  January,  1828.) 

Where  notice  should  be  sent.  —  Actual  notice  to  an  indorser  is  not  required ;  due  dili- 
gence only  is  necessary.  Therefore,  in  the  case  of  an  indorser  who  lived  in  the 
country,  two  or  three  miles  distant  from  the  place  (G.)  at  which  the  note  in  ques- 
tion was  payable,  where  he  usually  received  his  mail ;  held,  that  notice  left  in  the 
post-office  at  G:,  directed  to  him  at  that  place,  was  sufficient  to  charge  him. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Thompson,  J.  This  case  comes  before  the  Court  upon  a  writ  of 
error  to  the  Circuit  Court  of  the  District  of  Columbia. 

The  defendant  was  sued  as  indorser  of  a  promissory  note  for 
'$5000,  made  by  Joseph  Mulligan,  bearing  date  the  fifteenth  of 
July,  1819,  and  payable  sixty  days  after  date,  at  the  Bank  of  Co- 
lumbia. The  making  and  indorsing  the  note,  and  the  demand  of 
payment,  were  duly  proved  ;  and  the  only  question  upon  the  trial 
was  touching  the  manner  in   which   notice  of  non-payment  was 


BANK    OF    COLUMBIA    V.    LAWRENCE.  405 

given  to  the  indorser  ;  no  objection  being  made  to  tbe  suflficiency 
of  the  notice  in  point  of  time. 

The  material  facts  before  the  Court  npon  tliis  part  of  the  case, 
as  shown  by  the  l»ill  of  exceptions,  were :  Tliat  the  banking-liouse 
of  tlie  plaintiffs  was  in  Georgetown,  at  which  place  the  note  ap- 
pears to  be  dated.  Tliat  some  time  before  tlie  note  fell  due  the 
defendant  had  lived  in  the  city*  of  Washington,  and  carried  on 
the  business  of  a  morocco  leather-dresser,  keeinng  a  shop  and  liv- 
ing in  a  house  of  his  own  in  the  said  city.  That  about  the  year 
1818,  he  sold  his  shop  and  stock  in  trade  and  relinquished  his 
business,  and  removed  with  his  family  to  a  farm,  in  Alexandria 
county,  within  the  District  of  Columbia,  and  about  two  or  three 
miles  from  Georgetown.  That  the  Georgetown  i)Ost-office  was  the 
nearest  post-office  to  his  place  of  reeidence,  and  the  one  at  which 
he  usually  received  his  letters. 

The  notice  of  non-payment  was  put  into  the  post-office  at  George- 
town, addressed  to  the  defendant  at  that  place.  It  was  proved  on 
the  part  of  the  defendant,  that  at  the  time  of  his  removal  into  the 
country,  and  from  that  time  until  after  the  note  in  question  fell 
due,  he  continued  to  be  the  owner  of  the  house  in  Washington, 
where  he  formerly  lived,  and  which  was  occupied  by  his  sister-in- 
law,  Mrs.  Harbaugh.  That  he  came  frequently  and  regularly  every 
week,  and  as  often  as  two  or  three  times  a  week,  to  this  house ; 
where  he  was  employed  in  winding  up  his  former  business  and 
settling  his  accounts,  and  where  he  kept  his  books  of  account,  and 
where  his  bank  notices,  such  as  were  usually  served  by  the  runner 
of  the  bank  on  parties  who  were  to  pay  notes,  were  sometimes  left, 
and  sometimes  at  a  shop  opposite  to  his  house  ;  and  where  also 
his  newspapers  and  foreign  letters  were  left.  That  his  coming  to 
town  and  so  employing  himself  was  generally  known  to  persons 
having  business  with  him.  That  his  residence  in  the  country  was 
known  to  the  cashier  of  the  bank.  Tiiat  there  was  a  regular  daily 
mail  from  Georgetown  to  the  city  of  Washington,  and  that  the 
defendant's  house  was  situated  in  Washington  less  than  a  quarter 
of  a  mile  from  Georgetown. 

There  was  also  some  evidence  given  on  the  part  of  the  plaintiffs 
tending  to  show  that  the  usage  of  the  bank  in  serving  notices  in 
similar  cases,  was  conformably  to  the  one  here  pursued,  and  that 
the  defendant  was  apprised  of  such  usage.  But  that  the  testi- 
mony may  be  laid  out  of  view,  as  this  Court  does  not   found  its 


406  PROCEEDINGS   ON   NON-piYMENT. 

opinion  in  any  measure  upon  that  part  of  the  case.  Upon  this 
evidence  the  plaintiffs  prayed  the  Court  to  instruct  the,  jury,  that 
it  was  not  incumbent  on  them  to  have  left  the  notice  of  the  non- 
payment of  the  note  at  the  house  occupied  by  Mrs.  Harbaugh,  as 
stated  in  the  evidence ;  but  that  it  was  sufficient,  under  the  cir- 
cumstances stated,  to  leave  the  notice  at  the  post  office  in  George- 
town ;  which  instructions  the  Court  refused  to  give,  but  instructed 
the  jury  that  their  verdict  must  be  governed  according  to  their 
opinion  and  finding  on  the  subject  of  usage  which  had  been  given 
in  evidence. 

The  jury  found  a  verdict  for  the  defendant. 

From  this  statement  of  the  case  it  appears  that  the  note  was  made 
at  Georgetown,  payable  at  the  Bank  of  Columbia  in  that  town. 
That  the  defendant,  when  he  indorsed  the  note,  lived  in  the  county 
of  Alexandria,  within  the  District  of  Columbia,  and  having  what 
is  alleged  to  have  been  a  place  of  business  in  the  city  of  Wash- 
ington ;  and  the  notice  of  non-payment  was  put  into  the  George- 
town post-office,  addressed  to  the  defendant  at  that  place,  by  which 
it  is  understood  that  the  notice  was  either  inclosed  in  a  letter,  or 
the  notice  itself  sealed  and  superscribed  with  the  name  of  the  de- 
fendant, with  the  direction  "  Georgetown  "  upon  it ;  and  whether 
this  notice  is  sufficient  is  the  question  to  be  decided. 

If  it  should  be  admitted  that  the  defendant  had  what  is  usually 
called  a  place  of  business  in  the  city  of  Washington,  and  that  no- 
tice served  there  would  have  been  good,  it  by  no  means  follows 
that  service  at  his  place  of  residence  in  a  different  place,  would 
not  be  equally  good.  Parties  may  be  and  frequently  are  so  situ- 
ated that  notice  may  well  be  given  at  either  of  several  places. 
But  the  evidence  does  not  show  that  the  defendant  had  a  place  of 
business  in  the  city  of  Washington,  according  to  the  usual  com- 
mercial understanding  of  a  place  of  business.  There  was  no  pub- 
lic notoriety  of  any  description  given  to  it  as  such.  No  open  or 
public  business  of  any  kind  carried  on,  but  merely  occasional  em- 
ployment there  two  or  three  times  a  week  in  a  house  occupied  by 
another  person  ;  and  the  defendant  only  engaged  in  settling  up 
his  old  business.  In  this  view  of  the  case,  the  inquiry  is  narrowed 
down  to  the  single  point,  whether  notice  through  the  post-office  at 
Georgetown  was  good  ;  the  defendant  residing  in  the  country  two 
or  three  miles  distant  from  that  place  in  the  county  of  Alexan- 
dria. 


BANK    OF    COLUMBIA    V.    LAWRENCE.  407 

The  general  rule  is,  that  the  party  whose  duty  it  is  to  give 
notice  in  such  cases  is  bound  to  use  due  diligence  in  communicat- 
ing such  notice.  But  it  is  not  required  of  him  to  see  that  the 
notice  is  brought  home  to  the  party.  He  may  employ  the  usual 
and  ordinary  mode  of  conveyance,  and,  whether  the  notice  roaches 
the  party  or  not,  the  holder  has  done  all  that  the  law  requires  of  him. 

It  seems  at  this  day  to  be  well  settled,  that  when  the  facts  are 
ascertained  and  undisj)Utcd,  what  shall  constitute  due  diligence  is 
a  question  of  law.  This  is  certainly  best  calculated  to  have  fixed 
on  uniform  rules  on  the  subject,  and  is  highly  important  for  the 
safety  of  holders  of  commercial  paper. 

And  these  rules  ought  to  be  reasonable  and  founded  in  general 
convenience,  and  with  a  view  to  clog  as  little  as  possible,  consist- 
ently with  the  safety  of  parties,  the  circulation  of  paper  of  this 
description  ;  and  the  rules  which  have  been  settled  on  this  sultject 
have  had  in  view  these  objects.  Thus,  when  a  party  entitled  to 
notice,  has  in  the  same  city  or  town  a  dwelling-house  and  counting- 
house  or  place  of  business  within  the  compact  part  of  such  city  or 
town,  a  notice  delivered  at  either  place  is  sufficient;  and  if  his 
dwelling  and  place  of  business  be  within  the  district  of  a  letter- 
carrier,  a  letter  containing  such  notice,  addressed  to  the  party  and 
left  at  the  post-office  would  also  be  sufficient.  All  these  are  usual 
and  ordinary  modes  of  communication,  and  such  as  affijrd  reason- 
able ground  for  presuming  that  tlie  notice  will  be  brought  home  to 
the  party  without  unreasonable  delay.  So  when  the  holder  and 
indorser  live  in  diffijrent  post-towns,  notice  sent  by  the  mail  is 
sufficient,  whether  it  reaches  tlie  indorser  or  not.  And  this  for  the 
same  reason,  that  the  mail  being  a  usual  channel  of  communica- 
tion, notice  sent  by  it  is  evidence  of  due  diligence.  And  for  the 
sake  of  general  convenience  it  has  been  found  necessary  to  enlarge 
this  rule.  And  it  is  accordingly  held,  that  when  the  party  to  be 
affected  by  the  notice  resides  in  a  diffi3rent  place  from  the  holder, 
the  notice  may  be  sent  by  the  mail  to  the  post-office  nearest  to  the 
party  entitled  to  such  notice.  It  has  not  been  thought  advisable, 
nor  is  it  believed  that  it  would  comport  with  practical  convenience, 
to  fix  any  precise  distance  from  the  post-office  within  Avhich  the 
party  must  reside,  in  order  to  make  this  a  good  service  of  the 
notice.  Nor  would  we  be  understood  as  laying  it  down  as  a  uni- 
versal rule,  that  the  notice  must  be  sent  to  the  post-office  nearest 
to  the  residence  of  the  party  to  whom  it  is  addressed.     If  he  was 


408  PROCEEDINGS   ON   NON-PAYMENT.    * 

in  the  liabit  of  receiving  his  letters  through  a  more  distant  post- 
office,  and  that  circumstance  was  known  to  the  holder  or  party 
giving  the  notice,  that  might  be  the  more  proper  channel  of  com- 
munication, because  he  would  be  most  likely  to  receive  it  in  that 
way ;  and  it  would  be  the  ordinary  mode  of  communicating  in- 
formation to  him,  and  therefore  evidence  of  due  diligence. 

In  cases  of  this  description,  where  notice  is  sent  by  mail  to  a 
party  living  in  the  country,  it  is  distance  alone,  or  the  usual  course 
of  receiving  letters,  which  must  determine  sufficiency  of  the  notice. 
The  residence  of  the  defendant,  therefore,  being  in  the  county  of 
Alexandria,  cannot  affiact  the  question.  It  was  in  proof  that  the 
post-office  in  Georgetown  was  the  one  nearest  his  residence,  and 
only  two  or  three  miles  distant,  and  through  which  he  usually  re- 
ceived his  letters.  The  letter  containing  the  notice,  it  is  true,  was 
directed  to  him  at  Georgetown.  But  there  is  nothing  showing 
that  this  occasioned  any  mistake  or  misapprehension  with  respect 
to  the  person  intended,  or  any  delay  in  receiving  the  notice.  And 
as  the  letter  was  there  to  be  delivered  to  the  defendant,  and  not 
to  be  forwarded  to  any  other  post-of3fice,  the  address  was  unimpor- 
tant, and  could  mislead  no  one. 

No  cases  have  fallen  under  the  notice  of  the  Court  which  have  sug- 
gested any  limits  to  the  distance  from  the  post-office  within  which 
a  party  must  reside  in  order  to  make  the  service  of  the  notice  in 
this  manner  good.  Cases,  however,  have  occurred,  where  the  dis- 
tance was  much  greater  than  in  the  one  now  before  the  Court,  and 
the  notice  held  sufficient.  16  Johns.  218.  In  cases  where  the  party 
entitled  to  notice  resides  in  the  country,  unless  notice  sent  by  mail 
is  sufficient,  a  special  messenger  must  be  employed  for  the  pur- 
pose of  serving  it.  And  we  think  that  the  present  case  is  clearly 
one  which  does  not  imposfe  upon  the  plaintiffs  such  duty.  We  do 
not  mean  to  say  no  such  cases  can  arise,  but  they  will  seldom  if 
ever  occur,  and,  at  all  events,  such  a  course  ought  not  to  be  re- 
quired of  a  holder,  except  under  very  special  circumstances. 
Some  countenance  has  lately  been  given  to  this  practice  in  Eng- 
land in  extraordinary  cases,  by  allowing  the  holder  to  recover  of 
the  indorser  the  expense  of  serving  notice  by  a  special  messenger. 
The  case  of  Pearson  v.  Crallan,  2  Smith,  404  ;  Chitty,  222,  n.,  is 
one  of  this  description.  But  in  that  case,  the  Court  did  not  say 
that  it  was  necessary  to  send  a  special  messenger  ;  and  it  was  left 
to  the  jury  to  decide  whether  it  was  done  wantonly  or  not.     The 


B-ANK   OF   OOLUMBIA    r,    LAWRENCE.  409 

holder  is  not  bound  to  use  the  mail  for  the  purpose  of  sending  no- 
tice. He  may  employ  a  special  mess(3ngcr  if  he  pleases,  hut  no 
case  has  l)ccn  i'ouiid  where  the  English  courts  have  directly  de- 
cid(Ml  that  he  must.  To  compel  the  holder  to  incur  such  exjicnse 
^vould  be  unreasonable,  and  the  policy  of  adopting  a  rule  that  will 
throw  such  an  increased  charge  upon  commercial  paper  on  the 
party  bound  to  pay,  is  at  least  very  questionable. 

We  are  accordingly  of  opinion  that  the  notice  of  non-payment 
was  duly  served  upon  the  defendant,  and  that  the  Court  erred  in 
refusing  so  to  instruct  the  jury. 

Judgment  reversed,  and  venire  facias  de  novo  awarded. 

Alany  of  tlu;  riiU-s  relating  to  tliis  subject  are  common  to  the  sul)ject  of  pre- 
sentment, to  wliich  the  reader  is  referred.  There  is  one  material  distinction, 
however,  \vhi(  h  is  worthy  of  note ;  that  is,  that,  though  presentment  should  be 
made  only  at  the  residence  or  place  of  business  of  the  maker  or  acceptor,  per- 
sonal notice  to  a  drawer  or  indorser,  in  due  time,  is  good  wherever  given. 
Hj-sloj)  r.  Jones,  3  McLean,  9G. 

If  there  are  two  post-offices  in  the  same  town,  notice  in  a  letter  directed 
to  the  indorser  generally  at  the  town  or  to  either  of  the  offices,  will  be  good, 
uidt'ss  the  party  sending  notice  knew,  or  might  by  inquiry  have  learned, 
wliicii  was  the  proper  office.  Upon  this  subject  Shaw,  C.  J.,  in  Morton  v. 
Westccjtt,  8  ("ush.  •125,  said :  "It  seems  well  settled  that  where  there  are  two 
post-offices  in  a  town,  notice  by  letter  to  an  indonser  addressed  to  him  at  the 
town  generally  is  sufficient,  unless  the  party  addressed  has  been  generally  accus- 
tomed to  receive  his  letters  at  one  of  the  offices  in  particular,  and  to  have  his 
li-ttirs  addressed  to  him  there  by  his  correspondents.  Such  being  the  rule,  the 
plainiiff  proves  his  case  j)rima  J'acie  by  proving  notice  by  letters  addressed  to 
the  defendant  at  the  town  generally.  If  then  the  defendant  would  rebut  this 
presumption  of  fact,  and  bring  himself  within  the  exception,  it  lies  on  him  to 
l)rovc  that  he  did  usually  receive  his  letters  at  one  office  only,  and  that  this 
miL;ht  have  been  known  by  reasonable  incjuiry  at  the  place  where  the  letter  was 
mailed.  Without  this  proof  it  may  be  true  that  the  defendant  received  his  let- 
ters habitually  as  well  at  one  post-otlice  as  the  other,  and  then  the  plaintiff's 
jir'uiKi  I'dcic  proof  remains  uurebutted,  and  he  must  prevail."  See  Downer  v. 
Ivcmcr,  L'l  Wend.  10,  to  the  same  effect.  See  also  Shaylor  r.  Mix,  4  Allen,  351, 
cited  at  length,  ;k>.9<,  413;  Woods  v.  Neeld,  44  Penn.  State,  86. 

If  the  party  to  be  notified  lives  in  a  town  in  which  there  is  no  post-office,  it 
seems  that  notice  by  letter  sent  to  the  nearest  postroffice  will  be  sufficient.  Shed 
V.  Hntt,  1  Pi.k.  401,  411  ;  Ireland  r.  Kip.  11  Johns.  232;  Union  Bank  i'.  Sto- 
ker, 1  La.  An.  269.  And  it  is  held  th.it  where  the  nearest  post-office  is  unknown, 
if  diligent  inquiry  is  made  to  ascertain  the  fact,  and  notice  is  sent  accordingly, 
that  is  sufficient.  Marsh  v.  Barr,  Meigs,  68;  s.  c,  9  Yerg.  253.  See  Moore  v. 
Ilardcastle,  11  Md.  4S6 ;  Davis  v.  Beckham,  4  Humph.  53;  Davis  v.  Williams, 
:^eck,  191  ;  Bank  of  United  States  i\  Carneal,  2  Peters,  543,  551.  ^ee 
also  Woods  V.  Neeld,  44  Penn.  State,  86. 


410  PROCEEDINGS   ON   NON-PAYMENT. 

Where  the  drawer  or  iiulorscr  receives  his  mail  at  either  one  of  several  post- 
ofTices,  notice  may  he  sent  to  either.  Bank  of  United  States  v.  Carneal,  2  Peters, 
543;  Bank  of  Louisiana  v.  Tournillon,  12  La.  An.  132.  See  also  Bank  of  Gen- 
eva V.  Hewlett,  4  Wend.  328 ;  Chouteau  v.  Webster,  6  Met.  1  ;  Bank  of  Colum- 
bia V.  Magruder,  6  Harris  &  J.  172 ;  Seneca  Co.  Bank  v.  Neass,  5  Denio,  329, 
338 ;  Ransom  v.  Mack,  2  Hill,  587  ;  Mercer  v.  Lancaster,  5  Penn.  State,  160. 

As  to  the  employment  of  messengers  discussed  in  the  principal  case,  the  fol- 
lowing points  are  settled :  If  the  holder  elect  to  send  notice  by  private  convey- 
ance instead  of  by  mail,  his  responsibility  continues  until  delivery  of  the  notice, 
either  personally  to  the  party  to  be  charged,  or  at  his  place  of  business  or  res- 
idence. Van  Vechten  v.  Pruyn,  13  N.  Y.  (3  Kern.)  549,  555.  In  this  case  if  it 
reach  its  destination  on  the  same  day,  within  business  hours,  on  which  it  would 
have  arrived  by  mail,  it  is  in  time ;  but  if  it  does  not  reach  the  place  until  the 
next  day,  it  is  too  late.  Bancroft  v.  Hall,  Holt,  N.  P.  476  ;  Beeching  v.  Gower, 
id.  315,  note;  Darbishire  v.  Parker,  6  East,  3.  See  Jarvis  v.  St.  Croix  Manuf. 
Co.,  23  Maine,  287. 


Bank  of  Utica  v.  Bender. 

(21  Wendell,  643.     Supreme  Court  of  New  York,  October,  1839.) 

r 

Diligence.  Law  and  fact.  —  When  the  facts  are  all  found,  what  is  reasonable  diligence 
is  a  question  of  law. 

Reasonable  diligence,  not  excessive,  reqidred.  —  The  holder  of  a  bill  inquired  of  the  drawer, 
upon  discounting  the  same,  where  the  defendant,  an  accommodation  indorser  of 
the  drawer,  resided.  Notice  was  sent  according  to  the  answer  given.  Held,  that 
this  was  reasonable  diligence,  nothing  having  occurred  to  lead  the  holder  to  dis- 
trust the  information  received,  though  the  indorser  actually  lived  in  a  different 
place  from  that  named,  and  received  his  mail  in  a  third. 

The  case  is  sufficiently  stated  iu  the  head-note  and  in  the  opin- 
ion of  the  Court. 

Bronson,  J.  When  the  facts  are  all  ascertained,  what  is  reason- 
able diligence  is  a  question  of  law.  "  This  results,"  said  Spencer^ 
J.,  in  Bryden  v.  Bryden,  11  Johns.  187,  "from  the  necessity  of 
having  some  fixed  legal  standard,  by  which  men  may  not  only 
know  the  law,  but  be  protected  by  it."  Bayley,  Bills,  142,  144, 
and  notes.  The  judge  was  not  requested  to  submit  the  question 
of  due  diligence  to  the  jury  ;  but  had  it  been  otherwise,  he  was 
right  in  treating  it  as  a  question  of  law,  there  being  no  dispute 
about  the  facts. 


BANK    OF   UTICA    V.    BENDER.  411 

Was  there  reasonal)lc  dilifronce  in  endeavoring  to  ascertain  the 
place  to  which  the  notice  should  he  directed  ?  Not  knowing  where 
the  defendant  lived,  the  plaintiffs  inquired  of  the  drawer,  for  whose 
accommodation  the  hill  was  discounted,  and  relying  upon  the  infor- 
mation given  hy  him,  they  sent  the  notice  to  Chittenango,  when  it 
should  have  been  sent  to  Manlius  or  Ilartsville.  This  is  not  like 
the  case  of  the  Catskill  Bank  v.  Stall,  15  Wend.  304,  affirmed  in 
error,  18  id.  406  ;  for  there  the  person  whottook  the  note  to  the 
bank,  and  gave  the  information  on  which  the  notice  was  misdi- 
rected, was  the  agent  of  the  indorsers,  and  they  had  no  right  to 
complain  that  credit  had  been  given  to  what  was,  in  effect,  their 
own  representation. 

But  1  am  unable  to  distinguish  this  from  the  case  of  the  Bank  of 
Utica  V.  Davidson,  5  Wend.  587.  That  was  an  action  against  the 
indorser  of  a  note  which  had  been  discounted  for  the  accommoda- 
tion of  the  maker,  and  the  notice  of  protest  was  sent  to  Bainbridge, 
when  it  should  have  been  sent  to  Masonville,  where  the  indorser 
lived.  The  person  who  took  the  note  to  the  bank,  and  gave  the 
information  on  which  the  plaintiffs  acted,  was  the  agent  of  the 
maker,  and  it  was  held  that  there  had  been  due  diligence,  and 
judgment  was  rendered  for  the  plaintiffs.  Sutherland^  J.,  men- 
tions the  fact  that  the  note  was  dated  at  Bainbridge,  where  the 
notice  was  sent,  and  that  the  indorser  had  but  recently  removed 
from  that  place ;  but  the  case  was  put  mainly  on  the  ground,  that 
the  plaintiffs  had  a  right  to  rely  on  the  information  given  by  the 
agent  of  the  maker  when  the  note  was  discounted.  In  the  case  at 
bar,  notice  was  directed  to  the  place  where  the  bill  purports  to 
have  been  drawn  ;  and  the  only  diflference  between  this  and  the 
case  of  the  Bank  of  Utica  v.  Davidson,  consists  in  the  single  fact, 
that  the  indorser  of  this  bill  had  never  lived  at  Chittenango.  That 
does  not,  I  think,  furnish  sufficient  ground  for  a  solid  distinction 
between  the  two  cases. 

How  does  the  question  stand  upon  principle  ?  It  is  not  absolutely 
necessary  that  notice  should  be  brought  home  to  the  indorser,  nor 
even  that  it  should  be  directed  to  the  place  of  his  residence.  It  is 
enough  that  the  holder  of  a  bill  make  diligent  inquiry  for  the  in- 
dorser, and  acts  upon  the  best  information  he  is  able  to  procure. 
If  after  doing  so,  the  notice  fail  to  reach  the  indorser,  the  misfor- 
tune falls  on  him,  not  on  the  holder.  There  must  be  ordinary  or 
reasonable  diligence,  —  such  as  men  of  business  usually  exercise 


412  PROCEEDINGS   ON    NON-PAYMENT. 

when  their  interest  depends  upon  obtaining  correct  information. 
The  holder  must  act  in  good  faith,  and  not  give  credit  to  doubtful 
intelligence  when  better  could  have  been  obtained. 

Now,  what  was  done  in  this  case  ?  The  plaintiffs  inquired  of 
Cobb,  the  drawer  of  the  bill,  who  would  of  course  be  likely  to  know 
where  his  accommodation  indorser  lived.  Tiiey  saw  that  the  de- 
fendant, by  lending  his  name,  had  evinced  his  confidence  in  the 
integrity  of  the  drawer;  and  so  far  as  appears,  nothing  had  then 
occurred  which  should  have  led  the  plaintiffs,  or  any  prudent  man, 
to  distrust  the  accuracy  of  Cobb's  statements  concerning  any  matter 
of  fact  within  his  knowledge.  He  professed  to  be  able  to  give  the 
desired  information,  and  his  answer  was  unequivocal.  If  Cobb 
was  worthy  of  being  believed,  there  was  no  reason  for  doubt  that 
the  indorser  resided  at  Chittenango.  The  plaintiffs  confided  in 
this  information,  and  acted  upon  it. 

But  it  is  said  that  Cobb  had  an  interest  in  giving  false  informa- 
tion for  the  purpose  of  protecting  his  accommodation  indorser,  and 
consequently  that  the  plaintiffs  should  not  have  trusted  to  his 
statement.  He  certainly  had  no  legal  interest  in  the  question. 
If  the  bill  was  not  accepted  and  paid  by  the  drawee,  Cobb,  as  the 
drawer,  was  bound  to  pay  and  take  it  up  from  the  holder  ;  and  if 
the  indorser  was  charged,  Cobb  was  bound  to  see  him  indemnified. 
In  a  legal  point  of  view,  it  was  wholly  a  matter  of  indifference  to 
him  whether  notice  of  the  dishonor  of  the  bill  should  be  brought 
home  to  the  indorser  or  not.  Before  any  thing  can  be  made  out 
of  the  objection,  we  must  say  that  the  plaintiffs  were  bound  to  sus- 
pect that  Cobb,  when  he  presented  the  bill,  intended  to  commit  a 
fraud  ;  that  he  was  obtaining  a  discount  upon  a  draft  which  he 
knew  would  not  be  paid,  either  by  the  drawee  or  by  himself;  that 
the  money  was  to  be  lost  to  some  one,  and  that  he  preferred  the 
loss  should  fall  on  the  holder  rather  than  the  indorser ;  and  conse- 
quently, that  he  would  give  false  information  concerning  the  proper 
place  for  directing  notice.  It  is  quite  evident  that  the  plaintiffs 
entertained  no  such  suspicion  ;  for  if  they  had,  they  would  neither 
have  confided  in  the  statements  of  Cobb,  nor  would  they  have 
loaned  him  the  money.  I  think  they  were  not  bound  to  believe 
that  a  fraud  was  intended.  There  was  nothing  in  the  circum- 
stances of  the  case  calculated  to  induce  such  a  belief  in  the  mind 
of  any  man  of  ordinary  prudence  and  foresight.  This  was  an  every- 
day business  transaction,  where  men  must  of  necessity  repose  a 


BANK   OF    UTICA    V.    BENDER.  413 

reasonable  degree  of  confidonce  in  each  other,  and  no  one  can  be 
charj^cablc  with  a  want  of  diligence  for  trusting  to  information 
which  would  usually  l)e  deemed  satisfactory  among  business  men. 
If  there  was  any  ground  whatever  for  suspecting  fraud  on  the  part 
of  Cobb,  it  was,  to  say  tlie  least,  very  slight,  and  was  fully  counter- 
balanced by  the  fact  that  the  defendant  had  testified  his  confidence 
in  Cobb  by  lending  his  name  as  indorser.  The  plaintiffs  have,  I 
think,  lost  nothing  by  trusting  to  informat^n  derived  from  the 
drawer  of  tlic  bill,  instead  of  seeking  it  from  some  other  individual. 
The  case  then  comes  to  this.  The  plaintiffs  applied  for  infor- 
mation to  a  man  worthy  of  belief,  and  who  was  likely  to  know 
where  the  indorser  lived.  They  received  such  an  answer  as  left 
no  reasonable  ground  for  doubt  that  Chittenango  was  the  place  to 
which  the  notice  sliould  be  sent.  I  think  they  were  not  bound  to 
push  the  inquiry  further.  Men  of  business  usually  act  upon  such 
information.  They  buy  and  sell,  and  do  other  things  affecting 
their  interest,  upon  the  credit  which  they  give  to  the  declarations 
of  a  single  individual  concerning  a  particular  fact  of  this  kind 
within  his  knowledge.  This  is  matter  of  common  experience. 
Ordinary  diligence  in  a  case  like  this  can  mean  no  more  than  that 
the  inquiry  shall  be  pursued  until  it  is  satisfactorily  answered. 
This  is  the  only  practical  rule.  If  the  holder  of  a  bill  is  required 
to  go  further,  it  is  impossible  to  say  where  he  can  safely  stop. 
Would  it  be  enough  to  inquire  of  two,  three,  or  four  individuals, 
or  must  he  seek  intelligence  from  every  man  in  the  place  likely  to 
know  any  thing  about  the  matter  ?  It  would  be  difficult,  if  not 
impossible,  to  answer  this  question.  Neio  (rial  denied. 

So  where  the  holder  of  a  bill  inquired  of  a  person  trading  at  a  particular 
place  if  he  knew  where  an  indorser  resided,  and  lie  rei)lied  that  lie  resided  at  the 
place  where  he  traded,  and  it  did  not  appear  that  the  holder  had  any  better 
means  of  knowledge,  it  was  held  that  he  had  used  due  diligence  to  learn  the  resi- 
dence of  the  indorser,  and  that  notice  put  into  the  post-office  directed  to  him 
there  was  sufficient.     Lambert  r.  Ghiselin,  9  How.  552. 

It  was  further  held  in  this  case  that  after  due  diligence  had  been  used  and  no- 
tice sent  accordingly,  the  holder  is  not  obliged  to  give  any  further  notice,  though 
he  afterwards  discover  that  the  notice  was  directed  to  the  wrong  j)lace.  But 
Beale  i\  Parrish,  20  N.  Y.  (6  Smith)  407,  holds  a  contrary  view;  without  no- 
ticing Lambert  v.  Ghiselin,  however.  And  the  doctrine  of  Heale  v.  Parrish  is 
not  stated  with  perfect  confidence.  See  latter  portion  of  the  Opinion  by  Mr. 
Justice  Grover. 

That  due  diligence  is  a  question  of  law  when  the  facts  are  ascertained,  is  well 
settled.     See  Walker  v.  Stetson,  ante,  pp.  ,'397,  399,  and  cases  cited. 


414  EXCUSES   OP   PRESENTMENT   AND   NOTICE. 


EXCUSES   OF   PRESENTMENT   AND   NOTICE. 


4 
The  Windham  Bank  v.  Norton,  Converse,  &  Co. 

(22  Connecticut,  213.     Supreme  Court,  July,  1852.) 

Unavoidable  accident.  —  Presentment  of  commercial  paper  must  be  made  on  the  day  on 
which  it  becomes  due,  unless  it  is  out  of  the  power  of  the  holder,  hy  the  use  of 
reasonable  diligence  to  present  it.    Failure  of  such  presentment  is  excused  by  any 
*  inevitable  or  unavoidable  accident,  not  attributable  to  the  fault  of  the  holder,  pro- 
vided he  make  presentment  as  soon  thereafter  as  he  is  able. 

This  was  an  action  of  assumpsit,  brought  by  the  Windham 
Bank,  as  holders  of  a  bill  of  exchange,  against  the  defendants,  as 
indorsers. 

The  bill  of  exchange  referred  to  was  drawn  by  George  Hobart, 
of  Norwich,  in  this  State,  upon  Mansfield,  Hall,  and  Stone,  of  Phila- 
delphia, and  by  them  accepted,  for  8417.26;  dated  January  31, 
1849,  and  payable  four  months  after  date,  to  the  order  of  the  de- 
fendants. 

The  declaration  was  in  the  common  form,  and  contained  the 
usual  averments  of  a  due  presentment  of  the  bill  in  question,  and 
notice  of  its  non-payment.  The  defendants  pleaded  the  general 
issue,  and  the  cause  came  on  for  trial  at  Brooklyn,  October  term, 
1851.  The  facts  were  found  by  the  Court,  by  agreement  of  the 
parties,  as  follows.  Said  bill  of  exchange,  was,  on  the  day  of  its 
date,  accepted  by  said  Mansfield,  Hall,  and  Stone,  "  payable  at  the 
Farmers'  and  Mechanics'  Bank,"  in  the  city  of  Philadelphia.     On 

the day  of  February,  1849,  the  defendants  procured  said  draft 

to  be  discounted  by  the  plaintiffs,  and  then  indorsed  and  delivered 
it  to  them.  During  the  same  month  of  February,  the  plaintiffs 
forwarded  said  draft,  by  the  United  States  mail,  to  the  Ohio  Life 
and  Trust  Co.,  a  banking  corporation  in  the  city  of  New  York,  for 
collection,  and  indorsed  the  same  to  Iheir  cashier,  as  follows: 
"  Pay  G.  S.  Coe,  Esq.,  cashier,  or  order;  "  signed,  "  Samuel  Bing- 


WINDHAM  BANK  V.    NORTON.  415 

ham,  cashier."     The  bill,  so  indorsed,  was,  in  a  day  or  two  there- 
after, and  in   due  cour.sc  of  mail,  received  by  said  Ojjio  Life  and 
Trust  Co.     The  third  day  of  grace,  June  3d,  being  Sunday,  the 
draft  was  actually  due  and  payable  on  .Saturday,  June  2d.     During 
the  year  1849,  there  were  two  mails  per  day,  each  way,  between 
New  York  and  Philadclpliia,  —  those  for  the  latter  place,  leaving 
New  York,  one  at  nine  a.m.,  the  other  at  four  and  a  half  p.m.,  and 
both  due  at  Philadelphia  in  five  hours  from  i,hcir  departure.     The 
Farmers'  and  Mechanics' Bank  were  tiic  Philadelphia  correspondents 
of  the  Ohio  Life  and  Trust  Co.,  and  communication?  by  mail  passed 
between  them  daily.     On  the  morning  of  June  1st,  the  cashier  of 
the  Ohio  Life  and  Trust  Co.  inclosed  this  draft  with  others,  ad- 
dressed in  the  proper  and  usual  mode,  to  the  Farmers'  and  Mechan- 
ics' Bank,  and  deposited  said  letter  in  the  United  States'  post-office, 
at  the  city  of  New  York,  in  season  for  the  afternoon  mail  of  that 
day  for  Philadclpina.     That  letter  was  duly  deposited  in  said  mail, 
and  said  mail  left  New  York,  and  arrived  at  Philadelphia  in  due 
and  usual  time ;  but  the  mail-bags,  containing  the  letters  for  Phil- 
adelphia, were,  by  the  post-office  clerks  in  the  office  at  New  York, 
marked   to   be   forwarded   to   Washington,   and   were,  therefore, 
not  delivered  at  Philadelphia,  but   carried   to   Washington.     At 
Washington,  the  mistake  was  discovered,  and  said  mail-bags  for- 
warded to  Philadelphia,  which  place  they  reached  in  the  course  of 
Sunday,  June  3d.     On  the  morning  of  the  next  day  said  letter, 
with  the  draft  inclosed,  was  delivered  from  the  post-office  at  Phila- 
delphia, to   said  Farmers'    and  Mechanics'  Bank,  who,  by  their 
cashier,  refused  payment  of  the  same,  and  between  the  hours  of 
nine  and  ten  a.m.  of  the  day  placed  said  draft  in  the  hands  of  a 
notary  public,  for  protest.     Said  notary,  between  the  hours  of  nine 
A.M.  and  three  p.m.  of  said  day  presented  said  draft  at  the  counter  of 
said  bank  for  payment,  and  received  for  answer  from  said  cashier 
that  he  was  ordered  by  the  acceptors  not  to  pay  it,  and  that,  had 
he  presented  it  on  Saturday,  June  2d,  he  should  have  given  him 
the  same  answer.     Said  notary  thereupon,  on  said  4th  day  of  June, 
in  due  and  proper  form,  protested  said  draft,  and  made  out  written 
notices  to  the  drawer  and  the  several  indorsers,  of  the  non-payment 
of  said  draft,  and  inclosed  said  notices,  with  the  notice  of  protest, 
in  a  letter,  and  on  the  same  day  deposited  the  same  in  the  post- 
office  in  said  Philadelphia,  duly  addressed  to  George  S.  Coe,  cash- 
ier of  Ohio  Life  and  'Trust  Co.,  New  York,  who  had  indorsed  said 


416  EXCUSES   OF   PRESENTMENT    AND   NOTICE. 

draft  to  tlie  Farmers'  and  Mechanics'  Bank,  and  by  whom  said 
letter  was,  in  due  course  of  mail,  received.  Said  Coe,on  the  same 
day  in  which  lie  received  tliem,  inclosed  said  letter  of  protest  and 
said  notices,  except  the  one  to  himself,  in  a  letter  duly  addressed 
to  the  plaintiffs,  and  deposited  tlie  same  in. the  city  of  New  York 
in  season  for  the  next  mail.  The  same  was,  in  due  course  of  mail, 
received  by  the  plaintiffs,  who,  on  the  day  of  the  receipt  thereof, 
inclosed  said  notices  to  the  defendants,  as  indorsers,  and  said 
notice  to  said  drawer  (his  residence  being  unknown),  in  a  letter 
duly  addressed  to  the  defendants,  and  deposited  it  in  the  post-office 
at  Windham,  in  season  for  the  next  mail,  and  the  same  was,  in  due 
course  of  mail,  received  by  the  defendants.  Mansfield,  Hall,  and 
Stone  became  insolvent,  and  suspended  payment  on  the  twelfth  day 
of  April,  1849,  and  on  the  next  day,  sent  to  the  Farmers'  and  Me- 
chanics' Bank  the  following  notice  in  writing:  — 

"  E.  N.  Lewis,  Esq.,  Cash. 

"  You  will  please  pay  no  more  notes  or  drafts  drawn  by  us,  and 
payable  at  your  bank,  until  further  notice,  as  they  will  not  be 
provided  for. 

"  Very  respectfully  yours, 

"  Mansfield,  Hall,  and  Stone." 

No  further  notice  was  sent,  and  said  bank,  from  that  time  for- 
ward, acted  upon  this  order,  and  refused  payment  of  all  notes  or 
drafts,  payable  at  the  bank,  by  said  firm.  The  business  hours  of 
the  Philadelphia  banks,  were,  in  1849,  from  nine  a.m.  to  three  p.m. 
Owing  to  the  miscarriage  of  the  United  States  mail,  as  above 
stated,  said  draft  was  not  presented  for  payment  on  Saturday, 
June  2d,  when  it  became  due,  and  was  never  presented  for  pay- 
ment at  any  other  time  than  on  said  fourth  day  of  June. 

It  has  been  the  usage  of  the  banks  and  merchants  of  this  country, 
for  the  last  forty  years,  to  make  use  of  the  United  States  mail  in 
forwarding  negotiable  notes  and  bills  of  exchange,  for  collection  or 
acceptance.  It  is  the  custom  of  the  Windham  Bank,  and  the  four 
Norwich  banks,  to  forward  all  paper  in  their  hands,  payable  abroad, 
within  five  or  eight  days  after  it  comes  into  their  hands,  without 
reference  to  the  length  of  time  it  has  to  run. 

The  questions  of  law  arising  upon  these  facts,  and  on  such 
further  facts  as  the  jury  might  rightfully  infer,  were  reserved  for 
the  advice  of  this  Court. 


WINDHAM    BANK    V.    NORTON.  417 

Storrs,  J.  The  defendants  first  insist,  that  the  averments  in 
this  declaration,  of  a  due  presentment  of  the  draft  in  question  and 
notice  of  its  non-payment,  must  be  strictly  proved,  and  that  they 
are  not  sustained  by  proof  of  tlie  facts  set  up  by  the  plaintiff's,  l)y 
way  of  excuse.  Whatever  may  be  the  cojirse  of  authorities  else- 
where, it  is  well  settled  here,  that  those  alle^jjations  are  supported 
by  evidence  of  matter  of  excuse,  or  a  waiver  of  demand  and  notice. 
Norton  v.  Lewis,  2  Conn.  47'^,  and  Camp  v.  Bates,  11  id.  487,  are 
decisive  on  this  point. 

The  otlicr  and  more  important  question  in  tills  case  is,  whether 
the  plaintiffs  are  excused  for  the  non-presentment  of  this  draft  for 
payment,  on  the  day  when  it  became  due.  The  last  day  of  grace 
being  Sunday,  it  was  payable  on  the  preceding  Saturday,  which 
was  the  second  day  of  June,  1849.  This  question  depends  on 
whether  the  plaintiffs  arc  chargeable  with  negligence,  in  not  pre- 
senting it  on  that  day. 

If  the  agent  of  the  plaintiffs,  to  whom  they  sent  it,  to  be  for- 
warded for  presentment  and  collection,  and  who  transacted  this 
business  for  them,  was  guilty  of  sucii  negligence,  it  is,  of  course, 
imputable  to  the  plaintiffs.  And  it  is  not  important  to  this  ques- 
tion, either  that  the  defendants  in  fact  sustained  no  damage,  by  the 
draft  not  having  been  presented  for  payment  when  it  lell  due,  or 
that  it  would  not  have  been  paid  by  the  acceptor,  if  it  had  then 
been  presented.  The  indorser,  on  a  question  of  due  presentment 
for  payment,  is  not  aifected  by  either  of  these  circumstances.  Nor 
indeed  do  the  plaintifts  claim  to  recover  on  either  of  these 
grounds. 

The  question  of  negligence  here  presented  depends  on  the  in- 
quiry, whether,  under  the  circumstances  of  this  case,  the  delay  of 
the  plaintilfs'  agent,  in  not  forwarding  this  draft  to  Piiiladelphia, 
until  the  last  mail  left  New  York  for  that  place,  on  the  day  next 
preceding  that  on  which  the  draft  fell  due,  constituted  a  want  of 
reasonable  or  due  diligence  in  regard  to  its  presentment.  We 
say,  under  the  circumstances,  because  there  is  no  positive  or  abso- 
lute rule  of  law  wliich  determines  within  what  precise  time  the 
holder  of  a  bill  of  exchange  must,  in  all  cases  whatever,  or  at  all 
events  avail  himself  of  the  authorized  mode  of  transmission 
adopted  in  this  instance,  to  forward  such  paper  for  presentment. 
The  general  principle,  established  by  all  the  adjudged  cases,  as 
well  as  the  approved  elementary  writers  is,  that  reasonable  dili- 

27 


418  EXCUSES   OF   PRESENTMENT   AND   NOTICE. 

gence  in  the  presentment  of  a  bill  for  payment,  is  required  of  the 
holder,  and  that,  therefore^  if  there  has  been  no  want  of  such  dili- 
gence lie  is  excused.  Story,  Bills,  c.  10  ;  Chitty,  Bills,  c.  9,  10  ; 
Story,  Prom.  Notes,  c.  7,  §  3G8  ;  Patience  v.  Townley,  2  Smith, 
223,  224. 

In  applying  this  principle,  the  general  rule  is,  that  it  must  be 
presented  for  payment  on  the  very  day  on  which,  by  law,  it  becomes 
due,  and  that,  unless  the  presentment  be  so  made,  it  is  a  fatal  ob- 
jection to  any  right  of  recovery  against  the  indorser.  But,  although 
this  is  the  general  rule,  it  is  not  an  universal  one,  and  prevails 
only  under  the  qualification,  which  is  really  a  part  of  the  rule  itself, 
that  there  is  no  negligence  or  want  of  reasonable  diligence  in  not 
making  such  presentment.  The  whole  rule,  therefore,  more  prop- 
erly stated  is,  that  the  presentment  must  be  on  the  day  on  which 
the  bill  becomes  due,  unless  it  is  not  in  the  power  of  the  holder, 
by  the  use  of  reasonable  diligence,  so  to  present  it.  By  the  very 
statement  of  this  rule,  as  thus  fully  expressed,  it  is  plain  that,  on 
the  question  whether  the  holder  is  excused  on  this  ground  for  not 
thus  presenting  it,  or,  in  other  words,  whether  there  was  negligence 
on  his  part,  or  a  want  of  reasonable  diligence,  no  absolute  or  posi- 
tive rule  can,  from  the  nature  of  the  case,  be  laid  down  which 
shall  apply  under  all  circumstances.  We  have  no  evidence  of  any 
general  custom  of  merchants  in  regard  to  the  precise  time  within 
which  mercantile  paper  is  usually  forwarded,  in  order  to  be  pre- 
sentedfor  payment,  so  that  the  law  merchant  furnishes  us  no  guide 
on  this  point.  And  it  is  clear  that  the  strict  rule  of  the  common 
law,  by  which  an  inability  to  perform  the  terms  or  condition  of  a 
contract,  by  reason  of  inevitable  accident  or  casualty,  constitutes 
generally  no  excuse  for  their  non-performance,  is  not  applicable  to 
mercantile  instruments  of  this  description.  Therefore,  the  excuse 
for  non-presentment  in  this  case  presents  the  ordinary  question  of 
negligence.'  That  question  may,  and  often  does,  depend  on  such  a 
variety  of  circumstances,  or  those  of  such  a  peculiar  character, 
that  it  is  very  difficult,  if  not  impossible,  to  reduce  them  to  any 
fixed  or  invariable  rule.  But,  in  regard  to  such  a  question,  as 
applicable  to  the  non-presentment  of  a  bill  or  note  when  it  is  due, 
it  is  considered  a  well-settled  rule  that  such  want  of  presentment 
is  excused  by  any  inevitable  or  unavoidable  accident  not  attributa- 
ble to  the  fault  of  the  holder,  provided  there  is  a  presentment  by 
him  as  soon  afterward  as  he  is  able ;  by  which  is  intended  that 


WINDHAM  BANK  V.    NORTON,  419 

class  of  accidents,  casualties,  or  circumstances  which  render  it 
morally  or  physically  impossible  to  make  such  presentment.  Judge 
Story,  in  speaking  of  this  ground  of  excuse,  says :  "  It  has  been 
truly  observed,  by  a  learned  author,"  referring  to  Mr.  Chitty, 
"  that  there  is  no  positive  authority  in  our  law  which  establishes 
any  such  inevitable  accident  to  be  a  sufficient  excuse  for  the  want 
of  a  due  presentment.  But  it  seems  justly  and  naturally  to  flow 
from  the  general  principle,  which  regulates  all  matters  of  present- 
ment and  notice,  in  cases  of  negotial)le  paper.  Tlie  object,  in  all 
such  cases  is,  to  require  reasonable  diligence  on  the  part  of  the 
holder;  and  that  diligence  must  be  measured  by  the  general  con- 
venience of  the  commercial  world,  and  the  practicability  of  accom- 
plishing the  end  required,  by  ordinary  skill,  caution,  and  effort." 
And  he  cites  the  remark  of  Lord  EUcnborovgh  in  Patience  v. 
Townley,  2  Smith,  223,  224,  that  due  presentment  must  be 
interpreted  to  mean,  presented  according  to  the  custom  of  mer- 
chants, which  necessarily  implies  an  exception  in  favor  of  those 
unavoidable  accidents  which  must  prevent  the  party  from  doing  it 
within  regular  time.     Story,  Bills,  §  25S. 

Applying  these  principles  to  this  case,  we  are  of  opinion  that  the 
plaintiffs  are  not  chargeable  with  a  want  of  reasonable  diligence. 

No  fault  or  impropriety  is  imputable  to  them,  by  reason  of  their 
having  selected  the  public  mail  as  the  mode  of  forwarding  the 
draft  in  question,  to  the  bank  in  Philadelphia,  where  it  was  pay- 
able. It  is  properly  conceded  by  the  defendants  that  such  mode 
of  transmission  was  in  accordance  with  the  general  commercial 
usage  and  law,  in  the  case  of  paper  of  this  description.  Indeed,  it 
is  recommended  in  the  books,  as  the  most  proper  mode  of  trans- 
mission, as  being  the  least  hazardous,  and  therefore  preferable  to  a 
special  or  private  conveyance.  But,  although  the  public  mail  was 
a  legal  and  proper  mode  by  which  to  forward  this  paper,  it  was 
their  duty  to  use  it  in  such  a  manner  that  they  should  not  be 
chargeable  with  negligence  or  unreasonable  delay.  If,  therefore, 
they  put  the  draft  into  the  post-office  at  ^o  late  a  period  that,  by 
the  ordinary  course  of  the  mail,  it  could  not,  or  there  was  reason- 
able ground  to  believe  that  it  would  not,  reach  the  place  of  its 
destination  in  season  for  its  presentment  when  due,  we  have  no 
doubt  that  there  would  be  on  their  part,  a  want  of  reasonable  dili- 
gence, which  would  exonerate  the  indorser.  On  the  other  hand, 
to  throw  the  risk  of  every  possible  accident,  in  that  mode  of  for- 


420  EXCUSES   OF   PRESENTMENT   AND    NOTICE. 

warding  the  draft  upon  the  holder,  where  there  has  been  no  such 
delay,  would  clearly  be  most  inconvenient,  unreasonable,  and  un- 
just, as  well  as  contrary  to  the  expectation  and  understanding  of 
the  indorser,  who  is  presunaed  to  be  aware  of  the  general  usage 
and  law  in  regard  to  the  transmission,  by  mail,  of  this  kind  of 
paper,  and  must  therefore  be  suj)posed  to  require  only  reasonable 
diligence  in  this  respect  on  the  part  of  the  holder ;  and  would, 
indeed,  be  inconsistent  with  the  rule  itself,  which  sanctions  its 
transmission  in  that  manner.  It  has  been  suggested  that  the 
principle  should  be  adopted,  that  when  the  holder  resorts  to  the 
public  mail,  he  should  be  required  to  forward  the  presentment  at 
so  early  a  period,  that  if  by  any  accident  it  should  not  reach  the 
place  of  its  presentment  in  the  regular  course  of  the  mail  there 
should  be  time  to  recall  it,  and  have  it  presented  when  and  where 
it  falls  due  ;  or  that,  at  least,  it  should  be  forwarded  in  season  to 
ascertain  whether  it  reached  there  by  that  time,  and  to  make  such 
a  demand  or  presentment  for  payment  as  is  required  in  the  case 
of  lost  bills.  We  find  no  authority  whatever  for  any  such  rule, 
nor  would  it,  in  our  opinion,  comport  with  the  principle  now  well 
established,  requiring  only  reasonable  diligence  on  the  part  of  the 
holder,  or  with  the  policy  which  prevails  in  regard  to  such  commer- 
cial instruments.  It  would,  in  the  first  place,  be  the  means  of 
restraming  the  transfer  of  such  paper  within  such  a  limited  time  as 
to  impair,  if  not  to  destroy,  its  usefulness  and  value,  arising  out 
of  its  negotiable  quality  ;  and,  in  the  next  place,  it  would  in  many 
cases  be  wholly  impracticable.  The  casualties  incident  to  this 
mode  of  transmission  are  most  various  in  their  character,  and  can 
not,  of  course,  be  foreseen ;  and  they  might,  in  the  case  of  for- 
warding mercantile  paper,  be  such  as  to  render  it  impossible  to 
ascertain  its  miscarriage,  or  to  recall  it  in  season  to  remedy  the 
difficulty.  In  the  case  of  the  draft  now  before  us,  for  example,  if 
it  had  been  placed  by  the  plaintiffs  in  the  post-office  at  Windham, 
where  they  were  located,  and  transacted  their  business,  for  trans- 
mission, direct  from  thence  to  Philadelphia,  on  the  very  day  when 
they  became  the  holders  of  it,  which  was  between  three  and  four 
months  before  it  became  due,  and,  by  an  accident  or  mistake  of  the 
postmaster  in  the  former  place,  similar  to  that  which  occurred  in 
this  case  at  New  York,  it  had  been  mailed  to  one  of  the  most 
distant  parts  of  our  country,  or  to  a  foreign  country  (which  would 
not  have  been  more  singular  than  that  it  should  have  been  mis- 


WINDHAM    BANK    V.    NORTON.  421 

takingly  mailed,  as  in  the  present  case,  for  Washington),  it  might 
not  have  been  practical)lc  for  the  plaintiffs  to  learn  the  accident,  or 
obviate  its  effect  before  the  paper  fell  due.  In  shoi't.  such  a  rule 
as  that  suggested,  wiMild  l)e  merely  artificial  in  its  character,  \n'0- 
ductive  of  great  inconvenience  and  injustice  in  particular  cases, 
without  any  corresponding  general  benefits,  and  cliange  the  whole 
course  of  business  in  regard  to  a  most  extensive  and  important 
class  of  mercantile  transactions.  Nor  has  any  other  arbitrary  or 
positive  rule  been  suggested  which  is  not  equally  oljuoxious  to  the 
same  or  similar  objections. 

The  only  remaining  inquiry  is,  whether  the  plaintiffs  are  charge- 
able with  negligence  for  not  forwarding  the  draft  in  question  by 
an  earlier  mail  from  New  York  to  Philadelphia.  It  was  sent  by 
the  usual,  legal,  and  proper  mode.  It  was  deposited  in  the  post- 
office  in  season  to  reach  the  place  where  it  was  payable,  before  it 
fell  due,  by  the  regular  course  of  the  next  mail ;  and  there  was  no 
reason  to  believe  that  it  would  not  Ije  there  duly  delivered.  It 
was  actually  sent  by  that  mail,  and,  but  for  the  mistake  of  the 
postmaster  where  it  was  mailed  in  misdirecting  the  packnge  con- 
taining it,  would  have  reached  its  proper  destination,  and  been 
received  there  in  season  for  its  presentment  when  due.  It  in  fact 
reached  that  place  when  it  should  have  done ;  but  was  carried 
beyond  it  in  consequence  of  that  mistake.  As  that  mistake  could 
not  be  foreseen  or  apprehended  by  the  plaintiffs,  it  is  not  reason- 
able to  require  them  to  take  any  steps  to  guard  against  it.  Indeed, 
they  could  not  have  done  so,  as  they  had  no  control  or  supervision 
over  the  postmaster.  They  had  a  right  to  presume  that  the  latter 
had  done  his  duty.  Tbey  could  not  know  that  he  had  misdirected 
the  package  until  it  was  too  late  to  remedy  the  consequences. 
The  occurrence  of  the  draft  being  sent  beyond  its  place  of  desti- 
nation was,  therefore,  so  far  as  the  plaintiffs  were  concerned,  an 
unavoidable  accident.  It  happened,  not  in  consequence  of  any 
delay  of  the  plaintiffs  in  putting  the  draft  into  the  post-office  at  so 
late  a  period  that  it  could  not,  or  probably  would  not,  reach  its 
destination  in  due  season,  but  merely  in  consequence  of  the  act  of 
the  official  to  whom  it  was  properly  confided,  done  after  it  was 
properly  in  his  charge,  by  the  plaintiffs,  for  transmission.  The 
accident,  moreover,  was  of  a  very  peculiar  and  extraordinary  char- 
acter, and  quite  different  from  those  which  are  ordinarily  incident 
to  that  mode  of  transmission,  and  against  which  it  would  l)e  ex- 


422  EXCUSES   OF   PRESENTMENT   AND   NOTICE. 

tremcly  difficult,  if  not  impossible,  to  guard.  It  would  have  been 
equally  liable  to  occur  at  any  time  when  the  draft  should  have 
been  placed  in  the  post-office.  It  was  not  owing  in  any  sense  to 
the  fault  of  the  plaintiffs,  but  solely  to  tliat  of  the  postmaster. 
Under  these  circumstances,  we  do  not  feel  authorized  to  impute 
any  blame  or  negligence  to  the  plaintiffs.  We  are,  therefore,  of 
opinion  that  judgment  should  be  rendered  for  the  plaintiffs. 
In  this  opinion  the  other  judges  concurred. 

Judgment  for  the  plaintiffs. 

Schofield  V.  Bayard,  3  Wend.  488,  may  at  a  cursory  glance  seem  at  variance 
with  the  above  important  case ;  but  a  closer  scrutiny  of  the  case  will  show  that 
there  is  no  conflict.  In  Schofield  v.  Bayard,  the  plaintiffs  were  holders  of  a  bill 
payable  in  London.  By  a  mistake  of  their  men  the  bill  was  sent  to  Liverpool  for 
presentment.  The  agent  of  the  holders  at  the  latter  place  mailed  it  back  in  time, 
indeed,  if  it  had  reached  the  holders  when  it  should  have  reached  them,  to  be  duly 
sent  to  London  ;  but,  by  a  mistake  at  the  post-office,  it  failed  to  reach  the  holders 
soon  enough  to  be  presented  at  the  proper  time.  The  Court  held  that  the  fault 
lay  with  the  holders  in  sending  the  bill  to  Liverpool ;  and  that  therefore  the  fail- 
ure to  make  due  presentment  could  not  be  excused.  In  delivering  the  opinion 
of  the  Court,  Savage,  C.  J.,  said:  "  This  presents  no  impossibility,  if  due  dili- 
gence had  been  used.  The  plaintiffs  should  not  have  sent  the  bill  to  Liverpool 
at  all.  It  is  true  that,  after  the  letter  containing  it  had  been  left  at  Liverpool,  it 
could  not  have  reached  London  in  season  ;  but  it  was  the  fault  of  the  plaintiffs  to 
have  parted  with  the  bill  in  the  manner  they  did.  Instead  of  sending  it  to  Liv- 
erpool they  should  have  sent  it  to  London,  and  then  it  would  have  been  in  sea- 
son, and  probably  would  have  been  paid.  I  am  of  opinion  that,  by  the  law  mer- 
merchant,  payment  should  have  been  demanded  in  London  on  the  twelfth  of 
November,  and  that  not  having  been  done,  and  there  being  no  impossibility  to 
prevent  it  but  what  is  attributable  to  the  want  of  due  diligence  on  the  part  of  the 
holder,  the  defendants  are  legally  discharged,  and  are  entitled  to  judgment." 


JUNIATA    BANK    V.    HALE.  423 


The  Juniata  Bank  v.  Hale  et  al. 

(16  Sergeant  &  Rawle,  157.     Supreme  Court  of  Pennsylvania,  June,  1827.) 

Death  of  maker.  I ndorser  appointed  administrator.  —  The  death  of  the  maker  of  a  note 
before  it  becomes  due,  and  the  taking  out  letters  of  administration  upon  his 
estate  by  the  indorsers  and  others,  before  the  note  arrived  at  maturity,  do  not  dis- 
pense with  the  necessity  of  notice  to  the  indorsers  of  non  payment  by  tlie  maker. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Duncan,  J.  This  was  an  action  against  the  defendants,  on  a 
negotiable  note,  dated  the  tenth  of  Xovember,  181(3,  for  six  hun- 
dred dollars,  in  which  Starrett  was  the  drawer,  E.  W.  Hale  the 
payee,  Hale  the  first  indorser,  and  Chriswell  the  second.  It  was 
a  note  for  the  accommodation  of  the  drawer,  and  Hale  declares,  in 
the  memorandum  subjoined  to  it,  that  it  was  for  the  use  of  the 
drawer.  It  was  payable  in  six  months,  and  was  discounted  by  the 
Juniata  Bank.  The  drawer  died  before  the  day  of  payment ;  and, 
on  the  second  of  December,  1816,  letters  of  administration  issued 
on  his  effects  to  Rebecca,  his  widow,  Robert,  his  brother,  and  Hale 
and  Chriswell. 

On  the  fourteenth  of  May,  1817,  the  note  was  protested,  but  no 
notice  of  demand  or  non-payment  was  given  to  the  indorsers,  or 
either  of  them. 

Tlie  Juniata  Bank  contended  that  notice  of  non-payment  was 
unnecessary,  inasmuch  as  the  indorsers  were  two  uf  the  adminis- 
trators, who,  in  their  character  of  administrators,  must  have  had 
knowledge  of  the  non-payment  of  the  note,  and  had  all  the  estate 
of  the  drawer  in  their  hands  to  secure  themselves. 

The  indorsers  insist,  that  if  knowledge  was  proved  on  them  of 
the  fact  of  non-payment,  still  they  were  entitled  to  notice  from  the 
Juniata  Bank,  the  holder  of  the  note,  of  the  intention  of  the  bank 
to  call  on  them.  And  Chriswell  who  is  joined  in  the  action  under 
the  act  of  assembly,  insists  further,  that  he  should  have  had  notice  ; 
for  although  the  note  migiit  not  have  been  paid  by  the  drawer,  wiio 
died  before  it  became  due,  still  it  might  have  been  paid  by  tlie  first 
indorser,  and  the  notice  of  the  non-payment  was  an  important  mat- 
ter to  him.     It  is  further  insisted   by  the  defendants,  that  so  far 


424  EXCUSES   OF   PRESENTMENT    AND   NOTICE. 

from  the  bank  giving  notice  of  an  intention  to  look  to  them  for 
payment,  in  1818  they  obtained  a  judgment  by  confession  from  the 
administrators,  a  special  judgment  de  bonis  intestati,  and  not  other- 
wise ;  and  that  they  delayed  to  proceed  on  this  judgment,  and  did 
not  call  on  tlic  indorsers  until  this  action  was  brouglit,  which  was 
lacking  a  few  days  of  six  years,  when  the  statute  of  limitations 
would  have  barred  the  recovery. 

On  the  trial  of  the  cause  before  the  Chief  Justice  at  the  late 
Circuit  Court,  for  the  purpose  of  having  the  question  settled  in  this 
Court,  which  is  admitted  to  be  new  in  species,  he  instructed  the 
jury  that  neither  the  demand  of  payment  nor  notice  of  non-payment 
was  necessary,  and  it  is  from  this  decision  the  defendants  appealed  ; 
and  on  this  opinion  it  is  now  only  necessary  for  this  Court  to  de- 
cide. From  the  view  they  have  taken  of  this  subject,  if  the  Court 
did  not  decide  on  the  general  doctrine  of  the  necessity  of  notice  of 
non-payment  from  the  holders  of  the  note,  the  circumstances  of  the 
situation  in  which  Chriswell,  tlie  second  indorser,  stood,  and  the 
judgment  against  the  administrators,  and  the  long  delay  in  bring- ' 
ing  tlie  action,  were  matters  worthy  of  serious  consi^leration  ;  but 
they  have  judged  it  most  advisable  to  decide  upon  the  general 
principle. 

What  is  tlie  nature  of  the  engagement  of  the  indorser  ?  It  is 
founded  on  the  law  merchant,  and  is  governed  by  its  principles  ; 
his  undertaking  is  only  to  pay  in  case  the  maker  does  not  pay. 
The  indorser  takes  it  on  the  condition  that  he  will  first  apply  to  the 
maker ;  and,  in  an  action  by  the  indorsee  against  the  indorser,  the 
declaration  must  aver  that  on  the  note  becoming  due,  the  demand 
was  made  of  the  drawer,  and  that  he  refused  to  pay,  of  which  the 
defendant  had  notice.  It  is  an  essential  part  of  the  plaintiff's 
case,  and  even  a  verdict  would  not  cure  the  omission.  This  was 
decided  in  the  Court  of  Errors  and  Appeals,  and  the  judgment  of 
the  Supreme  Court  reversed.  Miles  v.  O'Hara.^  And  though  the 
declaration  alleged  that  the  drawer  of  the  bill  became  liable  by  the 
custom  of  merchants,  this  is  not  sufficient,  because  the  law  mer- 
chant is  not  a  matter  of  fact,  but  of  law,  and  the  want  of  notice  is 
the  very  gist  of  the  action  ;  for  it  is  that  which  raises  the  implied 
promise.     M'Kinney  v.  Crawford,  8  Serg.  &  Rawle,  351,  353. 

That  knowledge  of  Jion-payment  is  not  notice,  is  very  clear ;  for 
the  notice  must  come  from  the  holder  himself,  or  some  one  who  is 
a  party  ;  for  the  notice  must  assert  that  the  holder  intends  to  stand 

1  1  Serg.  &  R.  32. 


JUNIATA    BANK    V.    HALE.  425 

Oil  his  legal  rights,  and  to  resort  to  the  iiidorser  for  payment ;  and 
therefore,  where  the  drawer  had  notice  before  the  bill  was  due  that 
tiie  ■acceptor  had  failed,  and  gave  another  person  money  to  pay  the 
bill,  and  the  holder  neglected  to  give  notice  of  its  dishonor,  it  was 
held  that  the  drawer  was  discharged.  Nicholson  v.  Gouthit,  2  H. 
Bl.  (il2 ;  AVhitfield  v.  Savage,  2  Bos.  &  Pul.  277  ;  Esdaile  v.  8ow- 
erby,  11  East,  114,  117.  And  where  a  few  days  before  the  l)ill 
became  due,  the  acceptor  informed  the  drawer  that  he  must  take 
it  up,  and  gave  him  part  of  the  money  to  assist  him  in  so  doing, 
and  the  latter  promised  to  take  up  the  bill  accordingly,  it  was  held 
the  latter  might  nevertheless  set  up,  as  a  defence,  that  the  bill  was 
not  duly  presented  for  payment,  and  that  he  had  not  regular  notice 
of  the  dishonor.  Baker  v.  Birch,  3  Camp.  107.  The  notice  must 
come  from  one  who  cati  give  the  drawer  or  indorser  his  immediate 
remedy  on  the  bill,  and  not  from  a  stranger  ;  otherwise  it  is  merely 
an  historical  fact ;  it  nuist  be  legal  notice,  otherwise  the  j)arty  is 
discharged  from  the  liability  he  contracted  by  indorsing  it.  2  Cowp. 
177  ;  Ciiitty,  Bills,  292.  The  reason  given  in  Ex  parte  Baizley,  7 
Ves.  Jr.  597,.is  very  satisfactory  ;  for  the  ground  of  discharging 
the  drawee  is,  that  the  drawer  gave  credit  to  some  other  person 
lial)le,  as  between  him  and  the  drawer.  Notice  from  any  other 
person  than  the  holder  that  the  note  is  not  paid,  is  not  notice  that 
the  holder  does  not  give  credit  to  a  third  person.  This  is  very 
strongly  put  by  Ashhurst  and  Bullcr,  JJ.,  in  Tindal  v.  Brown, 
1  T.  R.  1G7.  According  to  Ashhurst,  "  notice  means  something 
more  than  knowledge,  because  it  is  competent  to  the  holder  to  give 
credit  to  the  maker.  It  is  not  enough  to  say  that  the  maker  does 
not  intend  to  pay,  but  that  the  holder  does  not  intend  to  give  credit 
to  such  maker;  the  party  ought  to  know  whether  the  holder  in- 
tends to  give  credit  to  the  maker,  or  to  resort  to  him."  And,  by 
Buller,  J.,  it  was  said,  "  The  notice  ought  to  purport  that  the 
holder  looks  to  the  party  for  payment,  and  a  notice  from  another 
party  cannot  be  sufficient ;  it  must  come  from  the  holder."  And 
tliis  doctrine  of  Buller  has  been  acted  upon  in  many  cases  there, 
as  Lord  Eldon  observed  in  Baizely's  Case.  Now,  here  these  in- 
dorsers  ought  to  have  had  notice  from  the  Juniata  Bank  ;  for  that 
would  be  notice  that  they  did  not  mean  to  resort  to  the  estate  on 
which,  with  others,  they  had  administered,  but  to  them  in  the  char- 
acter of  indorscrs  ;  whereas,  by  not  giving  notice,  they  had  a  right 
to  conclude  the  bank  intended  to  look  to  the  drawer.     And,  accord- 


426  EXCUSES   OF   PRESENTMENT   AND    NOTICE. 

ing  to  AsJihursVs  opinion,  they  had  a  right  to  know  from  the  liolder, 
the  Juniata  Bank,  that  they  intended  not  to  give  credit  to  tlie  estate 
of  John  Starrett,  but  to  look  to  them  personally  as  indorsers.^ 

Tlic  argument  that  the  indorsers  received  no  injury  from  the 
want  of  notice  does  not  now  liold.  Whatever  vacillation  prevailed 
in  courts  for  a  time,  it  is  now  settled  that  the  insolvency  of  the 
drawer  of  a  note  does  not  dispense  with  the  necessity  of  demand 
and  notice  of  non-payment.  Between  the  parties  to  the  notice  the 
rule  is  inflexible,  and  it  is  not  open  to  the  inquiry  whether  notice 
could  hajre  availed  the  indorser.  The  holder  has  no  right  to  spec- 
ulate and  judge  what  may  be  the  interest  of  the  parties ;  his  duty 
is  a  plain  one,  —  to  give  notice  ;  and,  if  that  rule  is  dispensed  with, 
it  opens  a  door  for  endless  litigation  and  perplexing  inquiries. 
Death,  bankruptcy,  notorious  insolvency,  or  the  drawer's  being  in 
prison,  constitute  no  excuse  either  in  law  or  equity.  Gibbs  v. 
Gannon,  9  Serg.  &  Rawle,  201.  Notice  to  one  of  several  partners 
who  are  joint  indorsers,  is  notice  to  all ;  and,  if  one  of  tlie  drawers 
of  the  bill  be  also  an  acceptor,  and  there  is  no  fraud  in  the  trans- 
action, no  notice,  in  fact,  is  necessary  to  the  others.  Neither  is 
notice  necessary  to  a  party  who  by  his  conduct  dispensed  with  it, 
as,  by  engaging  to  call  on  the  holder,  and  ascertain  whether  the 
acceptor  has  not  paid  the  bill.  Ciiitty,  Bills  (Carey  &  Lea's  ed.), 
297.  So,  if  the  drawer  of  a  bill  promises  to  pay,  this  is  a  waiver 
of  the  objection  of  the  want  of  notice,  where  the  party  knew  all  the 
facts  and  the  legal  consequences.  But  it  has  been  recently  held, 
that  though  the  drawer  of  a  bill  may  impliedly  waive  his  right  of 
defence,  founded  on  the  laches  of  the  holder,  yet  an  indorser  can 
only  do  so  by  an  express  waiver.  Borradale  v.  Lowe,  4  Taunt.  93, 
96,  97  ;  Brown  v.  M'Dermot,  5  Esp.  265.  And  there  is,  in  all 
those  cases  of  want  of  notice,  a  material  and  essential  difference 
between  the  drawer  of  a  bill  and  the  indorser ;  for,  if  the  drawer 
of  a  bill  had  no  effects  in  the  hands  of  the  drawee  or  acceptor,  and 
the  bill  is  drawn  for  the  accommodation  of  such  drawer,  he  is  prima 
facie  not  entitled  to  notice  of  the  dislionor  of  the  bill,  nor  can  he 
object  in  such  case.^  He,  being  the  real  debtor,  acquires  no  right 
of  action  against  the  acceptor  by  paying  the  bill,  and  suffers  no 
injury  from  want  of  notice  of  non-acceptance  or  non-payment  (12 
East,  171),  and  therefore,  the  laches  of  the  holder  affords  him  no 

1  See  Chanoine  t-.  Fowler,  ante,  383,  and  note. 

2  See  Hopkirk  v.  Page,  post,  430. 


JUNIATA    BANK   V.    HALE.  427 

defeiT^e.  4  Taunt.  733.  But  it  is  no  excuse  for  not  giving  notice 
to  the  indorser  of  a  bill,  that  the  acceptor  had  no  eflfects.  Pcakc, 
202.  "  That  circumstance,"  said  Lord  Kenyan^  "  will  not  avail 
the  plaintiff.  The  rule  extends  only  to  actions  brought  against  the 
drawer  ;  the  indorser  is,  in  all  cases,  entitled  to  notice."  See 
Chitty,  259,  295. 

It  has  been  attempted  to  bring  this  within  the  principle  of  Bond 
V.  Farnham,  5  Mass.  170,  and  Barton  v.  Baker,  1  Serg.  <fe  Rawle, 
334  ;  ^  but  those  cases  were  decided  on  very  different  grounds.  In 
the  first,  Chief  Justice  Parsons  says :  "  The  opinion  was*founded 
on  this,  that  if  the  indorser,  representing  himself  liable  for  the 
payment  of  particular  indorsements,  receives  a  security  to  meet 
them  he  shall  not  afterwards  insist  on  a  fruitless  demand  upon  the 
maker,  or  a  useless  notice  to  himself,  to  avoid  payment  of  demands, 
which  on  receiving  security  he  has  undertaken  to  pay."  In  the 
latter,  the  late  Chief  Justice  put  it  on  the  ground  that  it  was  not 
unreasonable  to  suppose  that  the  defendant  took  upon  himself  the 
payment  of  the  indorsed  notes,  and  on  no  other  ground  could  it  be 
held  that  the  notice  of  non-payment  was  not  necessary. 

But  here  the  indorsers  had  no  security  beyond  any  other  simple 
contract  condition  of  John  Starrett ;  they  obtained  no  advantage 
beyond  strangers  to  the  administration  ;  for,  by  the  death  of  the 
intestate,  his  goods  and  lands  were  seized  by  act  of  law,  by  a  kind 
of  statute  execution  in  the  hands  of  his  administrator,  just  as  in 
the  case  of  a  commission  of  bankruptcy,  and  to  be  discharged  in  a 
prescribed  order ;  in  which  the  administrator  cannot  prefer  himself 
or  retain  his  own  debt,  as  he  could  by  the  laws  of  England.  The 
lands,  the  fund  here  for  tiie  payment  of  debts,  do  not  come  into 
the  possession  of  the  administrator ;  he  has  no  right  of  entry,  and 
can  bring  no  ejectment ;  the  possession  descends  to  the  heir.  The 
executor  or  administrator,  have,  by  virtue  of  their  office,  in  no  case 
a  right  to  the  possession  of  the  deceased's  lands.  As  1  do  not  find 
the  case  of  an  indorser  becoming  an  administrator  to  the  di'awcr, 
in  any  decision  among  the  books  of  authority,  to  form  an  exception 
to  the  necessity  of  giving  notice  to  the  drawer,  and  as  there  is  no 
reason  why  it  should,  I  am  not  for  relaxing  one  jot  further  than  it 
has  been  done,  this  wholesome  and  convenient  rule.  Indeed  wo 
find  judges  regretting  that  it  had  ever  been  departed  from  in  any 
case. 

1  Post,  458. 


428  EXCUSES   OF   PRESENTMENT   AND   NOTICE. 

Tlie  Chief  Justice,  who  decided  the  case  in  this  Court,  for  the 
purpose  of  bringing  this  new  question  before  the  Court,  joins  in  the 
opinion  of  the  other  members  of  the  Court,  that  the  indorsers  not 
having  received  notice  of  non-payment,  are  not  liable  on  the  in- 
dorsement, and  that  the  appeal  be  sustained. 

Tiie  rule  of  demand  and  notice  is  one  of  universal  obligation. 
I  would  not  extend  the  exceptions  further  than  to  the  cases  which 
have  been  expressly  decided.  Policy  and  the  convenience  of  the 
public  require  a  rigid  adherence  to  the  rule ;  for,  otherwise,  excep- 
tion would  creep  in  after  exception,  and  leave  the  law,  which  ought 
to  be  certain,  open  to  speculation  and  to  doubt. 

Judgment  reversed. 

The  Supreme  Court  of  the  United  States,  in  1830,  declared  the  same  rule  in 
the  case  of  Magruder  v.  Union  Bank  of  Georgetown,  3  Peters,  87,  and  re-af- 
firmed it  in  the  same  case,  7  Peters,  287.  The  decision  in  Caunt  v.  Thompson, 
7  Com.  B.  400,  has  perhaps  been  somewhat  misunderstood.  That  case  does  not 
decide  that  where  the  party  sought  to  be  charged  has  become  executor  of  the 
payor,  notice  is  dispensed  with,  but  that  the  circumstances  in  that  particular  case 
constituted  notice.  It  was  proved  at  the  trial  that  the  bill  in  the  case  was  duly 
presented  at  the  house  of  the  acceptor ;  and  that  the  defendant  (the  drawer) ,  to 
whom  it  was  there  shown,  said  that  the  acceptor  was  dead,  and  that  he  was  his 
executor ;  adding  a  request  that  it  might  be  allowed  to  stand  over  for  a  few  days 
and  he  would  see  it  paid ;  and  it  was  held  that  this  was  sufJicient  notice  of  dis- 
honor. It  will  be  seen  that  the  drawers  knowledge  of  the  dishonor,  which  was 
held  to  constitute  notice,  came  from  the  holder  and  proper  party.  It  was  not  a 
mere  "  historical  fact,"  which  the  drawer  may  have  derived  from  a  stranger,  but 
it  was  legal  notice  within  the  rule  laid  down  in  the  principal  case.  It  was  imma- 
terial, as  the  Court  held,  that  the  notice  was  not  given  with  all  the  formalities 
which  are  usual,  so  long  as  it  was  given  by  the  holder.  The  very  impoi'tant  dis- 
tinction drawn  in  the  principal  case  between  knowledge  and  notice  is  also  main- 
tained in  Caunt  v.  Thompson.  Cresswell,  J.,  quotes  with  approval  the  following 
language  of  Alder  son,  B.,  in  Miers  v.  Brown,  11  Mees.  &  W.  372  :  "Knowledge 
of  the  dishonor  obtained  from  a  communication  by  the  holder  of  the  bill  amounts 
to  notice."  Also  the  following  language  of  Ashhurst,  J.,  in  Tindal  v.  Brown,  1 
T.  R.  167  :  "  Notice  means  something  more  than  knowledge ;  because  it  is  com- 
petent to  the  holder  to  give  credit  to  the  maker."  Mr.  Justice  Cressivell  proceeds 
to  say:  "In  substance  these  cases  seem  to  establish  that,  in  order  to  make  a 
prior  holder  responsible,  he  must  derive_/ro?rt  some  jierson  entitled  to  call  for  pay- 
ment information  that  the  bill  has  been  dishonored,  and  that  the  party  is  in  a 
condition  to  sue  him,  from  which  he  may  infer  that  he  will  be  held  responsible." 
See  Chanoine  v.  Fowler,  ante,  383,  and  note;  also  Gower  v.  Moore,  25  Me.  16. 

We  do  not  see  then  that  there  is  any  conflict  between  Caunt  v.  Thompson 
and  the  principal  case ;  though  it  must  be  admitted  that  the  former  goes  to  the 
verge  of  the  law.' 

But  there  may  be  an  exception  to  the  rule  in  those  States  in  which  the  personal 


JUNIATA    BANK    V.    HALE.  429 

representative  is  allowed  l)y  statirtf  a  certain  period  for  settling  the  estate  of  the 
payor,  during  which  time  he  cannot  be  sued.  And  it  has  been  held  that,  if  the 
maker  of  a  note  die  and  an  administrator  be  appointed  before  the  note  fall  due, 
demand  upon  the  latter  is  not  necessary  to  charge  an  indorser,  unless  the  paper 
fall  due  after  the  period  during  which  the  administrator  is  exempt  from  suit. 
Hale  V.  Burr,  12  Mass.  8G.  But  this  was  not  the  case  of  an  indorser  appointed 
administrator. 

Shejiley,  J.,  in  Gower  r.  Moore,  25  Me.  IG,  cites  this  case  as  an  exception, 
and  states  that  the  doctrine  of  it  is  questionable  ;  but  it  has  been  followed  in 
Massachusetts  in  Oriental  Bank  r.  Blake,  22  Pick.  200,  and  m  Louisiana  in  Lan- 
dry V.  Stansbury,  10  La.  4.'S-t. 

But  in  Gower  v.  Moore  it  is  held  that  if  the  maker  of  a  note  die  before  its 
maturity,  the  indorsee  sliouhl  make  inquiry  for  his  personal  representative  if 
there  be  one,  and  present  the  note  to  him  at  maturity  for  payment. 

It  would  seem  advisable,  if  not  necessary,  to  present  the  paper  at  maturity, 
even  where  the  personal  representative  is  exempt  from  suit  for  a  certain  time, 
—  which  is  believed  to  be  generally  the  case  throughout  the  United  States, — 
and  give  notice  to  the  indorser  or  drawer  of  the  payor''s  death  and  of  the  matter 
of  administration,  so  that  he  may  take  the  proper  measures  to  secure  himself 
in  case  the  paper  is  not  finally  paid.  There  is  a  strong  reason  for  this  where 
the  indorser  is  not  aware  of  the  payor's  death ;  for  in  that  case  if  notice  were  not 
given  he  would  be  led  to  suppose  that  the  paper  had  been  duly  paid,  and  thus 
be  thrown  off  his  guard,  and  perhaps  lose  altogether  an  opportunity  to  secure 
himself  in  the  event  of  non-payment  from  the  estate  of  the  payor.  And  the 
modern  inclination  of  the  courts  is  to  adhere  more  strictly  than  formerly  to  the 
rule  requiring  presentment  and  notice.     See  Pierce  v.  Gate,  12  Cush.  190. 

Putnam,  J.,  in  Oriental  Bank  v.  Blake,  22  Pick.  206,  after  stating  the  rule 
laid  down  in  Hale  v.  Burr,  supra,  states  an  important  non  sequitur,  involving  the 
point  in  issue  in  the  case  before  him.  He  says :  "  But  it  does  not  follow  that 
because  to  charge  an  indorser,  no  demand  is  necessary  to  be  made  on  the  admin- 
istrator of  the  maker  of  a  note,  or  the  acceptor  of  a  bill  of  exchange  falling  due 
within  the  year  after  the  appointment,  notice  of  the  dishonor  of  the  bill  is  not 
necessary  to  be  given  to  the  administrator  of  the  indorser  in  a  reasonable  time. 
He  stands  in  the  place  of  the  indorser ;  and  a  want  of  notice  of  the  dishonor  of 
the  bill  may  be  prejudicial  to  all  persons  interested  in  the  estate  of  his  intestate. 
He,  for  example,  may  have  paid  to  the  party  liable  to  him  upon  the  bill,  money 
which  he  might  have  retained,  or  have  otherwise  omitted  to  obtain,  security  against 
the  undertaking  of  his  intestate.  To  the  same  effect  is  Merchants'  Bank  r.  Birch, 
17  Johns.  25. 

In  Ilaslett  j".  Kunhardt,  Rice  (S.  Car.),  189,  the  maker  of  a  note  payable  May 
25th,  was  drowned,  with  his  whole  family,  two  or  tiiree  days  before  the  ma- 
turity of  the  paper.  Notice  was  given  to  the  indorser  on  the  2.jth.  The 
maker  had  left  no  will,  and,  up  to  the  time  of  notice,  no  administration  had  been 
or  could  have  been  taken  out.  It  was  held  that  demand  was  excused ;  Rich- 
ardson, J.,  dissenting.  Sec  also  Price  i'.  Young,  1  McCord,  331);  s.  c,  1  Nott 
&  M.  438. 


430  EXCUSES   OP   PRESENTMENT   AND   NOTICE. 


James  Hopkirk,  surviving  partner  of  Spiers,  Bowman,  & 
Co.,  n.  William  Byrd  Page,  Executor  ofWiLLiAM  Byrd. 

(2  Brockenbrough,  20.     Circuit  Court  of  the  United  States  for  Virginia, 

May,  1822.) 

Drawinci  without  funds. — If  the  drawer  have  no  funds  in  the  hands  of  the  drawee  at 
the  time  of  drawing,  and  no  right  to  draw,  and  has  the  strongest  reasons  to  beheve 
that  his  draft  will  not  be  paid,  he  is  not  entitled  to  notice  of  dishonor. 

Effect  of  war.  —  The  effect  of  war  is  to  suspend  all  commercial  intercourse  between 
the  countries  engaged  in  it ;  and  therefore  presentment  and  notice  will  be  excused 
during  the  continuance  of  hostilities.  But  these  steps  should  be  taken  within  a 
reasonable  time  after  the  cessation  of  the  war. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Marshall,  C.  J.  This  suit  is  brought  to  obtain  payment  of  two 
bills  of  exchange  drawn  by  the  late  William  Byrd,  of  Virginia, 
on  Robert  Gary  &  Co.,  merchants  of  London,  the  one  in  the  year 
1774,  and  the  other  in  1775.  These  bills  were  regularly  pro- 
tested ;  but  the  defendant  makes  several  objections  to  paying  them. 
The  first  to  be  considered  is,  that  no  notice  of  their  non-payment 
and  protest  was  given  either  to  William  Byrd  in  his  lifetime,  or  to 
his  representatives,  since  his  death. 

The  i^laintiff  contends  that  this  notice  was  uimecessary,  because 
the  drawer  had  no  funds  in  the  hands  of  the  drawee. 

Although  this  application,  in  consequence  of  the  state  of  the 
fund  to  which  the  plaintiff  must  resort,  it  consisting  of  equitable 
assets,  is  made  *to  a  court  of  equity,  it  is  admitted  to  be  a  law 
case  depending  entirely  on  legal  principles.  It  requires  an  atten- 
tive consideration  of  the  question,  how  far  the  want  of  funds  of 
the  drawer  in  the  hands  «f  the  drawee  discharges  the  holder  of  a 
bill  of  exchange  from  the  necessity  of  giving  notice  to  the  drawer 
of  its  dishonor. 

The  rule  requiring  this  notice  was  for  a  long  time  supposed  to 
be  general,  and  Mr.  Justice  Blackstone  in  his  Commentaries  lays 
it  down  without  any  exception.  The  first  case  in  which  an  ex- 
ception was  admitted,  is  Bikerdike  v.  Bollman,  decided  in  Novem- 


HOPKIRK   V.    PAGE.  431 

bcr,  1786,  and  reported  in  1  Durn.  «t  East,  40o  ;  in  that  case  the 
Court  stated,  that  if  it  be  proved  hy  the  holder  that  "  from  the 
time  the  bill  was  drawn  till  the  time  it  became  due,  the  drawee 
never  liad  any  etfects  of  the  drawer  in  his  hands,"  notice  to  the 
drawer  is  not  necessary.  The  reason  given  is,  that  he  had  no 
right  to  draw,  and  could  not  be  injured  by  not  receiving  notice. 
An  additional  observation  made  by  one  of  the  judges  is,  that  to 
draw  in  such  a  case  "  is  a  fraud  in  itself." 

It  does  not  appear  from  tlic  report  of  this  case,  nor  is  there  any 
reason  to  believe,  that  there  were  any  running  accounts  between 
the  parties  ;  the  whole  complexion  of  the  case  ;  and  the  reasons 
assigned  by  the  judges  for  their  opinions,  negative  the  idea ;  it  is 
simply  the  case  of  a  debtor  drawing  a  bill  on  his  creditor,  without 
a  prospect  of  its  being  paid.  In  such  a  case,  notice  is  declared  by 
the  Court  to  be  unnecessary. 

It  is  remarkable  that  in  this  case,  although  the  principle  is  ex- 
pressly asserted  by  both  the  judges,  each  declares  that  the  case 
would  be  decided  in  the  same  way  on  a  different  principle. 

In  Goodall  and  others  v.  Dolley,  decided  in  ITHT,  1  Durn.  <fe 
East,  712,  the  judgment  was  against  the  holder  of  the  bill,  for 
want  of  notice  ;  but  in  giving  his  opinion,  Mr.  Justice  Buller  rec- 
ognizes the  principle  established  in  Bikerdike  v.  BoUman. 

In  Rogers  v.  Stevens,  2  T.  R.  713,  decided  in  1788,  the  law  is 
said  to  be  settled,  that  no  effects  of  the  drawer  in  the  hands  of  the 
drawee,  excuses  the  holder  from  the  necessity  of  giving  notice, 
yet,  it  is  remarkable  that  in  this  case,  all  three  of  the  judges  rely 
very  much  on  a  subsequent  assumpsit  made  by  the  drawer. 

In  Gale  v.  Walsh,  5  T.  R.  239,  decided  in  1793,  the  principle 
appears  to  be  recognized  ;  but  a  rule  to  show  cause  why  a  new 
trial  should  not  be  granted  for  this  cause,  was  discharged,  because 
the  fact  did  not  exist  in  the  case. 

These  are  the  earliest  cases  on  this  point :  it  has  occurred  very 
frequently  in  subsequent  cases,  and  the  principle  seems  to  be 
firmly  established  ;  but  as  the  q\icstion  has  come  forward  in  differ- 
ent forms,  and  been  viewed  under  different  aspects,  the  principle 
has  been  greatly  modified,  and  is  no  longer  laid  down  in  the  gen- 
eral terms  which  were  carelessly  used  on  its  introduction.  It  has 
been  found  necessary  to  define  its  extent  with  more  precision,  and 
to  state  the  rule  with  more  accuracy.  It  was  perceived,  that  in 
the  course  of  commercial  dealing,  it  would  frequently  occur  that  a 


432  EXCUSES  OP  PRESENTMENT  AND  NOTICE, 

person  might  draw  a  bill  with  the  best  reasons  for  believing  that  it 
would  be  honored,  although,  in  fact,  he  might  have,  at  the  time, 
no  funds  in  the  hands  of  the  drawee  ;  and  that  all  the  reasons  for 
requiring  notice,  would  apply  in  such  a  case,  with  the  same  force 
as  if  the  bill  had  been  drawn  on  actual  funds.  In  Legge  v.  Thorpe, 
12  East,  171,  Le  Blanc  and  Bayley,  JJ.,  stated  the  principle 
laid  down  in  Bikerdike  v.  Bollman,  and  afterwards  adhered  to,  in 
these  terms : 

They  said,  "  that  the  Court  in  that  case,  looking  to  the  reason 
for  which  notice  was  required  to  be  given,  laid  down  the  rule,  not 
generally,  that  where  the  drawer  had  no  effects  in  the  hands  of  the 
drawee  at  the  time  (which  perhaps  might  turn  out  to  be  the  case 
upon  a  future  settlement  of  accounts  between  them)  no  notice  of 
dishonor  should  be  given :  but  that  it  need  not  be  given  where  the 
drawer  mud  have  hioum  at  the  time  that  he  had  no  effects  to  an- 
swer the  bill,  and  could  have  no  reason  to  expect  tiiat  his  bill 
would  be  honored." 

In  Blackhan  v.  Doren,  2  Camp.  503,  Lord  Ellenhorovgh  said: 
"  If  a  man  draw  upon  a  house  with  whom  he  has  no  account, 
he  knows  that  the  bill  will  not  be  accepted,  he  can  suffer  no  injury 
from  want  of  notice  of  its  dishonor,  and,  therefore,  he  is  not  en- 
titled to  such  notice.  But  the  case  is  quite  otherwise  where  the 
drawer  has  a  fluctuating  balance  in  the  hands  of  the  drawee." 

In  Walwyn  v.  St.  Quintin,  1  Bos.  &  Pul.  652,  one  of  the 
strongest  cases  in  the  books  in  favor  of  dispensing  with  notice, 
Eyre,  C.  J.,  said:  "  But  it  may  be  proper  to  caution  bill-holders 
not  to  rely  on  it  as  a  general  rule,  that  if  the  drawer  has  no  effects 
in  the  acceptor's  hands,  notice  is  not  necessary.  The  cases  of 
acceptances  on  the  faith  of  consignments  from  the  drawer,  ijot 
come  to  hands,  and  the  case  of  acceptances  on  the  ground  of  fair 
mercantile  agreements,  may  be  stated  as  exceptions,  and  there 
may  possibly  be  many  others." 

In  Brown  et  al.  v.  Maffey,  15  East,  216,  Lord  Ellenhorough 
said :  "  The  doctrines  of  dispensing  with  notice  of  the  dishonor  of 
a  bill  has  grown  almost  entirely  out  of  the  case  of  Bikerdike  v. 
Bollman.  That  decision  dispensed  with  the  notice  to  the  drawer, 
where  he  knew  beforehand  that  he  had  no  effects  in  the  hands  of 
the  drawee,  and  had  no  reason  to  expect  that  the  bill  would  be  paid 
when  it  became  due." 

''  But  that  exception   must   be   taken  with   some   restrictions. 


HOPKIRK    V.    PAGE.  433 

which,  since  I  sat  hero,  1  have  often  had  occasion  to  put  on  it,  as 
where  the  drawer,  thouuh  he  migiit  not  have  cnbcts  ut  the  time  of 
tlic  drawing  of  tlie  hill  in  the  drawee's  hands,  has  a  running  ac- 
count with  him,  and  there  is  a  flliictuating  balance  between  them, 
and  the  drawer  has  rcasonai)le  ground  to  expect  that  he  shall  have 
effects  in  the  drawee's  hands  when  the  bill  becomes  due.  In  such 
cases,  I  have  always  held  the  drawer  to  be  entitled  to  notfce,  he- 
cause  he  draws  the  l)ill  upon  a  reasonable  presumption  that  it  will 
be  honored." 

In  Rucker  et  al.  v.  Hiller,  16  East,  43,  Lord  Ellenhorongh  said  : 
"  Where  the  drawer  draws  his  bill  in  the  bona  fide  expectation  of 
assets  in  the  hands  of  the  drawee  to  answer  it,  it  would  be  carry- 
ing the  case  of  Bikerdike  v.  Bollman  farther  than  has  ever  been 
done,  if  he  were  not  at  all  events  entitled  to  notice  of  the  dis- 
honor. And  I  know  the  opinion  of  my  lord  chancellor  to  be,  that 
the  doctrine  of  that  case  ought  not  to  be  pushed  farther.'' 

"  The  case  is  very  different  where  the  party  knows  tiiat  he  has  no 
right  to  draw  the  bill.  There  are  many  occasions  where  a  drawee 
may  be  justified  in  refusing  from  motives  of  prudence  to  accept  a 
bill,  on  which  notice  ought  nevertheless  to  be  given  to  the  drawer  ; 
and  if  we  were  to  extend  the  exception  farther,  it  would  come  at 
last  to  a  general  dispensation  with  notice  of  the  dishonor,  in  all  cases 
where  the  drawee  had  not  assets  in  hand  at  the  very  time  of  pre- 
senting the  bill,  and  thus  get  rid  of  the  general  rule  requiring 
notice,  than  which  nothing  is  more  convenient  in  the  commercial 
world.  A  bona  fide  reasonable  expectation  of  assets  in  the  hands 
of  the  drawer  has  been  several  times  held  to  be  sufficient  to  en 
title  the  drawer  to  notice  of  the  dishonor,  though  such  exj)ectation 
may  ultimately  fail  to  be  realized." 

And  in  the  same  case,  Bayley^  J.,  said  :  "  The  general  rule  re- 
quires notice  of  the  dishonor  to  be  given  in  due  time  to  the 
drawer,  and  it  lay  upon  the  plaintiff  to  show  that  he  could  not 
possibly  be  injured  by  the  want  of  it.  It  would  be  somewhat  hard 
to  call  upon  the  drawer  towards  the  end  of  six  years  after  the  bill 
given  ;  and  when  he  objected  that  he  had  no  notice  of  the  dis- 
honor, to  tell  him  that  he  had  no  effects  in  the  drawee's  hands  at 
the  time  when  the  bill  was  presented,  though  they  might  haye 
come  to  his  hands  the  very  day  after, *and  the  drawee  might  have 
settled  his  accounts  with  the  drawer  on  the  presumi)tion  that  the 
bill  was  paid." 

28 


434  EXCUSES   OF   PRESENTMENT   AND   NOTICE. 

The  subject  was  considered  by  the  Supreme  Court  of  the  United 
States,  in  the  case  of  French  v.  The  Bank  of  Columbia,  reported 
in  the  fourth  volume  of  Cranch.  4  Cranch,  141,  2  Cond.  58. 
In  that  case,  it  was  said,  "  to  be  the  fair  construction  of  the  Eng- 
lish cases,  that>-a  person  having  a  riglvt  to  draw  in  consequence  of 
engagements  between  himself  and  the  drawee,  or  in  consequence 
of  consignments  made  to  the  drawee,  or  from  any  other  cause, 
ought  to  be  considered  as  di^wing  u})on  funds  in  the  hands  of  the 
drawee,  and,  therefore,  as  not  coming  within  the  exception  to  the 
general  rule."  When  the  drawer  is  continually*making  consign- 
ments to  the  drawee,  and  continually  drawing  on  those  consign- 
ments, his  conduct  may  be  essentially  affected  by  knowing  that 
any  of  his  bills  have  been  protested.  He  may  stop  in  transitu,  or 
may  suspend  further  consignments.  It  may  be  as  material  to  his 
interest  to  place  no  more  funds  in  the  hands  of  the  drawee  in 
such  a  case,  as  to  withdraw  the  funds  previously  placed  in  his 
hands.  Notice  may  be  as  important  to  him  in  the  one  case  as  in 
the  other,  and  there  seems  to  be  the  same  reason  for  requiring  it, 
supposing  the  rule  to  be,  that  every  person  having  a  right  to  draw, 
or  having  reason  to  believe  that  his  bill  will  be  honored,  is  entitled 
to  notice.  I  will  proceed  to  apply  the  principle  to  the  facts  of  this 
case  ;  and,  in  doing  it,  I  shall  consider  the  two  bills  separately. 

On  the  nineteenth  of  July,  1774,  William  Byrd  drew  on  Robert 
Cary  <)e  Co.,  in  favor  of  Edward  Brisbane,  for  the  sum  of  £353  6s. 
This  bill  was  indorsed  by  Edward  Brisbane  to  Alexander  Spiers, 
and  by  him  to  the  company.  On  the  seventeenth  of  November,  1774, 
it  was  protested  for  non-payment.  The  first  information  that  appears 
to  have  been  given  of  this  protest  to  Colonel  Byrd,  or  his  repre- 
sentatives, was  the  institution  of  this  suit  in  1819. 

The  executor  of  Byrd  resists  its  payment  for  want  of  notice, 
and  the  plaintiff  alleged  that  notice  was  unnecessary,  because  the 
drawer  had  no  effects  at  the  time  in  the  hands  of  the  drawee.  To 
support  this  allegation,  he  relies  on  several  letters  written  by  Rob- 
ert Cary  &  Co.  to  William  Byrd,  which  have  been  exhibited  by  the 
executor  on  his  requisition. 

The  defendant  objects  to  this  testimony,  that  the  letters  are  the 
mere  allegations  of  Robert  Cary  &  Co.,  and  do  not  contain  a  full 
statement  of  the  correspondence  between  the  parties,  or  of  their  ac- 
counts ;  that  Colonel  Byrd  may  not  have  acquiesced  in  the  accounts 
transmitted  with  these  letters,  or  in  the  statements  they  contain, 


^        HOPKIHK    V.    PAGE.  436 

although,  from  tlic  loss  of  papers,  the  death  of  parties,  and  tlie 
great  lapse  of  time,  the  papers  cannot  now  be  produced. 

The  general  ruh."  is,  that  a  long  ac(iuiescence  in  letters  contain- 
ing accounts,  is  prima  facie  evidence  of  an  acquiescence  in  their 
contents ;  and  there  is  less  reason  for  excepting  thJfe  case  from  the 
rule,  because  the  letters  of  Robert  Gary  &  Co.,  from  November, 
1773  to  October,  1775,  do  not  notice  any  objection  on  the  part  of 
William  Byrd  to  any  of  the  accounts  which,  one  of  those  letters 
says,  were  annually  transmitted  to  him. 

The  letter  from  Robert  Gary  &  Go.  to  AVilliam  Byrd,  dated  the 
tenth  of  November,  1773,  incloses  an  account  current,  showing  a 
balance  due  Robert  Gary  &  Go.  of  £616  9«.  Id,  Tiiis  letter  gives 
notice  of  the  completion  of  a  contract  for  the  sale  of  Byrd's  Eng- 
lish estate  ;  says  the  money  is  to  be  paid  the  fifth  of  April ;  that 
they  shall  immediately  afterwards  take  up  the  whole  of  his  bills ; 
and  says  that  they  have  referred  Farrell  and  Jones  to  him,  to  deter- 
mine whether  they  shall  pay  a  debt  of  about  <£800,  claimed  by 
Farrell  and  Jones. 

Tiie  next  letter  is  dated  the  thii'teenth  of  May,  17  74.  It  states  the 
receipt  of  £5000  on  account  of  the  estate  which  had  been  sold, 
and  the  expectation  of  receiving  the  farther  sum  of  .£11,500  on 
the  same  account.  It  states  the  payment  of  debts  to  the  amount 
of  X5544  Is.  4:d.  and  gives  a  list  of  other  debts  due  from  Byrd,  to 
the  amount  of  £11,577.  The  letter  concludes  with  saying,  that 
by  Greenland's  estimate,  the  produce  of  the  estate  will  not  exceed 
£15,500,  out  of  which  great  charges  are  to  be  deducted.  From 
this  sketch  the  letter  proceeds  :  '*  You  will  be  able  to  judge  how 
the  account  may  stand,  and  what  bills  must  be  returned." 

It  is  observable,  that  among  the  debts  paid,  are  several  bills  of 
exchange,  which  had  been  long  protested,  one  of  them  as  early  as 
February,  1708.  This  fact  shows  an  understanding  by  which  bills 
were  held  up  after  a  protest,  in  the  expectation  that  they  would  be 
paid  by  tke  drawee,  notwithstanding  the  protest.  In  such  a  case, 
if  no  notice  be  given,  the  law  seems  to  be,  that  the  holder  looks  to 
the  drawee,  not  to  the  drawer  for  payment. 

The  next  letter,  of  the  fifth  of  August,  1774,  states  that  there 
are  many  bills  which  must  be  returned,  after  paying  all  the  money 
received  on  account  of  the  English  estate.  This  letter  speaks  of 
a  further  sum  for  a  half  year's  rent,  accruing  before  the  purchaser 
took  possession,  to  be  received  after  Michaelmas.     This  would  be 


436  EXCUSES   OF  PRESENTMENT   AND   NOTICE. 

£371  is.  Qd.  There  is,  too,  a  subsequent  letter,  of  the  foiirteenth  of 
March,  1775,  which  mentions  a  farther  receipt  of  .£448  12s.  1^., 
on  account  of  the  English  estate. 

Colonel  Byrd  appears  to  have  drawn  to  the  full  amount  of  his 
English  estate,  *o  far  as  Robert  Gary  &  Co.  had  stated  the  money 
to  have  been  received ;  and  if  the  transactions  between  the  par- 
ties had  gone  no  farther,  these  letters  would  furnish  strong  reasons 
for  the  opinion  that,  in  July,  1774,  he  acted  at  least  incautiously  in 
drawing  the  bill  under  consideration.  But  there  were  transac- 
tions between  the  parties.  Colonel  Byrd  held  a  large  estate  in 
Virginia,  and  the  usage  of  the  considerable  planters  to  ship  their 
tobacco  to  London  mercliants,  and  to  draw  on  their  consignments,  is 
of  general  notoriety.  In  their  letter  of  the  seventeenth  of  November, 
1774,  Robert  Cary  &  Co.  say  :  "  "We  shall,  in  the  disposal  of  your 
tobacco,  hope  to  render  you  a  safe  and  pleasing  tale." 

In  a  letter  of  the  tenth  of  February,  1775,  is  an  account  of  sales 
of  fifteen  hogsheads  of  tobacco,  shipped  in  a  vessel  commanded  by 
Captain  Powers  ;  and  there  is  also  notice  taken  of  a  mortgage  on 
the  estate  sold  to  Mrs.  Otway,  for  which  no  claimant  had  appeared, 
but  for  which  Mrs.  Otway  had  retained  a  considerable  sum  in  her 
hands.  The  letter  says  :  "  We  were  compelled  to  settle  the  con- 
veyance in  the  manner  we  did,  yet  at  the  same  time,  it  no  ways 
precluded  you  from  receiving  your  part  of  this  other  mortgage,  if 
no  claimants."  The  letter  shows  that  Colonel  Byrd  had  written 
on  this  subject,  and  had  manifested  the  expectation  of  receiving  a 
further  sum  on  this  account.  The  letter  mentions  the  payment  of 
some  small  orders  given  by  Byrd. 

It  may  be  considered  as  probable,  from  these  letters,  that  Colonel 
Byrd  was  not  perfectly  satisfied  with  the  sums  retained  on  account 
of  charges  on  the  estate,  and  expected  more  money  from  it. 

A  letter  of  the  twentieth  of  June,  1775,  states  the  payment  of  a 
draft  drawn  by  Colonel  Byrd,  in  favor  of  Hornsby,  for  <£75,  and 
their  payment  for  his  honor  of  another  draft  on  Farrell  and  Jones 
for  the  same  sum. 

The  last  letter  is  dated  second  of  October,  1775.  It  mentions 
the  payment  of  several  little  drafts,  as  desired  b}'  Colonel  Byrd, 
"  which  are  mentioned  in  an  account  current  inclosed,"  but  th^ 
account  itself  does  not  appear.  It  shows  a  balance,  as  the  letter 
says,  of  16s.  lid.  in  favor  of  Colonel  Byrd. 

From  this  review  of  the  letters  in  the  cause,  it  is  obvious  that 


HOPKIRK    V.    PAGE.  437 

Colonel  Byrd  was  much  pressed  for  money  ;  that  he  was  sanguine 
in  his  calculations  of  the  sums  to  l)e  yielded  by  his  estate  in  Eng- 
land;  that  he  drew  upon  that  fund  by  anticij)ation,  and  to  an 
amount  greater  perhaps  than  was  strictly  justifiable.  It  is  also 
apparent  that  a  considerable  part  of  the  money  fgi*  which  the  es- 
tate sold  was  retained  for  incumbrances,  some  of  which  were 
questionable,  and  there  is  reason  to  believe  that  he  questioned 
them.  It  is  also  apj)aront  that  there  were  running  transactions 
between  the  parties,  and  tbat  the  holders  of  his  l)ills  were  in 
the  habit  of  retaining  them,  and  of  receiving  payment  long  after 
protest.  That  he  made  sliipments  of  tobacco  in  the  time,  is  un- 
questionable ;  but  the  amount  of  his  shipments  is  uncertain  ;  his 
letters  are  not  produced  ;  they  would  throw  much  light  on  this 
transaction.  The  letters  giving  notice  of  this  particular  draft, 
might,  and  probably  would,  show  the  idea  on  which  it  was  drawn, 
and  the  calculations  of  the  drawee  ;  it  might  be  drawn  on  actual 
consignment  of  tobacco,  or  it  might  be  drawn  on  a  calculation  that 
something  farther  miglit  be  yielded  by  those  items  of  the  English 
estate,  which  the  letters  sliow  had  not  finally  been  adjusted.  These 
calculations  may  have  been  erroneous  ;  but  if  they  were  made, 
the  bill  was  not  drawn  with  a  knowledge  that  it  would  not  be  hon- 
ored, and  therefore  notice  of  its  dishonor  was  unnecessary.  The 
Court  will  not  presume  that  these  calculations  were  made ;  the 
Court  will  not  presume  that  the  letter  of  advice  which  usually 
accompanies  a  bill  of  exchange,  did  show  that  the  drawer  cal- 
culated on  his  bills  being  honored ;  but  the  Court  cannot 
presume  the  contrary ;  and  it  is  to  be  recollected  that  when  a  pro- 
tested bill  is  held  up  for  a  great  length  of  time  without  notice,  the 
whole  onus  prohandi  is  thrown  on  the  holder  ;  he  must  prove  every 
thing,  and  nothing  is  required  from  the  drawer. 

The  case  furnishes  strong  reason  for  the  opinion,  that  this  bill 
was  not  returned  to  A^irginia,  but  was  held  up  by  Spiers,  Bowman, 
k  Co.  in  the  expectation  of  its  being  paid  by  Robert  Cary  «fe  Co. 
It  was  drawn  on  the  nineteenth  of  July,  1774,  and  protested  for 
non-payment  on  the  twenty-sixth  day  of  November  of  the  same 
year.  Another  bill  for  £218  los.  drawn  on  the  fourth  of  July, 
1774,  in  favor  of  Spiers,  Bowman,  &  Co.,  and  protested  on  the 
ninth  of  November,  1774,  was  returned  to  Colonel  Byrd,  and  was 
taken  up ;  these  bills  drawn  l)y  the  same  persons,  and  held  by  the 
same  house,  at  the  same  time,  would  probably  have  been  returned 


438  EXCUSES   OF   PRESENTMENT   AND   NOTICE. 

by  the  same  vessel  had  they  been  both  returned.  The  circum- 
stance that  one  was  drawn  in  favor  of  Brisbane,  an  agent  of  the 
company,  and  indorsed  by  him  to  a  member  of  the  company,  and 
by  that  member  to  the  company,  would  not  account  for  the  appear- 
ance of  one  bili  without  the  other,  if  both  were  returned.  They 
were  both  the  property  of  the  same  company,  both  due  by  the 
same  person,  both  in  possession  of  the  company  at  the  same  time, 
and  would  probably  have  been  both  returned,  if  they  ivere  both 
returned  by  tlie  same  vessel.  The  bill,  said  not  originally  to  have 
been  drawn  in  favor  of  Spiers,  Bowman,  &  Co.,  would  probably 
have  been  transmitted  to  the  same  agent  to  whom  the  other  bill 
was  transmitted.  The  appearance  of  the  one  bill  without  the 
other  is,  then,  a  strong  circumstance  in  favor  of  the  opinion  that 
the  bill  retained  was  held  up  in  England  in  the  expectation  of  its 
being  paid  by  the  drawee.  In  estimating  the  probabilities  of  the 
circumstances  and  prospects  under  which  the  bill  was  drawn,  this 
fact  is  entitled  to  some  consideration. 

We  have  no  regular  accounts,  no  statements  of  the  consign- 
ments made  by  Byrd  to  Robert  Gary  &  Co.  We  know  that  their 
connection  was  of  long  standing ;  that  there  was  a  considerable 
degree  of  mutual  kindness  and  confidence ;  that  Byrd  was  in  the 
habit  of  shipping  tobacco  to  Robert  Cary  &  Co.,  that  there  may 
have  been  a  shipment  at  the  very  time  this  bill  was  drawn  ;  that 
money  was  paid  for  Byrd  by  Robert  Cary  &  Co.,  after  this  bill 
was  protested  ;  that  a  bill  of  <£75  was  taken  up  for  his  honor  ; 
and  that  in  October,  1775,  the  balance  of  ,£616  9s.  ocZ.,  which 
stood  against  him  in  November,  1773,  was  converted  into  a  bal- 
ance of  16s.  lie?,  in  his  favor.  We  have  not  all  the  intermediate 
accounts,  and  we  do  not  know  how  this  balance  may  have  fluct- 
uated ;  add  to  this,  that  the  bill  is  not  said  to  have  been  protested 
foj  want  of  effects. 

Under  all  these  circumstances,  I  cannot  say  that  the  bill  was 
drawn  with  a  knowledge  that  it  would  be  protested  ;  and  that  no- 
tice of  the  protest  could  not  be  necessary.  I  cannot  say  that  it 
was  a  fraud  upon  the  payee,  by  giving  him  a  bill  which  the  drawer 
knew  would  not  be  paid.  If  the  onus  probandl  lay  on  the  drawer 
of  the  bill,  the  case  would  be  clearly  against  him ;  but  as  it  lies 
entirely  on  the  holder,  whose  laches  are  without  a  precedent  in 
a  court  of  law  or  equity,  I  think  he  has  not  made  out  a  case  of 
complete  justification,  on  which  he  can  entitle  himself  to  a  decree 
for  the  bill  drawn  on  the  nineteenth  of  July,  1774. 


m)PKIRK  V.   PAGE.  439 

The  second  bill  was  drawn  on  the  twenty-sixth  day  of  Novem- 
ber, 1775,  for  <£24<i  '4h.  Id.,  and  was  protested  on  tlie  twenty-sixth 
day  of  June,  1770.*  It  was  drawn  after  the  coaimencement  of 
liostilities  in  Virginia ;  and  before  it  was  protested  all  intercourse 
between  the  two  counties  was  interdicted.  Under  these  circum- 
stances, notice  is  not  to  be  expected  and  ought  not  to  be  required. 
I  at  first  doubted  whether  a  bill,  which,  f(jr  a  length  of  time,  is 
held  under  circumstances  which  dispense  with  notice,  does  not 
lose  its  commercial  character,  and  become  an  ordinary  debt.  But 
on  reflection,  I  am  satisfied  that  this  idea  cannot  be  sustained  : 
and  that  to  charge  the  drawer,  notice  of  the  dishonor  of  his  bill 
ought  to  be  given  within  a  reasonable  time  after  the  removal  of 
the  impediment.  The  question,  therefore,  on  this  bill,  also  i#, 
were  the  circumstances  under  which  it  was  drawn  such  as  to  dis- 
pense with  notice  ?  Was  it  drawn  without  reasonable  ground  for 
an  expectation  that  it  would  be  paid  ?  It  may  reasonal)ly  be  sup- 
posed tiiat,  on  the  twenty-sixth  of  November,  1775,  the  letter  of 
the  second  of  October,  1775,  which  came  by  the  last  packet  to 
New  York,  was  received.  In  attempting  to  show  that  notice  of 
the  dishonor  of  this  bill  was  unnecessary,  because  the  drawer  had 
no  effects  in  the  hands  of  the  drawee,  the  holder  is  met  in  limine, 
by  the  fact  that  this  letter  shows  a  balance  in  his  favor  of  16«.  l\d. 
and  the  exception  under  which  the  plaintiff  withdraws  himself 
from  the  general  rule  is,  that  tlve  drawer  had  at  the  time  no 
effects  in  the  hands  of  the  drawee.  If  we  may  depart  from  the 
letter  of  the  exception,  there  is  no  point  at  which  to  stop  ;  and  if 
notice  may  be  dispensed  with  when  a  small  sum  is  in  the  hands  of 
the  drawer,  it  may  also  be  dispensed  with  when  a  large  sum  is  in 
his  hands,  provided  that  sum  be  one  cent  less  than .  the  bill  i^ 
drawn  for. 

I  am  aware  of  this  argument,  but  think  it  more  perplexing  than 
convincing.  There  arc  many  {piostions  in  which  no  precise  line 
can  be  marked,  which  must  depend  on  sound  legal  discretion,  and 
where  the  case  itself  mtist  Ite  decided  by  a  jury  or  by  the  Court, 
acting  on  the  princii)les  which  ought  to  regulate  a  jury.  The 
sound  sense  and  justice  of  the  exception  .is,  that  where  a  drawer 
knows  he  has  no  right  to  draw,  and  has  the  strongest  reason  to  be- 
lieve his  bill  will  not  be  paid,  the  motives  for  requiring  notice  of 
•  its  dishonor  do  not  exist,  and  his  case  comes  within  reason  of  the 
exception.     Where  all  transactions  between  partieff  have  ceased, 


440  EXCUSES   OF   PRESENTMENT  JiliD   NOTICE. 

and  there  is  nothing  to  justify  a  draft  but  a  balance  of  one  penny, 
it  would  l)e  sporting  with  our  understanding  to  tell  us,  that  a 
creditor  for  this  balance,  who  should  draw  fora  thousand  pounds, 
would  be  in  a  situation  substantially  different  from  what  he  would 
be  in,  were  he  the  debtor  in  the  same  sura.  The  true  inquiry 
appears  to  me  to  be,  whether  the  connection  between  William  Byrd 
and  Robert  Gary  &  Co.  remained  such  as  to  justify  a  hope  that  his 
bill  would  be  honored,  and  to  afford  any  shadow  of  justification 
for  drawing  it. 

I  think  it  as  demonstrable  as  any  proposition  of  this  sort  can  be, 
'that  he  knew  that  this  bill  would  not  be  paid. 

He  had  no  funds  in  the  hands  of  the  drawee  except  16s.  lid., 
a^id  no  prospect  of  having  any.  He  had  made  no  shipment  of 
tobacco  by  the  last  vessel,  and  Robert  Gary  &  Go.  speak  of  the 
fact  with  some  resentment.  In  their  letter  of  June,  1775,  they 
had  mentioned  sendiwg  a  vessel  to  Virginia  chartered  at  a  high 
price,  in  which  they  expected  consignments  of  tobacco  from  their 
friends,  and,  among  others,  from  Golonel  Byrd.  In  their  letter  of 
the  second  of  October,  they  say :  "  When  Power  came  in,  we  were 
\\i  hopes  you  would  have  offered  him  some  assistance,  but  we  ob- 
serve the  high  price  in  the  country  was  the  cause  of  the  disappoint- 
ment, and  no  compliment  to  our  charter.  However,  if  we  are  no 
losers,  we  are  not  beholden  to  our  friends  for  it." 

With  respect  to  the  mortgage  for  whicli  it  had  been  supposed 
that  the  mortgagee  was  dead  without  a  representative,  he  says,  "  it 
is  feared  the  representative  is  found  ;  but  be  this  as  it  may,"  he  adds, 
"  the  estate  will  be  always  liable,  and  therefore,  without  a  proper 
indemnity,  little  can  be  expected.  What  indemnity  you  may  offer 
we  know  not,  but  we  shall  not  engage  for  our  own  parts."  After 
mentioning  the  payment  of  some  bills,  they  add,  "  but  for  paying 
a^iy  more,  or  raising  money  on  the  uncertainty  of  the  mortgage, 
we'shall  not  attempt." 

With  this  letter  before  him,  Colonel  Byrd  must  have  drawn,  I 
think,  with  a  moral  certainty  that  his  bill  would  be  dishonored  : 
and  if  in  any  case  a  holder  can  be  excused  for  not  giving  notice, 
this  is  that  case.  There  was  an  end  of  all  consignments,  of  all 
intercourse  between  the  parties  ;  there  were  no  funds  to  withdraw, 
and  no  remittances  to  stop.  The  want  of  notice  would  be  no  in- 
jury to  him.  This  case  seems  to  me  to  come  within  the  exception- 
of  Bikerdike  ♦.  Bollman,  as  modified  in  the  subsequent  cases. 


HOPKIRK   V.    PAGE.  441 

Dorset/,  J.,  in  Cathell  v.  (ioodwin,  1  Harris  &  G.  468.  471,  tlius  states  what  is 
.  meant  1))'  reasonable  ground  to  expect  that  the  drawer's  bill  will  be  honored : 
'*  The  '  reasonable  grounds  '  required  by  law,  are  not  such  as  would  excite  an 
idle  hope,  a  wild  expectation,  or  a  remote  probability,  that  the  bill  mipht  be  hon- 
ored ;  l)ut  such  as  create  a  full  expectation,  a  strong  probability  of  its  payment; 
sudi  in(lec<l  as  would  induce  a  merchant  of  common  prudence  and  ordinary  re- 
gard for  liis  commercial  credit,  to  draw  a  like  bill." 

The  above  language  is  quoted  with  approval  in  Orear  v.  McDonald,  9  Gill, 
350,  357,  and  Martin,  J.,  adds:  "Tlie  right  to  demand  and  notice  does  not  de- 
pend upon  the  fact  that  the  drawers  had,  at  the  maturity  of  the  draft,  funds  in 
the  hands  of  the  drawees,  as  ascertained  by  ulterior  events,  adequate  to  its  pay- 
ment. There  is  to  be  found  in  the  adjudications  on  this  subject,  no  such  stringent 
rule.  On  the  contrary,  we  consider  the  principle  as  now  established  to  be  that 
if  the  drawers,  at  the  time  when  the  bill  should  have  been  presented,  had  the 
right  to  expect,  reasoning  upon  the  state  of  facts  connected  with  the  transac- 
tions as  they  then  existed  between  the  drawees  and  themselves,  that  their  bill 
would  be  honored,  they  were  entitled  to  demand  and  notice."'  See  also,  to  the 
same  elfect,  Clopper  v.  Union  Bank,  7  Harris  &  J.  92,  H»2  ;  Kupfer  v.  Bank  of 
Galena.  34  III.  328,  351  ;  Wood  r.  Price,  46  III.  435;  Walker  v.  Rogers,  40  111. 
278;  Valk  r.  Simmons,  4  ^Nlason,  113;  Adams  r.  Darby,  28  Mo.  162;  Kingsley 
V.  Robinson,  21  Pick.  328,  SJiaic,  C.  J.;  Rhett  r.  Foe,  2  How.  457;  Dickens 
V.  Beal,  10  Peters,  577  ;  Williams  v.  Brashear,  19  La.  370 ;  Youngue  v.  Ruff, 
3  Strob.  311  ;  Wollenweber  v.  Ketterlinus,  17  Penn.  State,  389;  Oliver  v.  Bank 
of  Tennessee,  11  Humph.  74  ;  Farmers'  Bank  v.  Van  Meter,  4  Rand.  553 ;  Miser 
V.  Trovinger,  7  Ohio  State,  281;  Cook  v.  Martin,  5  Sm.  &  M.  379;  Spear  r. 
Atkinson,  1  Ired.  262;  Claridge  v.  Dalton,  4  Maule  &  S.  230;  Blackham  v. 
Doren,  2  Camp.  503.  These  and  many  other  cases  hold  that  the  presence  or 
absence  of  funds  in  the  hands  of  the  drawee  is  not  the  criterion  by  which  to  de- 
termine whether  the  drawer  is  entitled  to  notice  or  not ;  but  that  the  true  test  is 
whether  or  no  he  has  reasonable  ground  to  expect  his  bill  to  be  honored.  The 
weight  of  authority  is  almost  altogether  this  way  ;  though  the  doctrine  has  been 
denied  in  Alabama.  See  Shirley  v.  Fellows,  9  Port.  3(»0;  Foard  r.  Womack,  2 
Ala.  368.  An  opposite  opinion  had  been  entertained  in  the  earlier  case  of  Hill 
V.  Norris,  2  S.  &  P.  114.  But  Foard  r.  Womack  is  approved  in  Tarver  v.  Nance, 
5  Ala.  712.  See  also v.  Stanton,  1  Hay.  271.  Two  New  York  cases  (Hoff- 
man V.  Smith,  1  Caines,  157,  160,  and  Commercial  Bank  of  Albany  r.  Hughes,  17 
Wend.  94)  were  cited  in  Foard  r.  Womack,  as  authority  for  the  decision  in  that 
case,  but  the  doctrine  of  the  principal  case  does  not  afipear  to  have  been  raised 
in  either  case.  Jetvett,  J.,  in  Dollfus  r.  Frosch,  1  Denio,  367,  also  states  that  the 
absence  of  funds  is  sufficient  excuse  for  failure  to  notify  the  drawer,  but  he  im- 
mediately quotes  as  authority  the  language  of  Story,  J.,  in  Valk  v.  Simmons,  4* 
Mason,  113,  that  "  no  notice  was  necessary  when  the  acceptor  had  not  in  fact  or 
in  the  ea-pectanei/  of  the  drawer,  any  funds  in  his  hands  at  the  time  of  payment, 
nor  had  entered  into  anv  arrangement  with  the  drawer  at  all  events  to  pay  the 
bill.''  And  again  :  "  He  was  then,  to  say  the  least  of  it,  in  the  predicament  of 
a  party  drawing  without  funds,  awl  having  :io  ritjht  to  expect  the  bill  to  be  paid.^^ 
But  the  point  was  directly  decided  in  Robinson  v.  Ames,  20  Johns.  146  ;  and 
the  same  rule  adopted  as  that  laid  down  in  the  principal  case.   SpenCer,  C  J. ,  said : 


442  EXCUSES   OF   PRESENTMENT   OF   NOTICE. 

"  I  am  entirely  satisfied  that  there  is  no  foundation  for  sayino;  the  defendants  are 
precluded  from  setting  up  laches,  because  they  had  no  right  to  draw  the  bill.. 
The  case  of  Bikerdike  v.  BoUman,  1  T.  R.  405,  is  considered  the  first  case  de- 
ciding that  notice  to  the  drawer  of  the  dishonor  of  the  bill  was  unnecessary ;  and 
in  that  case  the  drawer  had  no  funds,  and  knew  he  had  none,  in  the  hands  of 
the  drawee.  The  drawing  the  bill  was  considered  a  fraud,  and  it  was  held  that 
he  was  not  entitled  to  notice,  and  could  not  be  injured  by  the  want  of  it.  It  has, 
however,  since  that  case,  repeatedly  been  decided  that,  where  there  are  any  funds 
in  the  hands  of  the  drawee,  so  that  the  drawer  has  a  right  to  expect  the  bill  will 
be  paid,  or  where  there  are  not  any  funds,  yet  if  the  bill  was  drawn  under  such 
circumstances  as  induced  the  drawer  to  entertain  a  reasonable  expectation  that 
the  bill  would  be  accepted  and  paid,  the  person  so  drawing  it  is  entitled  to  no- 
tice ;  and  a  fortiori,  he  is  entitled  to  have  the  bill  duly  presented.  The  rule  is 
correctly  laid  down  in  Claridge  v.  Dalton,  4  Maule  &  S.  229,  by  Lord  Ellenbor- 
ouijh.     The  principle  which  has  been   stated  is  very  ably  supported  by  Chief 

'Justice  Marahall,  in  French  v.  The  Bank  of  Columbia,  4  Cranch,  153,  where  the 
principal  authorities  are  reviewed.  There  is  nothing  more  important  than  that, 
in  questions  of  a  general  mercantile  nature,  there  should  be  a  uniformity  of  de- 
cision ;  and,  although  the  justice  and  equity  of  this  rule  may  not  in  some  cases 
be  perceived,  where  the  payee  has  purchased  a  bill,  and  it  is  drawn  in  good 
faith,  and  no  conceivable  loss  has  happened  by  the  want  of  notice,  yet,  as  there 
may  be  cases  where,  though  there  were  no  funds  in  the  hands  of  the  drawee,  the 
drawer  may  be  injured  by  the  want  of  notice,  it  is  better  that  the  rule  on  the 
subject  should  be  general  and  uniform  throughout  the  mercantile  world." 

In  Benoist  v.  Creditors,  18  La.  522,  it  was  held  that  where  the  drawers  de- 
pended on  the  issue  of  a  lawsuit,  they  could  not  be  regarded  as  having  drawn  on 
funds,  so  as  to  be  entitled  to  notice.  But  this  was  probably  on  the  ground  that 
the  drawer  had  no  right  under  such  circumstances  to  expect  his  bill  to  be  hon- 
ored ;  for  in  Williams  v.  Brashear,  19  La.  370,  the  doctrine  of  the  principal  case 
is  held ;  and  such  was  declared  to  be  the  law  of  Louisiana  in  Bloodgood  v.  Haw- 
thorn, 9  La.  124.  See  also  Whaley  v.  Houston,  12  La.  An.  585 ;  LaCoste  v. 
Harper,  3  La.  An.  385. 

iThe  fact  of  the  indebtedness  of  the  acceptor  to  the  drawer  will  warrant  the 
drawing,  though  the  acceptor  have  no  funds  of  the  drawer  in  his  hands.  Walker 
V.  Rogers,  40  111.  278 ;  Thackray  v.  Blackett,  3  Camp.  164. 

The  authorities  are  not  uniform  upon  the  point  which  was  befoi'e  the  Court  in 
the  principal  case,  and  which  Chief  Justice  Marshall  forcibly  said  (p.  439),  was 
"  more  perplexing  than  Convincing;  "  viz.,  in  regard  to  the  amount  of  funds  in 
the  hands  of  the  drawee  which  will  justify  the  drawing.  In  the  Matter  of  Brown, 
2  Story,  502,  the  same  doctrine  is  maintained  by  Story,  J.  as  that  held  in  the 

r  principal  case.     See  also v.  Stanton,  1   Hay.  271;  Blackenship  v.  Rogers, 

10  Ind.  333;  Smith  v.  Thatcher,  4  Barn.  &  Aid.  200;  Wollenweber  v.  Ketter- 
linus,  17  Penn.  State,  389,  399;  Hill  «.  Norris,  2  Stew.  &  P.  114;  Sutcliflfe 
V.  McDowell,  2  Nott  &  M.  251 ;  LaCoste  v.  Harper,  3  La.  An.  385. 

The  difficulty  of  laying  down  any  inflexible  rule  in  dollars  and  cents  to  meet 
this  particular  phase  of  the  case  is  apparent ;  and  it  results  only  in  confusion  to 
attempt  it.  It  should  suffice  that  the  cases  of  this  character  may  be  decided  upon 
the  broad  and  just  principle  determined  by  Chief  Justice  Marshall,  that  the  mat- 


HOPKIRK   V.    PAGE.  443 

ter  of  notice  sliould  depend  upon  the  question  whether  the  drawer  had  reasona- 
•ble  ground  to  expect  his  bill  to  be  lionored.  The  question  of  amount  may  funiisb 
a  prima  facie  presumption ;  but  it  can  never  be  conclusive  of  the  drawer's  right 
to  draw.  There  may  have  been  a  private  agreement  or  understanding  upon  the 
subject;  or  then;  may  have  been  other  circumstances  which  justified  the  draw- 
ing, though  the  drawer  had  no  funds  at  all  in  the  hands  of  the  drawee. 

It  has  been  held  not  to  afi'eet  the  (juestion  of  the  necessity  of  notice  in  this  class 
of  cases,  that  the  bill  had  been  accepted.  Notwitlistanding  the  fact  of  acceptance, 
the  drawer  is  not  entitled  to  notice  of  non-payment,  if  he  had  no  right  to  draw. 
Hoffman  v.  Smith,  1  Caines,  IGO;  Hill  v.  Norris,  2  S.  &  P.  114;  Foard  i\ 
Womack,  2  Ala.  368,  371;  Gillespie  ».  Cammack,  3  La.  An.  248;  Kinsley  p. 
Robinson,  21  Pick.  327;  Mobley  v.  Clark,  28  liarb.  390;  Valk  v.  Simmons,  4 
Mason,  113;  Allen  r.  King,  4  McLean,  128;  Rhett  v.  Poe,  2  How.  457. 
And  see  Sargent  v.  Appleton,  (3  Mass.  ^b. 

But  a  contrary  view  ha3  been  entertained.  See  Pons  v.  Kelly,  2  Hay.  45, 
47;  Richie  v.  McCoy,  13  Sm.  &  M.  541.  See  also  Campbell  r.  Pettingill, 
7  Greenl.  126;  English  v.  Wall,  12  Rob.  La.  132;  Orear  v.  McDonald.  9  Gill, 
350,  358. 

The  cases  also  show  that,  thoiigii  the  drawer  may  have  had  funds  in  the  hands 
of  the  drawee,  and  therefore  ground  to  draw,  still,  if  he  withdraw  the  funds  be- 
fore the  bill  matures,  or  having  funds  on  the  way  intercept  them  so  that  they  do 
not  reach  the  drawee, -notice  of  non-payment  is  excused.  Valk  r.  Simmons,  4 
Mason,  113 ;  Rhett  v.  Poe,  2  How.  457  ;  Adams  v.  Darby,  28  Mo.  162 ;  Eiche- 
berger  v.  Finley,  7  Harris  &  J.  381,  385;  Spangler  v.  McDaniel,  3  Ind.  275; 
Hammond  v.  Dufrene,  3  Camp.  145.     But  see  Orr  v.  INIaginnis,  7  East,  359. 

But  none  of  the  circumstances  above  mentioned  will  excuse  notice  to  an  in- 
dorser.  He  has  no  concern  with  the  state  of  accounts  between  the  drawer  and 
drawee,  and  should  be  notified  of  the  dishonor.  Wilkes  v.  Jacks,  Peake,  202, 
per  Lord  Kemjon  ;  Byles,  Bills,  293,  10th  Lond.  ed.  See  Carter  u.  Flower,  16 
Mees.  &  W.  743,  751. 

As  to  what  particular  circumstances  come  within  the  rule  respecting  reasonable 
ground,  see  the  numerous  cases  collected  in  1  Parsons,  Notes  and  Bills,  532, 
et  seq. 

In  the  case  of  paper  payable  at  bank  it  is  sufficient  presentment,  demand,  and 
refusal  of  payment  that  it  was  in  the  banking-house  on  the  day  it  fell  due,  and 
that  there  were  no  funds  of  the^payor  there,  and  no  provision  for  payment. 
Ilollowell  V.  Curry,  41  Penn.  State,  322;  Bailey  r.  Porter,  14  Mees.  &  W.  44; 
United  States  Bank  v.  Smith,  11  Wheat.  171  ;  Fullerton  v.  Bank  of  the  United 
States,  1  Peters,  604,  017  ;  Bank  of  the  United  States  v.  Carneal,  2  Peters,  604. 
But  notice  must  still  be  given.  Phipps  v.  Chase,  6  Met.  492,  and  cases  just 
cited. 

Respecting  the  effect  of  war  upon  the  obligation  of  the  holder  to  make  pre- 
sentment and  give  notice,  the  recent  case  of  House  r.  Adams,  48  Penn.  State, 
2G1,  growing  out  of  the  late  war,  is  interesting  and  important.  The  facts  will 
suiheiently  appear  in  the  opinion  by 

Rkad,  J.  Presentment  for  acceptance  is  not  necessary  in  the  ease  of  a  Itill  of  ex- 
change, payable  at  a  certain  period  after  date,  and  in  Pennsylvania  the  drawer  is 
not  discharged  for  want  of  notice  of  non-acceptance,  provided  he  receives  notice  of 


444  EXCUSES    OF    PRESENTMENT    AND    NOTICE. 

non-payment.  Read  v.  Adams,  6  Serg.  &  Rawle,  356.  The  question  therefore 
in  the  present  case  narrows  itself  down  to  whether  due  notice  was  ^iven  of  the 
non-payment  of  the  two  bills  of  exchange  which  are  the  subject  of  this  suit. 

The  first  bill  was  for  $112,  and  was  protested  at  New  (!)rleans  for  non-pay- 
ment on  the  11th  June,  1861.  The  second  bill  for  $351  25,  was  protested 
at  the  same  place  for  non-payment,  orf  the  29th  July,  1861.  Notice  of  non- 
payment was  not  received  by  the  holders  of  these  bills  at  Pittsburgh  until 
14th  July,  1862,  when  the  protests  and  drafts  were  received  by  them  by 
mail,  and  proper  notice  of  their  dishonor  was  given  to  the  indorser  and  drawers. 
According  to  strict  commercial  law  in  ordinary  cases  this  notice  came  too  late, 
but  the  state  of  the  country  is  alleged  as  an  excuse,  and  it  therefore  becomes 
necessary  to  determine  the  rule  in  such  cases,  and  its  applicability  to  the  history 
of  the  times,  and  the  facts  disclosed  on  the  trial. 

Judge  Story,  in  his  Commentaries  on  the  Law  of  Promissory  Notes,  §  257, 
has  enumerated,  among  the  sufficient  excuses  for  non-presentment  and  demand  at 
the  time  and  place  when  and  where  the  promissory  note  is  due  and  payable,  the 
following:  "  (3.)  The  presence  of  political  circumstances  amounting  to  a  virtual 
interruption  and  obstruction  of  the  ordinary  negotiations  of  trade,  called  the 
vis  major.  (4.)  The  breaking  out  of  war  between  the  country  of  the  maker  and 
that  of  the  holder.  (5.)  The  occupation  of  the  country  where  the  parties  live, 
or  where  the  note  is  payable  by  a  public  enemy,  which  suspends  commercial  in- 
tercourse. (6.)  Public  and  positive  interdictions  and  prohibitions  of  the  State 
which  obstruct  or  suspend  commerce  and  intercourse."  And  in  §  356  of  the 
same  work,  the  learned  commentator  enumerates  them  also  as  constituting  suf- 
ficient excuses  for  the  omission  of  due  and  regular  notice  of  the  dishonor. 

Upon  this  subject  there  are  two  leading  cases :  one  in  England,  and  one  in 
America.  In  Patience  v.  Townley,  2  Smith,  224  (1805),  which  was  an  action  on 
a  bill  of  exchange  by  the  holder  against  one  of  the  antecedent  parties,  the  bill 
was  drawn  the  1st  June,  1800,  at  three  months'  usance  on  Leghorn,  and  was 
due  on  the  10th  September,  1800,  but  was  not  presented  either  for  acceptance 
or  payment  until  the  31st  October,  1800.  The  protest  stated  that  it  was 
not  paid  because  not  presented  in  due  time.  At  the  trial,  before  Lord  Ellen- 
Jforough,  C.  J.,  this  was  relied  upon  as  a  defence  to  the  action,  but  the  plaintiff 
proved  that,  from  the  particular  situation  of  the  country,  Leghorn  being  then 
occupied  by  the  enemy,  or  in  some  such  critical  situation,  though  the  bill  was 
sent  out  by  the  plaintiff  for  the  purpose  of  being  presented,  it  was  impossible  to 
present  it  in  due  time,  and  it  was  presented  as  early  as  could  be  afterwards, 
and  there  was  a  verdict  for  the  plaintiff.  This  was  affirmed  by  the  Court  of 
King's  Bench,  on  a  motion  for  a  new  trial  by  Mr.  Erskine,  on  a  technical  ground 
not  disputing  the  ruling  at  nisi  prius,  where  Lord  EUenborough  said:  "It  was 
left  to  the  jury  to  say  whether,  from  the  situation  of  the  country,  it  was  possible 
for  the  plaintiff  to  present  it  in  due  time." 

In  Hopkirk  v.  Page,  2  Brock.  20  [the  principal  case],  a  case  growing  out  of 
our  revolutionary  war.  Chief  Justice  Marshall,  p.  34,  uses  this  language:  '"The 
second  bill  was  drawn  on  the  twenty-sixth  day  of  November,  1775,  for  £246  35. 
Id.,  and  was  protested  on  the  twenty-sixth  day  of  June,  1776.  It  was  drawn 
after  the  commencement  of  hostilities  in  Virginia,  and  before  it  was  protested  all 
intercourse  between  the  two  countries  was  interdicted.  Under  these  circumstances 


HOPKIRK   V.    PAGE.  445 

notice  is  not  to  be  expectinl,  and  ouf^lit  not  to  be  required.  I  at  first  doubted 
wlu'tliLT  a  bill  which,  for  a  length  of  time  is  held  under  circumstances  which  dis- 
pense with  notice,  does  not  lose  its  commercial  iliaracter,  and  become  an  ordi- 
nary debt.  But  on  rellection  I  am  satisfied  that  this  idea  cannot  be  sustained, 
and  that  to  charge  the  drawer,  notice  of  the  dishonor  of  his  bill  ought  to  be 
given  within  a  reasonable  time  after  the  removal  of  the  impediment." 

To  apply  these  principles  to  the  present  case,  it  is  necessary  briefly  to  refer  to 
the  history  of  the  times.  On  the  2Uth  December,  1860,  South  Carolina  passed  a 
secession  ordinance,  which  example  was  followed  by  Mississippi,  Alabama,  Flor- 
ida, Georgia,  and  on  the  'JMi  Jainiary,  180 1,  by  Louisiana,  Avhose  State  authori- 
ties inunediately  seized  the  United  States  branch  mint  and  the  custom-house  at 
New  Orleans,  with  the  Government  funds  amounting  to  more  than  .$500,000,  and 
the  United  States  revenue  cutter  Robert  ^IcClelland  was  traitorously  surren- 
dered by  Captain  Breshwood  to  the  State  of  Louisiana.  On  the  1st  February., 
Texas  seceded,  and  on  the  ninth  of  the  same  month  the  rebel  Congress  at  Mont- 
gomery elected  .lellcrson  Davis  President  of  the  Confederate  States  of  America, 
and  on  the  11th  March  the  Constitution  of  the  Confederate  States  was  unanimous- 
ly adopted.  On  the  12th  April,  Fort  Sumter  was  bombarded,  and  on  the  14th 
capitulated,  and  on  the  21st  May  the  rebel  Congress  adjourned  to  meet  at  Rich- 
mond on  the  2<ith  July,  where  their  meetings  have  since  b(;en  held. 

On  the  19tt>  April,  the  President  issued  his  proclamation  establishing  a  block- 
ade of  the  ports  of  the  seceded  States  above  stated,  which,  on  the  27th  of  the 
same  month  was  extended  to  tiie  ports  of  the  States  of  Virginia  and  North  Caro- 
lina. On  the  3d  May  a  proclamation  was  issued,  calling  for  three  years'  volun- 
teers, and  increasing  the  regular  army  and  navy,  and  on  the  10th  May  martial 
law  was  declared  on  certain  islands  on  the  coast  of  Florida.  On  the  2Gth  Au- 
gust, the  President,  in  pursuance  of  the  Act  of  Congress  of  ll3th  July,  1861,  de- 
clared the  inhabitants  of  these  States  in  a  state  of  insurrection  against  the  United 
States,  and  that  all  commercial  intercourse  between  the  same  and  the  inhabitants 
thereof  and  the  citizens  of  other  States  and  other  parts  of  the  United  States  is 
unlawful,  and  will  remain  unlawful  until  such  insurrection  shall  cease  or  have 
been  suppressed.  On  the  12th  May,  1861,  the  President  by  his  proclj^niation  de- 
clared that  the  blockade  of  the  ports  o(  Heaufort,  Port  Royal,  and  New  Orh-ans 
should  so  far  cease  and  determine  from  and  after  the  first  day  of  June  next,  that 
commercial  intercourse  with  these  ports,  except  as  to  persons,  things,  and  informa- 
tion contraband  of  war,  may  from  that  time  be  carried  on,  subject  to  the  laws  of 
the  United  States,  and  to  the  limitations  and  in  pursuance  of  the  regulations  pre- 
scribed by  the  Secretary  of  the  Treasury,  in  his  order  appended  to  the  proclama- 
tion. On  the  1st  July,  1862,  in  pursuance  of  the  second  section  of  an  Act  of 
Congress  of  7th  June,  1862,  the  President  by  his  proclamation  declared  that  cer- 
tain States,  including  Louisiana,  were  then  in  insurrection  and  rebellion,  and  the 
civil  authority  of  the  United  States  so  obstructed  that  the  provisions  of  the  Act 
of  6th  August,  1861,  could  not  be  peaceably  executed;  that  the  taxes  upon  real 
estate  under  the  Act  aforesaid,  within  said  States,  with  a  penalty  of  fifty  per 
centum  of  said  taxes,  should  be  a  lien  upon  the  same  till  paid. 

Flag-oifucr  Farragut  having  run  past  Forts  Jackson  and  St.  Philip.  New  Or- 
leans was  surrendered 'on  the  28111  April,  1862,  and  the  American  Mag  was  hoisted 
on   the  custom-house,  post-olUce,  mint,   and  city  hall,  and  the   forts  were  also 


446  EXCUSES   OP    PRESENTMENT   AND   NOTICE. 

surrendered  that  evening.  In  the  report  of  the  postmaster-general  of  the  2d 
December,  1801  (Message  and  Documents  1861-2,  part  3,  p.  558),  he  says :  "  In 
conscqueiiee  of  the  defection  of  the  insurrectionary  States,  and  the  termination 
of  the  mail  service  in  those  States,  on  the  31st  May  last,  under  the;  Act  of  Con- 
gress approved  Feb.  28,  18G1  (with  the  exception  of  service  in  Western  Vir- 
ginia), it  becomes  necessary  to  present  the  transportation  statistics  in  two 
divisions ;  these  are  shown  in  Tables  A  and  B  attached  to  the  report."  Table 
B,  at  page  (502,  is  headed  "Table  of  Mail  Service  in  the  following  States"  (in- 
cluding Louisiana),  "  as  it  stood  on  the  31st  May,  1861,  discontinued  under  Act 
of  Congress,  approved  Feb.  28,  1861." 

By  the  evidence  it  appears  that  the  Farmers'  Deposit  Banking  Company,  with 
whom  these  drafts  were  left  by  the  plaintiff  for  collection  about  1st  May,  1861, 
returned  them,  declining  to  collect  them  on  account  of  the  irregularity  of  the 
mails.  They  were  then  immediately  transmitted  by  the  plaintiffs  to  Burbridge  & 
Co.,  their  agents  at  New  Orleans. 

It  also  appeared  by  the  evidence  of  the  postmaster  at  Pittsburgh,  that  all 
postal  service  in  Louisiana  and  other  named  places  was  suspended  on  and  after 
31st  May,  1861.  On  the  26th  May,  1862,  the  first  mail  went  out  to  New  Orleans 
carrying  ten  thousand  letters,  including  the  letters  which  had  accumulated  in  the 
dead-letter  office.  This  mail  was  carried  by  the  steamer  Blackstone  ;  since  then 
the  regular  rohte  to  New  Orleans  has  been  by  New  York.  This  cause  was  tried 
on  the  9th  December,  1862,  and  the  testimony,  of  course,  is  to  be  taken  as  de- 
livered at  that  time. 

"  The  first  mail  from  New  Orleans  was  an  enormous  one.  We  received  ours 
from  it  about  the  1st  July,  1862,"  says  the  postmaster  at  Pittsburgh.  "There 
were  considerable  intervals  between  the  reception  of  the  first  mails  after  re- 
sumption." 

The  omission  of  due  and  regular  notice  of  the  dishonor  of  these  bills  is  there- 
fore satisfactorily  accounted  for  by  the  entire  cessation  of  all  mails  and  commer- 
cial Intercourse  with  New  Orleans,  a  blockaded  port,  and  the  only  question  is, 
whether  such  notice  was  given  within  a  reasonable  time  after  the  removal  of  the 
impediment.  It  will  be  recollected  that  the  only  communication  between  Pitts- 
burgh and  New  Orleans  was  by  sea  through  the  port  of  New  York,  and  that  the 
very  first  mail  received  was  about  the  1st  July.  Under  these  circumstances 
particularly,  as  connected  with  the  unsettled  state  of  affairs  at  New  Orleans, 
although  in  our  possession,  we  cannot  say  the  notice  received  at  Pittsburgh  on 
the  14th  July,  was  not  within  a  reasonable  time  after  the  removal  of  the  impedi- 
ment. 

The  judgment  of  the  Court  must  therefore  be  reversed,  and  judgment 
entered  on  the  verdict  in  favor  of  the  plaintiffs. 

See  also  Apperson  v.  Union  Bank,  4  Cold.  445 ;  Polk  i\  Spinks,  5  Cold.  431. 


M'GRUDER   v.   THK   bank    of   WASHINGTON.  447 


George  McGruder,  Plaintiff  in  Error,  v.  The  President, 
Directors,  &c.,  of  the  Bank  of  Washington,  Defend- 
ants in  Error. 

(9  AVheaton,  5'JS.     Suprcine  Court  of  the  United  States,  February,  1824.) 

Removal  into  another  Jurixdirliou.  —  Tlie  removal  of  the  maker  of  a  note,  before  its  matu- 
rity, into  aiiotlier  jurisdJL'tion  from  tliat  in  which  tlie  note  was  executed, will  excuse 
the  IFolder  from  makintr  a  juTsonal  presentment  and  demand. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Johnson,  J.  This  case  comes  up  from  the  Circuit  Court  of  the 
District  of  Columbia,  in  which  a  suit  was  instituted  against  the 
plaintiff  here,  as  indorser  of  one  Patrick  M'Gruder. 

The  facts  are  exhibited  in  a  stated  case,  upon  which,  l)y  consent, 
an  alternative  judgment  is  to  be  entered.  The  judgment  below 
was  for  tlie  plaintiffs  in  the  action,  and  the  defendant  brings  tliis 
writ  of  error  to  have  that  judgment  reversed,  and  a  judgment 
entered  in  his  favor. 

Tlie  leading  facts  in  the  cause  are  so  much  identified  with  those 
in  the  case  of  Renner  v.  The  Bank  of  Columbia,  9  Wheat.  581  ,i 
decided  at  the  present  term,  on  the  question  relative  to  the  days  of 
grace,  that  the  decision  in  that  cause  disposes  of  the  principal 
question  raised  in  this. 

But  there  is  another  jioiiit  presented  in  the  present  cause.  There 
was  no  actual  demand  made  on  the  drawer  of  this  note,  and  the 
question  intended  to  be  presented  was,  whether  the  facts  stated 
will  excuse  it. 

At  the  time  of  drawing  the  note,  and  until  within  ten  days  of  its 
falling  due,  the  maker  was  a  house-keeper  in  the  District  of  Colum- 
bia. But  he  then  removed  to  the  State  of  Maryland,  to  a  place 
within  about  nine  miles  of  the  district.  The  case  admits  that 
neither  the  holder  of  the  note,  nor  the  notary,  knew  of  his  removal 
or  place  of  residence ;  but  the  circumstances  of  his  removal  had 
nothing  in  them  to  sanction  its  being  construed  into  an  act  of  ab- 
sconding. The  words  of  the  admission  to  this  point  are,  that  he 
"  went  to  the  house  where  the  said  Patrick  had  last  resided,  and 

1  AnU,  297. 


A 


448  EXCUSES   OF  PRESENTMENT    AND   NOTICE. 

from  which  he  had  removed  as  aforesaid,  in  order  there  to  present 
the  said  note,  and  demand  payment  of  the  same ;  and  not  finding 
him  there,  and  being  ignorant  of  his  place  of  residence,  returned 
the  said  note  under  protest." 

The  alternative  in  which  the  judgment  of  the  Court  is  to  be 
rendered  is  not  very  appropriately  stated;  but  since  the  absurdity 
cannot  have  entered  into  the  minds  of  the  parties,  that,  not  know- 
ing of  the  removal  or  present  abode  of  the  .drawer,  the  holder  was 
still  bound  to  follow  him  into  Maryland,  we  will  construe  the  sub- 
mission with  reference  to  the  facts  admitted;  and  then  the  question 
raised  is, — 

Whether  the  holder  had  done  all  that  he  was  bound  to  do,  to 
excuse  a  personal  demand  upon  the  maker. 

On  this  subject  the  law  is  clear ;  a  demand  on  the  maker  is,  in 
general,  indispensable  ;  and  that  demand  must  be  made  at  his  place 
of  abode  or  place  of  business.  That  it  should  be  strictly  personal, 
in  the  language  of  the  submission,  is  not  required  ;  it  is  enough  if 
it  is  at  his  place  of  abode,  or  generally,  at  the  place  where  he  ought 
to  be  found.  But  his  actual  removal  is  here  a  fact  in  the  casp,  and 
in  this,  as  well  as  every  other  case,  it  is  incumbent  upon  the  in- 
dorsee, to  show  due  diligence.  Now,  that  the  notary  should  not 
have  found  the  maker  at  his  late  residence  was  tlie  necessary  con- 
sequence of  his  removal,  and  is  entirely  consistent  with  the  suppo- 
sition of  his  not  having  made  any  one  of  those  inquiries  which 
would  have  led  to  a  development  of  the  cause  why  he  did  not  find 
him-  there.  Non  constat^  but  he  may  have  removed  to  the  next 
door,  and  the  first  question  would,  most  probably,  have  extracted 
information  that  would  have  put  him  on  further  inquiry.  Had  the 
house  been  sliut  up,  he  might,  with  equal  correctness,  have  re- 
turned "  that  he  had  not  found  him,"  and  yet  that  clearly  would 
not  have  excused  the  demand,  unless  followed  by  reasonable  in- 
quiries. 

The  party  must,  then,  be  considered  as  lying  under  the  same 
obligations  as  if,  having  made  inquiry,  he  had  ascertained  that  the 
maker  had  removed  to  a  distance  of  nine  miles,  and  into  another 
jurisdiction.  This  is  the  utmost  his  inquiries  could  have  extracted, 
and  marks,  of  course,  the  outlines  of  his  legal  duties. 

Mere  distance  is,  in  itself,  no  excuse  from  demand  ;  but,  in  gen- 
eral, the  indorser  takes  upon  himself  the  inconvenience  resulting 
from  that  cause.  Nor  is  the  benefit  of  the  post-office  allowed  him, 
as  in  the  case  of  notice  to  the  indorser. 


m'gruder  v.  the  bank  of  Washington.  449 

• 

But  tlie  question  on  the  recent  removal  into  another  jurisdiction, 
is  a  new  one,  and  one  of  some  nicety.  In  case  of  original  resi- 
dence in  a  State  dill'crent  from  that  of  the  indorser,  at  the  time  of 
taking  the  paper,  there  can  l)c  no  question  ;  hut  how  far,  in  case  * 
of  suhsequcnt  and  recent  removal  to  anoth(3r  State,  the  holder 
shall  he  recjuired  to  pnrsne  the  maker,  is  a  question  not  withtjut  its 
difficulties. 

We  think  that  reason  and  convenience  are  in  favor  of  sustaining 
the  doctrine,  that  such  a  removal  is  an  excuse  from  tactual  demand. 
Precision  and  certainty  are  often  of  more  importance  to  the  rules 
of  law,  than  their  abstract  justice.  On  this  point  there  is  no  other 
rule  that  can  be  laid  down,  which  will  not  leave  too  much  latitude 
as  to  place  and  distance.  IJesides  which,  it  is  consistent  with 
analogy  to  other  cases,  that  the  indorser  should  stand  committed, 
in  this  respect,  by  the  conduct  of  the  maker.  For  his  absconding 
or  removal  out  of  the  kingdom,  the  indcfl-ser  is  held,  in  England, 
to  stand  committed  ;  and,  although  from  the  contiguity,  and,  in 
some  instances,  reduced  size  of  the  States,  and  their  union  under 
the  general  government,  the  analogy  is  not  perfect,  yet  it  is  obvious 
that  a  removal  from  the  seaboard  to  the  frontier  States,  or  vice 
versa,  would  be  attended  witii  all  the  hardships  to  a  holder,  espe- 
cially one  of  the  same  State  with  the  maker,  that  could  result  from 
crossing  the  British  Channel. 

With  this  view  of  the  subject,  we  are  of  opinion  that  the  judg- 
ment below,  although  rendered  on  a  different  ground,  nuist  be 
sustained. 

Judgment  (ij/irnird. 

The  doctrine  of  the  above  case  is  well  settled.  See  Taylor  v.  Snvder,  ante, 
p.  327,  and  note  ;  Adams  r.  Leland,  30  N.  Y.  309  ;  Foster  v.  Julien,  24  N.  Y.  28. 
But  the  question  whether,  in  case  of  removal  into  anotiier  jurisdiction,  present- 
ment should  be  made  at  the  payor's  last  abode,  has  given  rise  to  some  conflict. 
It  will  1)0  observed  that  that  point  is  not  directly  decided  in  the  principal  case ; 
it  is  only  held  that  such  a  presentment  is  sufficient.  If  no  such  presentiiunt  iiad 
been  made,  the  question  of  the  necessity  of  it  might  have  arisen. 

In  Massachusetts  it  is  held  that  in  case  of  removal  from  the  State,  the  present- 
ment should  1)0  made  at  the  payor's  last  place  of  residence.  Wheeler  r.  Field,  6 
Met.  2UU.  See  also  Fierce  v.  Cate,  12  Cush.  l')0,  eited  at  length  in  note  to 
Lehman  v.  tloiies,  post,  451.  In  New  York  and  Ohio  the  contrary  rule  otitains. 
Foster  r.  Julien,  2-i  N.  Y.  (10  Smith)  2t>,  Mdson, .].,  dissenting;  tiist  r.  Lybrand, 
3  Ohio,  308.  The  same  may  possibly  be  inlened  in  Pennsylvania  from  Keid  r. 
Morrison,  2  Watts  &  S.  401,  where  it  is  said  that  the  rule  which  applies  in  the  case 
of  an  absconding  debtor  applies  equally  in  the  case  of  the  removal  of  the  payor  into 

2U 


450  EXCUSES   OF  PRESENTMENT    AND    NOTICE. 

• 
anotluT  State.  This  may  mean,  however,  only  that  a  personal  demand  is  in  such 
case  dispensed  with ;  for  it  is  very  obvious  that  so  far  as  the  necessity  of  making 
presentment  at  the  payor's  last  abode  is  concerned,  there  is  a  very  material  dif- 
(ierence  between  an  al)sconding  and  an  honest  removal  from  the  State.  In  the 
latter  case  it  is  not  unusual  lor  the  maker  or  acceptor  to  leave  funds  behind  him 
to  meet  his  obligations ;  but  a  circum.stance  of  that  kind  in  the  former  case 
would  be  remarkable  indeed.  And  this  seems  to  be  a  Strong  reason  for  main- 
taining the  rule  held  in  Massachusetts.  Chancellor  Kent  (3  Com.  96),  and 
Bcarddey,  J.,  in  Taylor  v.  Snyder,  aiite,  p.  327,  carefully  state  that  presentment 
at  the  payor's  last  abode  is  sufficient;  but  say  nothing  of  the  necessity  of- such 
presentment.  See  Taylor  v.  Snyder,  ante,  p.  327,  and  latter  part  of  note  ;  also 
Lehman  v.  Jones,  infra. 


Lehman  v.  Jones. 

(1  Watts  &  Sergeant,  126.-    Supreme  Court  of  Pennsylvania,  May,  1841.) 

Absconding  of  the  payor.  —  If  the  maker  of  a  promissory  note  absconds  before  the 
maturity  of  the  note,  this  will  excuse  the  holder  from  making  presentment  at  his 
last  place  of  residence. 

Assumpsit  against  Lehman  and  Stroh,  as  indorsers  of  a  promis- 
sory note. 

It  was  proved  that  Robinson,  the  maker  of  the  note  in  suit,  had 
absconded  to  parts  unknown  and  had  not  returned. 

The  objection  was  that  no  demand  was  made  upon  Robinson, 
and  that  the  notice  was  informal. 

The  Court  below  thus  instructed  the  jury  :  — 

Parsons,  President.  —  The  Court  instruct  the  jury,  as  a  matter 
of  law,  if  they  believe  that  Robinson  absconded  in  December, 
1835,  as  testified  to  by  his  mother,  and  did  not  return  before  the 
note  became  due,  nor  since,  it  was  not  requisite  that  the  holders 
of  the  note  should  go  to  Jonestown,  and  attempt  to  make  a  de- 
mand upon  him  in  order  to  charge  the  indorsers  ;  provided  the 
indorsers  were  cognizant  of  the  fact  that  the  drawers  had  left  the 
State,  of  which  there  would  seem  to  be  no  doubt,  if  the  testimony 
of  Mrs.  Robinson  is  believed. 

Per  Curiam}  —  The  rule  in  Lambert  v.  Oakes  (1  Ld.  Raym. 
443),  is,  that  the  holder  must  have  demanded,  or  done  his  en- 

1  Gibson,  C.  J.,  Rogers,  Huston,  Kennedy,  Sergeant,  JJ. 


LEHMAN   V.   JONKS.  451 

deavor  to  demand  the  money.  But  the  law  is  not  so  uureasouahle 
as  to  retjiiire  an  iinpossiljility  ;  and  therefore  it  is  said  HI).  Anon. 
743),  that  where  the  drawee  of  a  bill  has  abseonded  before  the  day 
of  payment,  notice  of  tlMJ  fact  is  equivalent  to  notice  of  demand 
and  di.shoiior.  In  Duncan  v.  McCullough,  4  Herg.  &  Rawle,  480, 
the  principle  was  fecogni/.ed  as  Ijeing  applicaljle  to  a  promissory 
note;  and  it  has  l)cen  established  l)y  direct  decision  in  some  of 
our  neighboring  Stales.  It  would  have  been  idle  for  the  i)hiiiitifT 
to  demand  jniymont  at  tiie  late  residence  of  Robinson,  tlie  drawer, 
after  he  had  absconded.  Where,  indeed,  the  drawer  of  a  note  or 
the  drawee  of  a  bill  has  merely  removed  from  the  place  of  his 
residence,  indicated  by  the  bill,  it  is  the  business  of  the  holder  to 
inquire  for  liim  and  ascertain  where  he  has  gone,  in  order  that  he 
may  follow  him  ;  but  when  he  has  secretly  fled,  an  application  at 
the  place  would  lead  to  no  information  in  respect  to  him  ;  and  the 
law  requires  notliing  which  is  nugatory.  The  other  errors  are 
either  resolvable  by  this  precedent,  or  are  plainly  unfounded. 

Judgynent  affirmed. 

This  case  is  followed  by  lleid  v.  ^lorrison,  2  Watts  &  S.  401  ;  ami  the  same 
doctrine  is  stated  to  be  the  law  in  New  York.  See  Taylor  v.  Snyder,  ante,  p.  327  ; 
Spies  V.  Gilniore,  1  Coinst.  321.  See  also  Wolfe  v.  Jewett,  10  La.  383,  stating 
the  same  rule  ;  Bruce  v.  Lytle,  13  Barb.  163  ;  Gillespie  v.  Hannalian,  4  McCord, 
o03,  in  which  Johnson,  J.,  says  :  "  Now  I  take  it  that  there  is  nothing  in  the  prin- 
ciples of  justice  which  would  require  the  indorsee  to  make  a  demand,  when,  as  in 
the  case  of  Putnam  v.  Sullivan,  4  Mass.  »3,  it  had  become  impracticable,  the  maker 
having  absconded.  Nor  can  I  perceive  in  what  way  it  would  promote  commerce. 
But  on  the  contrary,  that  rule  which  enjoined  the  performance  of  impossibilities, 
would  deter  the  most  hardy  and  adventurous  from  placing  themselves  within  its 
operation.  And  it  seems  to  be  generally  agreed  that  the  absconding  of  the 
maker  of  a  note,  or  the  acceptor  of  a  bill  of  exchange,  will  excuse  the  holder 
from  making  a  demand." 

This  was  the  doctrine  in  Massachusetts  until  the  case  of  Pierce  v.  Gate,  12 
Gush.  I'JO,  decided  in  1853,  when  a  more  stringent  rule  was  declared.  See  Graf- 
ton Bank  v.  Cox,  13  Gray,  503.  See  as  to  the  former  rule,  Hale  v.  Burr,*12 
Mass.  v85  ;  Shaw  v.  Keed,  12  Pick.  132.  But  in  Pierce  r.  Gate,  supra,  it  was  hold 
that  if  the  payor  absconds,  leaving  no  visible  property  subject  to. attachment,  a 
want  of  demand  or  inquiry  for  him  will  not  thereby  be  excused,  though  the 
indorser  knew  of  tlie  absconding.  .SV/a/r,  G.  J.,  said  :  "  We  are  aware  xhat  in 
some  of  the  earlier  cases  in  Massachusetts,  it  was  held  that  proof  that  the  maker 
had  absconded,  or  failed,  and  become  insolvent,  so  that  a  demand  would  bo 
unavailing,  would  be  an  excuse  lor  want  of  presentment.  Putnam  r.  Sullivan,  4 
Mass.  45.  But  it  has  been  decided,  on  consideration,  and  upon  principle,  that 
the  obligation  of  an  indorser  is  conditional ;  that  is,  that  he  will  be  answeral)le  if, 


452  EXCUSES   OF   PRESENTMENT   AND   NOTICE. 

at  the  maturity  of  the  note,  the  holder  will  present  it  to  the  maker  for  payment ; 
and  if  thereupon  the  maker  shall  neglect  or  refuse  to  pay  it,  and  the  holder  will 
give  seasonable  notice  to  the  indorser,  he  will  pay  it  himself.  ^Sandford  v.  Dilla- 
way,  10  Mass.  52 ;  Farnum  v.  Fowle,  12  Mass.  89.  These  are  the  conditions  of 
his  liability.  The  holder,  therefore,  to  charge  the  indorser,  must  show  a  com- 
pliance with  these  conditions,  or  that  proper  means  have  been  taken  to  effect  a 
compliance  with  them,  unless,  indeed,  he  can  prove  a  waiver  of  them  by  the 
indorser.  And  this,  we  think,  is  the  rule  as  now  settled.  Granite  Bank  v. 
Ayres,  IG  Pick.  ;592  ;  Lee  Bank  v.  Spencer,  6  Met.  308.  If  the  maker  has  left 
the  State,  the  holder  must  demand  payment  at  his  actual  or  last  place  of  abode, 
or  of  business,  within  the  State.  Wheeler  v.  Field,  6  Met.  290."  But,  after 
giving  the  same  extract  from  this  case  in  1  Parsons,  Notes  and  Bills,  450,  it  is 
there  said,  in  the  note  :  "  It  is  a  fact  personally  known  to  us,  that  this  point  was 
not  argued,  nor  indeed  raised,  by  counsel  in  this  case.  The  defence  was  based 
upon  other  grounds,  because  it  was  supposed  that  the  decisions  overruled  by  this 
case,  and  the  practice  under  them,  had  established  the  law." 

Under  these  circumstances,  it  would  not  be  strange  that  the  old  rule,  as  stated 
in  the  principal  case  should,  on  the  next  raising  of  the  question,  be  re-established. 

But  though  demand  upon  the  maker  or  acceptor  is  excused  in  the  case  of  an 
absconding,  still  notice  should  be  given  that  the  party  has  absconded.  Anony- 
mous, 1  Ld.  Raym.  743 ;  Foster  v.  Julien,  24  N.  Y.  (10  Smith)  28,  37  ;  Ex  parte 
Rohde,  Mont.  &  M.  430 ;  Michand  v.  Lagarde,  4  Minn.  43 ;  1  Parsons,  Notes 
and  Bills,  449,  528. 


MicAJAH  T.  Williams,  Plaintiff  in  Error,  v.  The  Bank  of 
THE  United  States,  Defendant  in  Error. 

(2  Peters,  96.     Supreme  Court  of  the  United  States,  January,  1829.) 

Absence  of  payor. — In  an  action  against  an  indorser,  it  appeared  that  the  notary  called 
at  his  dwelling-house  to  serve  notice  of  dishonor,  and  found  the  house  shut  up,  the 
doors  locked,  and  the  family  out  of  town  (as  he  learned  on  inquiry  of  the  next 
neighbor),  upon  a  visit  of  unknown  duration.  Held,  that  he  had  used  due  dili- 
gence, and  that  the  indorser  was  liable. 
« 

The  case  is  stated  in  the  opinion  of  the  Court. 

Washington,  J.  This  was  an  action  of  assumpsit,  brought  in 
the  Circuit  Court  of  Ohio  by  the  president,  directors,  and  company 
of  the  Bank  of  the  United  States,  against  J.  Embree,  the  maker, 
and  D.  Embree  and  M.  T.  Williams,  the  indorsers  of  two  several 
promissory  notes.  The  only  count  in  the  declaration  is  for  money 
lent  and  advanced  by  the  plaintiffs  to  the  defendants. 


WILLIAMS   V.    BANK    OF   THE    UNITED    STATES.  453 

Upon  the  plea  of  the  general  issue,  the  case  at  the  trial  was,  by 
consenfof  the  parties,  submitted  to  the  Court ;  aiul  the  above  notes 
were  given  in  (Evidence  by  the  plaintiffs,  in  support  of  the  action. 
The  Court  gave  judgment  against  the  defendants,  and  ordered  it  to 
be  certified  in  pursuance  to  the  statute  of  Oliio,  that  it  appeared 
to  the  satisfaction  of  the  Court  that  J.  Embree  had  signed  the 
notes  on  which  the  suit  was  brought  as  principal,  and  D.  Embree 
and  M.  T.  Williams,  as  sureties. 

At  the  trial  of  the  cause  tiius  submitted  to  the  Court,  the  plain- 
tiffs, having  proved  the  demand  and  the  handwriting  of  the  in- 
dorsers  of  the  notes,  offered  the  following  evidence  of  the  notice 
to  the  defendant,  Williams,  namely,  "  that  the  notary  public,  after 
the  protest  of  the  notes  and  the  expiration  of  the  usual  days  of 
grace,  called  at  the  house  of  the  defendant  Williams,  who  resided 
in  the  city  of  Cincinnati,  wiiich  lie  found  shut  up,  and  the  door 
locked,  and  on  inquiry  of  the  nearest  resident,  he  was  informed 
that  tlie  said  Williams  and  family  had  left  town  on  a  visit,  whether 
for  a  day,  week,  or  month,  he  did  not  know,  nor  did  he  inquire. 
He  made  use  of  no  further  diligence  to  ascertain  where  Mr.  Wil- 
liams had  gone,  or  whether  he  had  left  any  person  in  town  to 
attend  to  his  business.  The  witness  left  a  notice  at  the  house  of 
a  person  adjoining,  with  a  request  to  hand  it  to  the  defendant  when 
he  should  return." 

The  Court  being  of  opinion  that  this  evidence  was  conclusive  of 
legal  notice  to  charge  Williams,  his  counsel  took  a  bill  of  exceptions, 
and  the  cause  is  now  for  judgment  before  this  Court  upon  a  writ 
of  error. 

The  only  question  which  this  bill  of  exception  presents  is,  whether 
due  diligence  was  used  l)y  the  defendants  in  error  to  give  notice 
to  the  indorser  of  the  non-payment  of  these  notes  by  the  maker  of 
them  ? 

The  general  rule  of  law  applicable  to  the  subject  has  long  been 
settled,  that  to  enable  the  holder  of  a  bill  of  exchange  or  promissory 
note  to  charge  the  indorser,  it  is  incumbent  on  him  to  prove  that 
timely  notice  of  the  dishonor  of  the  bill  or  of  the  non-payment  of 
the  note  was  given  to  the  indorser,  or,  if  this  could  not  be  done,  he 
must  excuse  the  omission  by  showing  that  due  diligence  had  been 
used  to  give  such  notice. 

If  the  parties  reside  in  the  same  city  or  town,  the  indorser  must 
be  personally  noticed  of  the  dishonor  of  the  •bill  or  note,  either 


454  EXCUSES   OP   PRESENTMENT   AND   NOTICE. 

verbally  or  in  writing ;  or  a  written  notice  mnst  be  left  at  his 
dwelling-house  or  place  of  business.  Either  mode  is  sufficient,  but 
one  or  the  other  must  be  observed  unless  it  is  prevented  by  the  act 
of  the  party  entitled  to  the  notice. 

In  the  case  now  under  consideration,  the  banking-house  of  the 
defendants  in  error  and  the  dwelling-house  of  the  plaintiff  were 
located  in  the  same  city.  The  notary  called  at  the  plaintiff's  house, 
which  he  found  shut  up,  and  the  door  locked.  Upon  inquiry  of 
the  nearest  resident,  he  was  informed  that  the  defendant,  with  his 
family,  had  left  town  on  a  visit,  but  for  how  long  a  period  was 
unknown  to  tbis  person  ;  no  further  attempt  was  made  to  ascer- 
tain where  the  plaintiff  in  error  was  gone,  or  whether  he  had  left 
any  person  in  town  to  attend  to  his  business.  The  question  to  be 
decided  is,  whether,  under  these  circumstances,  the  defendants 
are  excused  for  not  having  given  the  notice  which  tlie  law  re- 
quires ? 

In  the  case  of  Goldsmith  and  Bland,  Bayley,  Bills,  224,  note, 
it  was  decided  that  it  was  sufficient  to  send  a  verbal  notice  to  the 
defendant's  counting-house,  and  if  no  person  be  there  in  the  ordi- 
nary hours  of  business  to  receive  it,  it  is  not  necessary  to  leave  or 
send  a  written  one.  The  principle  of  this  decision  is,  that  the 
counting-house  of  tbe  defendant  is  the  place  in  which  the  holder 
was  entitled,  during  the  regular  hours  of  business,  to  look  for  the 
person  for  whom  the  notice  was  intended,  or  for  some  person 
authorized  by  him  to  receive  it,  and  that  the  omission  to  give  it 
was  occasioned,  not  by  the  want  of  due  diligence  in  the  holder,  but 
by  the  fault  of  the  party  who  claimed  a  right  to  receive  it. 

The  principle  here  stated  is  not  peculiar  to  this  class  of  con- 
tracts. If  a  party  to  a  contract  who  is  entitled  to  the  benefit  of  a 
condition,  upon  the  performance  of  which  his  responsibility  is  to 
arise,  dispense  with,  or  by  any  act  of  his  own  prevent  the  perform- 
ance, the  opposite  party  is  excused  from  proving  a  strict  compliance 
with  the  condition. 

Thus,  if  the  precedent  act  is  to  be  performed  at  a  certain  time  or 
place,  and  a  strict  performance  of  it  is  prevented  by  the  absence 
of  the  party  who  has  a  right  to  claim  it,  the  law  will  not  permit 
him  to  set  up  the  non-performance  of  the  condition  as  a  bar  to 
the  responsibility  which  his  part  of  the  contract  had  imposed  upon 
him. 

The  application  of  this  general  principle  of  law  to  tlie  subject 


WILLIAMS    V     BANK    OF    THK    UNITED    STATES.  455 

before  us,  may  be  ilhisti-atcd  l)y  otber  cases  than  the  one  inime- 
diatcly  under  consideration.  The  hohler  of  a  bill  or  promissory 
note,  in  order  to  entitle  himself  to  call  upon  the  drawer  or  indorser, 
must  give  notice  of  its  dishonor  to 'the  party  whom  he  means  to 
charge.  But  if,  when  the  notice  should  be  given,  the  party  entitled 
to  it  be  absent  from  the  State,  and  has  left  no  known  agent  to 
receive  it ;  if  he  abscond,  or  has  no  place  of  residence  which  rea- 
sonable diligence  used  by  the  holder  can  enable  him  to  discover, 
the  law  dispenses  with  the  necessity  of  giving  regular  notice. 

So  where  the  parties,  as  in  this  case,  reside  in  the  same  city  or 
town,  the  notice  should  be  given  at  the  dwelling-house  or  place  of 
business  of  the  party  entitled  to  claim  it,  and  the  duty  of  the  holder 
does  not  require  of  him  to  give  the  notice  at  any  otiier  j)lace.  If 
the  giving  of  the  notice  at  either  of  these  places  l)e  prevented  by 
the  act  of  the  party  entitled  to  receive  it,  the  performance  of  the 
condition  is  excused. 

In  this  case,  the  notary  called  at  the  dwelling-house  of  the  in- 
dorser, at  the  regular  time  and  at  a  seasonable  hour,  for  aught 
that  appears,  to  serve  the  notice,  and  found  the  house  shut  up,  the 
doors  locked,  and  the  family  absent  from  town  upon  a  visit  of 
unknown  duration  to  the  agent  of  the  bank  or  to  his  informer. 
What  was  he  to  do  ?  He  was  not  bound  to  call  a  second  time,  nor 
was  he  under  any  obligation  to  leave  a  written  notice,  even  if  he 
could  have  found  an  entrance  into  the  house. 

But  it  is  insisted  that  the  defendants  in  error  were  bound,  under 
the  circumstances  of  this  case,  to  give  notice  to  the  plaintiff  through 
the  channel  of  the  post-ofTice  :  and  the  case  of  Ogden  v.  Cowley, 
2  Johns.  274,  is  relied  uj)on  in  support  of  this  j)osition. 

In  that  case,  tiio  notary  called  at  the  houses  of  the  indorser.  and 
of  his  deceased  partner,  for  the  jmrpose  of  giving  them  notice  of 
the  non-payment  of  the  note,  but  found  their  house  locked  up,  and 
on  inquiring  at  the  next  door  was  told  they  were  gone  out  of  town. 
On  the  same  day,  the  notary  put  a  letter  into  the  post-office  in  the 
city  of  New  York,  addressed  to  the  defendant  and  his  partner, 
informing  them  of  the  non-payment  of  the  note,  and  that  they  were 
looked  to  for  payment.  It  appeared  that  at  that  time  the  yellow 
fever. j)revailed  in  the  city.  The  Court  decided  that  all  proper  steps 
were  taken  to  communicate  the  requisite  notice  to  the  indorser, 
and  that  the  notice  was,  of  course,  sufficient. 

It  may  be  remarked  upon  this  case,  that  the  absence  of  the 


456  EXCUSES   OF   PRESENTMENT    AND   NOTICE. 

indorsers  from  their  houses  was  probably  the  consequence  of  a 
temporary  removal  from  the  city,  on  account  of  the  prevailing 
sickness,  and  that  the  case  does  not  inform  us  whether  the  place 
to  which  they  had  removed  was  known  to  the  notary.  We  arc  not 
prepared  to  say  that  in  such  a  case  the  parties  entitled  to  notice 
were  bound  to  be  at  their  dwclling»house8,  or  to  have  any  person 
there  at  the  time  the  notary  called  to  receive  notice,  and  conse- 
quently that  their  absence,  and  the  closing  of  their  houses,  ought 
to  have  excused  the  holder  from  taking  other  steps  to  communicate 
notice  to  them.  But  laying  these  circumstances  out  of  the  case, 
the  Court  decided  no  more  than  that  the  steps  taken  to  give  notice 
were  sufficient,  in  point  of  law,  for  that  purpose ;  and  it  is  not  to 
be  doubted  but  tliat  they  were  so.  They  do  not  decide  that,  in  a 
case  freed  from  the  circumstances  before  noticed,  it  was  necessary 
that  notice  to  the  indorsers  should  have  been  given  through  the' 
post-office. 

In  the  case  of  Crosse  v.  Smith,  1  Maule  &  Sel.  545,  the  cashier 
called  at  the  counting-house  of  the  drawer,  for  the  purpose  of 
giving  him  notice  of  the  dishonor  of  the  bill.  He  found  the  out- 
ward door  open,  but  the  inner  locked.  The  cashier  knocked,  and 
made  noise  enough  to  have  been  heard,  if  anybody  had  been  within. 
After  waiting  a  few  minutes  and  no  person  appearing,  he  left  the 
house,  and  took  no  further  legal  step  to  give  the  notice.  It  was 
insisted,  in  opposition  to  the  sufficiency  of  the  notice,  that  a  notice 
in  writing,  left  at  the  counting-house,  or  put  into  the  post-office, 
was  necessary.  Tiie  answer  given  by  the  Court  was,  that  the  law 
did  not  require  either  mode  to  be  pursued.  "  Putting  a  letter  in 
the  post,"  says  Lord  Ullenborough,  "  is  only  one  mode  of  giving 
notice  ;  but  where  both  parties  are  residing  in  the  same  post-town, 
sending  a  clerk  is  a  more  regular  and  less  exceptionable  mode." 
The  decision  in  this  case,  as  to  the  suffioiency  of  the  notice,  was 
the  same  as  that  given  in  the  case  of  Goldsmith  v.  Bland,  before 
referred  to. 

The  case  of  Ireland  v.  Kip,  10  Johns.  490,  and  11  Johns.  231, 
was  much  pressed  upon  the  Court  in  the  argument  of  the  present 
cause  by  tlie  counsel  for  the  plaintiff  in  error.  We  have  examined 
that  case  with  great  attention  and  respect,  but  have  not  been  able 
to  view  it  in  the  same  light  as  it  seemed  to  have  struck  the  learned 
counsel.  The  place  of  residence  of  the  defendant,  the  indorser, 
was  three  and  a  half  miles  from  the  post-office,  within  the  limits 


WILLIAMS   V.    BANK    OF   THE    UNITED   STATES.  457 

of  tlie  city  of  New  york,  l)ut  without  tlic  compact  part  of  the  city, 
and  without  the  district  of  any  letter-carrier.  Tiie  case  does  not 
State  that  the  indorser  had  any  counting-house,  or  place  of  husiness 
in  the  city,  at  which  the  notice  could  have  heen  left.  The  only 
notice  given  to  the  defendant  was  a  written  one,  put  into  the  post- 
office  in  the  city  of  New  York,  directed  to  the  defendant,  and 
stating  that  the  note  had  not  heen  paid.  The  place  of  the  defend- 
ant's residence  was  known  to  the  clerk  of  the  notary,  wflo  put  the 
written  notice  to  the  defendant  into  the  post-ofiice.  Tlie  only 
question  decided  hy  the  Court  was,  that,  under  the  circumstances 
of  that  case,  the  holder  of  the  note  was  bound  to  give  personal 
notice  to  the  defendant,  or  to  see  that  the  notice  reached  his 
dwelling-house  ;  and  that  merely  putting  the  notice  into  the  post- 
office  was  not  sufficient. 

*  Upon  a  second  trial  of  the  cause  it  appeared  in  evidence,  that 
the  defendant  had  given  directions  to  the  letter-carriers  of  the  post- 
office  to  leave  all  letters  that  came  to  the  post-office  for  him  at  a 
house  in  Frankfort  Street,  in  the  city  of  New  York  ;  that  the  letter- 
carriers  called  at  the  post-office  tliree  or  four  times  every  day,  and 
took  out  and  delivered  all  letters  left  there  ;  and  that  the  defendant 
usually  called  or  sent  every  day  for  his  letters  to  the  house  in 
Frankfort  Street. 

The  learned  judge  who  delivered  the  opinion  of  the  Court  stated, 
that,  admitting  a  service  of  the  notice  at  the  house  in  Frankfort 
Street  would  have  been  good  and  equivalent  to  a  service  at  tlie 
defendant's  dwelling  or  counting-house ;  still,  the  delivery  of  the 
notice  at  the  ))Ost-office,  \inaccompanicd  with  proof  that  it  was  actu- 
ally delivered  at  the  house,  was  not  notice,  lie  adds,  that  ''  the 
invariable  rule  with  us  is,  that  when  the  parties  reside  in  the  same 
city  or  place,  notice  of  the  dishonor  of  bills  or  notes  must  be 
personal,  or  something  tantamount;  such  as  leaving  it  at  the 
dwelling-house  or  place  of  business  of  the  party,  if  absent."  Now 
it  is  apparent,  that  the  question  which  arises  in  the  case  under 
consideration  was  not  and  could  not  be  decided  in  the  case  just 
referred  to.  The  objection  to  the  notice  in  the  latter  case  was, 
that  it  ought  to  have  been  given  at  the  dwelling-house  of  the  de- 
fendant, and  could  not  be  given  through  the  post-office,  unless  it 
also  appeared  that  the  notice  so  given  reached  the  dwelling-house 
or  the  house  in  Frankfort  Street.  No  attempt  was  made  to  give 
the  notice  in  the  former  mode,  as  was  done  in  this  case  ;  and  the 


458  EXCUSES   OF   PRESENTMENT    AND    NOTICE. 

latter  mode,  SO  far  from  being  considered  as. tantamount  to  the 
former,  or  as  being  necessary  in  order  to  excuse  the  want  of 
personal  notice,  is  declared  throughout  to  be  insufficient  without 
further  proof. 

The  opinion  of  this  Court  is  that  the  defendants  in  error  were, 
under  tlie  circumstances  of  this  case,  excused  from  taking  any 
other  steps  than  they  did,  to  give  notice  to  the  plaintiff  of  the  non- 
payment ^f  these  notes  ;  and  that  the  judgment  of  the  Court  below 
ought  to  be  affirmed,  witli  costs. 

The  text-writers  state  the  rule  as  declared  in  this  case.  See  Story,  Promis- 
sory Notes,  §  238;  Story,  Bills  of  Exchange,  §  352;  Chitty,  Bills,  279,  280; 
Bayley,  Bills,  216,  6th  Lond.  ed. 

But  if  the  payor's  place  of  business  or  residence  is  closed,  the  holder  as  in  the 
principal  case,  must  make  inquiry  for  him.  Collins  v.  Butler,  2  Strange,  1087  ; 
Bateman  v.  Joseph,  12  East,  433;  Beveridge  v.  Burgis,  3  Camp.  262;  Brown- 
ing V.  Kinnear,  1  Gow,  81 ;  Hine  v.  AUely,  4  Barn.  &  Adol.  624;  Granite  Bank 
V.  Ayres,  16  Pick.  392;  Lanusse  v.  Massicot,  3  Mart.  La.  261,  265 ;  Franklin  v. 
Verbois,  6  La.  727.  Howe  v.  Bowes,  16  East,  112;  s.  c,  in  error,  5  Taunt. 
30;  Baumgardner  v.  Reeves,  35  Penn.  State,  250;  Shedd  v.  Brett,  1  Pick.  413. 
In  the  last-named  case,  Parsons,  C.  J.,  seemed  to  think  the  inquiry  unnecessary, 
though  there  was  proof  of  diligent  search  for  the  maker  in  the  case. 


Barton  v.  Baker. 

(1  Sergeant  &  Rawle,  334.     Supreme  Court  of  Pennsylvania,  April,  1815.) 

Insolvenaj.  Assignment  to  indorser.  —  Though  the  maker  of  a  note  was  insolventwhen 
the  note  was  made  and  indorsed,  and  also  when  it  fell  due,  and  this  fact  was  known 
to  the  indorser,  this  will  not  excuse  due  notice  of  non-payment.  But  if  the  in- 
dorser has  received  from  the  maker  a  general  assignment  of  his  estate  and  effects, 
notice  is  not  necessary. 

The  case  is  sufficiently  stated  in  the  opinion  of  the  Court. 

TiLGHMAN,  C.  J.  The  objection  to  the  verdict  in  this  case  is, 
that  due  notice  of  non-payment  by  the  maker  of  the  note  on  which 
the  action  is  founded,  was  not  given  to  the  defendant  who  was  the 
indorser.  It  is  confessed  that  due  notice  was  not  given  ;  but  the 
plaintiff  contends,  that  under  the  circumstances  of  the  case,  notice 
was  not  necessary.     The  circumstance  principally  relied  on  at  the 


BARTON    V.    BAKER.  459 

trial,  and  on  which  the  plaiiitilT  had  the  charj^e  of  the  Court  in 
his  favor,  is,  that  at  the  time  when  tlie  note  was  made  and 
indorsed,  and  also  at  the  time  when  it  fell  due,  it  was  known  to 
the  defendant  that  James  Brown  <fe  Co.  were  insolvent.  If  the 
case  rested  solely  on  this  objection,  I  should  be  for  <rrantin<j  a  new 
trial,  because  the  cases  cited  by  tlio  plaintitf,  of  De  Berdi  v.  Atkin- 
son, 2  II.  Bl.  ^)3G,  and  Corney  v.  Da  Costa,  1  Esp.  302,  have 
been  overruled  in  Niciiolson  v.  Gouthit,  2  H.  Bl.  t509,  and 
Esdaile  v.  Sowcrby,  11  East,  114.  The  case  of  Jackson  v.  Rich- 
ards, 2  Caines,  343,  agrees  with  the  law  as  settled  by  the 
last  English  cases.  But  I  do  not  rest  my  opinion  solely  upon  the 
authority  of  these  cases.  Tiie  reason  of  the  thing  demonstrates 
that  the  insolvency  of  the  maker  of  a  note,  though  known  to  the 
indorser,  ought  not  to  discharge  the  holder  from  giving  notice. 
There  are  various  degrees  of  insolvency,  and  it  rarely  happens 
that  a  man  is  totally  insolvent.  So  that  there  is  a  chance  of 
getting  something  by  an  application  to  the  debtor.  Besides,  if  a 
man  has  nothing  of  his  own  he  may  have  friends,  who,  to  relieve 
him  from  j)rcssure,  will  do  something  for  him.  The  indorser, 
therefore,  has  a  chance  of  securing  himself  at  least  in  part.  The 
only  reason  that  can  be  assigned  for  insolvency  taking  away  the 
necessity  of  notice,  is,  that  notice  could  be  of  no  use  to  the  indors- 
er. But  it  is  almost  impossible  to  prove  that  it  miglit  not  have 
been  of  use.  Therefore  it  is  necessary.  Tliere  is  another  circum- 
stance in  this  case,  however,  operating  powerfully  in  favor  of  the 
plaintiff.  The  house  of  James  Brown  &  Co.  consisted  of  James 
Brown  and  Armat  Brown.  When  the  note  fell  due,  James  Brown 
was  in  Europe,  and  Armat  Brown  in  this  city.  A  few  months 
before  it  was  due  the  defendant  received  from  Armat  Brown  an 
assignment  o^  his  whole  estate,  for  the  purpose,  among  other  things, 
of  indemnifying  him  against  his  indorsements  on  account  of  James 
Brown  &  Co.  Now,  by  the  taking  of  this  assignment,  it  is  not 
unreasonable  to  presume,  tliat  the  defendant  took  upon  himself 
the  payment  of  the  indorsed  notes,  especially  as  wIumi  he  did 
receive  notice  (ten  days  after  the  note  fell  due),  although  he  knew 
and  remarked,  that  it  was  out  of  time,  he  did  not  deny  his  respon- 
sibility, but  said  that  his  ability  to  pay  would  depend  on  the  arrival 
of  a  vessel,  I  agree,  therefore,  with  Bond  v.  Farnham,  5  Mass. 
170,  where  it  was  held,  tliat  in  such  a  case  the  indorser  dispenses 
with  notice.     Inasmuch  then   as  it  appears  upon  the  whole  of 


460  EXCUSES    OP    PRESENTMENT    AND    NOTICE. 

this  case,  that  notice  of  non-payment  was  not  necessary,  no  injus- 
tice has  been  done  by  tlie  verdict,  and  therefore,  a  new  trial  ought 
not  to  be  granted. 

Yeates,  J.  I  have  no  hesitation  in  admitting,  tliat  my  charge 
to  the  jury  in  the  particular  of  notice  to  the  defendant  of  the  non- 
payment of  the  note  by  the  drawers,  does  not  accord  with  the  most 
modern  authorities.  I  considered  the  cases  De  Berdt  v.  Atkinson, 
in  1794,  ^  H.  Bl.  336,  and  of  Corney  v.  Da  Costa  in  1795,  1 
Esp.  302,  under  circumstances  very  similar  to  those  disclosed  in 
evidence  on  the  trial,  as  decisive  of  the  question  of  notice ;  and 
that,  according  to  the  expressions  of  BuUer,  J.,  in  the  first  case, 
the  general  rule  as  to  notice  was  only  applicable  to  fair  transac- 
tions, where  the  note  had  been  given  for  value,  in  the  ordinary 
course  of  trade.  The  justice  of  the  case  in  favor  of  the  plaintiff 
struck  my  mind  forcibly,  and  I  thought  Nicholson  v.  Gouthit,  in 
1796,  2  H.  Bl.  610,  and  Jackson  v.  Hitter,  in  1805,  2  Caines, 
343,  might  be  admitted  to  be  law,  without  overthrowing  the  two 
former  decisions.  In  the  first  of  them,  2  H.  Bl.  610,  it  is 
stated,  that  if  the  note  had  been  presented  when  it  became  due,  it 
would  have  been  paid,  as  Burton,  a  prior  indorser,  had  lodged  a 
sufficient  sum  of  money  in  the  defendant's  hands  for  that  purpose, 
but  which  he  paid  away,  when  he  found  the  note  did  not  come  to 
him  as  he  expected.  It  appeared  to  me  very  singular,  that  al- 
though Eijre,  Chief  Justice,  and  Heath  and  Rooke,  Justices,  sat  in 
the  Common  Pleas,  and  decided  both  cases,  the  decision  in  De 
Berdt  v.  Atkinson  was  not  cited  nor  adverted  to  in  Nicholson  v. 
Gouthit,  if  it  established  a  different  principle,  either  by  the  Court 
or  counsel,  although  nineteen  months  only  had  intervened.  I  was 
led  to  remark  on  the  trial  that  Chitty  (who  is  generally  deemed  a 
very  correct  compiler,  in  his  treatise  on  Bills  and  Notes,  p.  87,  I 
Lond.  ed.)  lays  down  the  broad  proposition  that  the  payee  of  a 
note,  indorsing  it  to  give  it  currency,  and  knowing  the  insolvency 
of  the  maker  at  the  time,  cannot  insist  on  the  want  of  notice  as  a 
defence ;  and  yet,  though  he  cites  Nicholson  v.  Gouthit,  in  the  fol- 
lowing page  he  does  not  consider  it  as  effecting  any  change  in  tlie 
commercial  law  before  asserted.  In  the  New  York  case,  2  Caines, 
343,  notice  was  given  to  the  indorser  of  non-payment  by  the 
drawer,  prior  to  any  demand  upon  the  drawer,  and  consequently 
the  notice  was  null,  as  the  drawer  was  not  in  default  when  he 
received  notice.     I  placed  too  much  reliance  on  the  circumstances 


BARTON   V.    BAKER.  461 

detailed  in  the  cases  of  1794  and  1795,  without  sufTicicnfly  attend- 
ing to  the  reasoning  of  the  Court  therein,  wliich  is  contradicted  in 
the  later  cases,  Esdailc  v.  Sowerby,  in  1809,  11  East,  117,  was 
not  cited  on  the  trial,  but  it  is  held  therein  by  the  whole  court  that 
Nicholson  v.  Gouthit  is  so  decisive  an  authority  on  this  suliject, 
that  the  Court  could  not  again  enter  into  the  discussion  of  the 
doctrine.  It  seems  now  settled,  that  notwithstanding  it  sounds 
harsh  that  a  known  bankruptcy  should  not  be  equivalent  to  a  de- 
mand or  notice,  the  rule  as  to  both  is  too  strong  to  be  dispensed 
with.  At  the  same  time,  1  cannot  see  how  the  defendant  can  get 
over  the  late  case  of  Bond  cf  ul.  v.  Farnham,  in  1809,  5  ^lass. 
170.  In  this  instance,  James  Brown,  one  of  the  partners  in  the 
firm,  when  the  note  fell  due  on  the  fifth  of  June,  1812,  was  in 
Europe,  and  had  been  there  some  time  before;  Armat  Brown,  the 
only  resident  partner  in  America,- had  assigned  all  his  real  and 
personal  estate  to  the  defendant  to  indemnify  him  for  his  advances 
and  indorsements.  Against  neither  could  any  en'octive  measures 
be  pursued  within  the  period  of  imputed  delay.  In  the  language 
of  Chief  Justice  Parsons,  "any  demand  by  the  defendant  would  be 
fruitless,  as  he  had  secured  all  the  property  the  drawer  on  the  spot 
had,  for  the  express  purpose  of  keeping  him  harmless."  The 
reason  of  the  rule  as  to  notice,  must  wholly  fail  under  such  cir- 
cumstances. On  this  last  ground,  I  am  of  opinion,  that  judgment 
be  rendered  for  the  plaintiff  on  the  verdict. 

Neiv  trial  refused. 

Thoui^li  there  is  some  conflict  among  the  early  cases,  as  shown  by  the  cases 
referred  to  in  the  opinion  supra,  re.«pcctin<j  the  necessity  of  notice  in  the  case  of 
the  insolvency  of  the  payor,  known  to  tlie  drawer  or  indorser,  the  later  authori- 
ties, and  the  text- writers  state  the  rule  as  declared  in  tlie  principal  case.  Mr. 
Justice' Story  (Promissory  Notes,  §  2S())  says  that  "  it  is  by  our  law,  as  well  as. 
by  the  French  law,  no  excuse  that  the  maker  is  a  bankrupt,  or  is  insolvent,  at 
the  time  wlien  the  note  becomes  due  ;  and  this  (as  is  asserted)  for  two  reasons : 
first,  that  it  is  part  of  the  implied  obligations  or  conditions  of  tlie  contract  of  the 
indorscr,  that  due  presentment  ^li;ill  be  made  in  order  to  bind  him  to  pay  upon 
the  dislionor;  and  sccoiully,  that  it  is  not  certain,  that  if  due  presentment  liad 
been  made,  the  note,  notwithstanding  tlie  failure,  might  not  have  been  paid,  cither 
by  the  maker  or  by  some  friend  for  him.  Eacii  of  these  reasons  has  been  pro- 
mulgated, nut  only  in  the  common-law  authorities,  but  by  foreign  jurists  of  liigh 
repute,  such  as  Pothier  and  Savary."' 

Upon  this  subject,  Chitty  (Bills,  Wdo)  says:  "The  death,  bankruptcy,  or 
hnown  insohnici/,  of  the  drawee,  or  his  being  in  prison,  constitute  no  excuses, 
either  at  law  or  in  cc^uity,  for  the  neglect  to  give  due  notice  of  non-acceptance  or 


462  EXCUSES  OF  PRESENTMENT  AND  NOTICE. 

non-payment ;  because  many  means  may  remain  of  obtaining  payment  by  the 
assistance  of  friends  or  otherwise;  of  which  it  is  reasonable  that  the  drawer  and 
indorsers  should  have  the  opportunity  of  availing  themselves,  and  it  is  not  com- 
petent to  the  holders  to  show  that  the  delay  in  giving  notice  has  not  in  fact  been 
prejudicial."  The  same  writer  again  uses  this  language,  in  substance,  on  p.  450; 
with  the  additional  statement  that  an  offer  of  composition  by  the  acceptor,  not 
acceded  to,  with  a  declaration  in  the  presence  of  the  drawer  and  holder  that  he 
(the  acceptor)  had  not  and  should  not  provide  for  the  bill,  will  not  dispense  with 
notice  of  dishonor.  See  Ex  ixirte  Bignold,  2  Mont.  &  A.  633.  See  also  Chitty, 
Bills,  493;  Story,  Bills  of  E.xchange,  §  375. 

The  early  cases  which  support  a  different  doctrine  are  Bogy  v.  Keil,  1  Mo. 
743;  Stothart  v.  Parker,  1  Tenn.  260;  Clark  v.  Minton,  2  Brev.  185.  See  Kid- 
dell  v.  Ford,  3  Brev.  178;  Ex  parte  Solarte,  2  Deac.  &  C.  261,  as  explained 
in  Ex  parte  Johnston,  1  Mont.  &  A.  622,  626,  per  Erskine,  C.  J.  In  the 
early  case  of  Jackson  v.  Richards,  2  Caines,  343,  Kent,  C.  J.,  said  that  the 
rule  in  Nicholson  v.  Gouthit,  requiring  notice,  was  "  best,  and  ought  to  be 
followed."  The  cases  to  the  contrary  have  long  since  been  disregarded;  and 
the  rule  stated  in  the  principal  case  is  now  considered  as  well  settled.  See 
Allwood  V.  Haseldon,  2  Bailey,  457  ;  Mechanics'  Bank  v.  Griswold,  7  Wend.  165, 
169  ;  Buck  i-.  Cotton,  2  Conn.  126  ;  Sandford  v.  Dillaway,  10  Mass.  52  ;  Barker 
V.  Parker,  6  Pick.  80;  Shaw  v.  Pteed,  12  Pick.  132;  Granite  Bank  v.  Ayres,  16 
Pick.  392  ;  Hunt  v.  Wadleigh,  26  Me.,  271 ;  Lawrence  v.  Langley,  14  N.  Hamp. 
70;  Bank  of  America  v.  Petit,  4  Dall.  127;  Benedict  v.  Caffe,  5  Duer,  225; 
Watkins  v.  Crouch,  cited  at  length,  infra  ;  Boultbee  v.  Stubbs,  18  Ves.  21,  per 
Lord  Eldon;  Sta{)les  v.  Okines,  1  Esp.  332 ;  Esdaile  v.  Sowerby,  11  East,  117, 

Upon  the  other  point  made  in  the  principal  case,  that  notice  may  be  dispensed 
with  in  case  of  an  assignment  of  all  the  assets  of  the  payor  to  the  drawer  or 
indorser,  the  law  is  pretty  well  settled  that  way,  especially  if  the  fund  is  sufficient 
to  protect  him.  See  Mechanics'  Bank  v.  Griswold,  7  Wend.  165;  Spencer  v. 
Harvey,  17  Wend.  489;  Coddington  v.  Davis,  3  Denio,  16;  s.  c,  1  Comst. 
186  ;  Bank  of  South  Carolina  v.  Myers,  1  Bailey,  412 ;  Kramer  v.  Sandford,  4 
Watts  &  S.  328  ;  Stephenson  v.  Primrose,  8  Port.  Ala.  155 ;  Perry  v.  Green,  4 
Harrison,  61;  Andrews  v.  Boyd,  3  Met.  434;  Prentiss  v.  Danielson,  5  Conn. 
175  ;  Duvall  v.  Farmers'  Bank,  9  Gill  &  J.  31,  47  ;  Lewis  v.  Kramer,  3  Md.  265 ; 
Marshall  v.  Mitchell,  34  Me.  227;  Denny  v.  Palmer,  5  Ired.  610;  Martel  v. 
•Tureauds,  18  Martin,  118;  Watkins  v.  Crouch,  5  Leigh,  522,  cited  at  length, 
infra. 

But  if  the  payor  make  an  assignment  in  trust  for  the  benefit  of  his  creditors, 
and  among  them  of  the  indorser,  this  will  not  excuse  demand  and  notice ;  for 
such  a  trust  is  a  mere  indemnity  against  his  legal  liabilities,  which  being  con- 
ditional would  become  absolute  only  by  due  demand  and  notice.  Creamer  v. 
Perrv,  17  Pick.  332.  In  this  case  Shaw,  C.  J.,  said:  "On  the  first  ground  we 
think  that  the  most  which  could  be  made  of  the  evidence,  is  that  after  this  note 
was  made,  but  several  months  before  it  became  due,  the  promisor  made  an 
assignment  to  trustees,  upon  trust,  among  other  thing>,  to  secure  the  defendant 
for  all  debts  due  to  him  from  the  promisor,  and  to  indemnify  him  against  all  his 
liabilities.  AVithout  stopping  to  consider  whether,  after  his  property  was  sur- 
rendered by  the  trustees,  the  defendant  could  have  availed  himself  of  it,  we 


BARTON    V.    BAKKR.  4G3 

think  the  effect  of  tliis  assif^nment  was  to  secure  and  indemiiify  tlie  defendant 
against  his  h-gal  liabilities;  and  as  his  liability  as  an  indorser  on  this  note  was 
conditional,  and  depended  upon  the  contingency  of  his  having  seasonable  notice 
of  its  dishonor,  his  claims  upon  the  property  depended  upon  the  like  contin- 
gency." See  Haskell  v.  Boardman,  8  Allen,  .'38;  Moses  v.  Ela,  43  N.  Hanip. 
557 ;  Wilson  v.  Senier,  U  Wis.  380. 

And  the  same  is  true  where  the  indorser  has  received  from  the  payor  a  chose 
in  action  as  collateral  security  to  indemnify  him  for  his  indorsement.  He  is  still 
entitled  to  notice.  Kramer  r.  Sandford,  3  Watts  ct  S.  328;  Seacord  r.  Miller, 
3  Kern.  i")."> ;  Otsego  County  Bank  r.  AVarren,  18  Barb.  2'JO,  in  which  the  decision 
was  based  in  part  on  the  ground  that  the  security  was  given  after  the  maturity 
of  the  note. 

The  case  may  also  require  notice,  if  the  fund  assigned  is  insufficient  to  save 
the  drawer  or  indorser  harmless ;  and  the  burden  of  proof  seems  to  be  on  the 
plaintiff  suing  without  notice,  to  show  that  the  fund  was  sufficient  to  protect 
the  defendant.  In  the  absence  of  proof  the  latter  will  have  judgment.  AVat- 
kins  V.  Crouch,  5  Leigh,  522 ;  lirooke,  J.,  dissenting.  See  also  Denny  v.  Palmer, 
5  Ired.  GIO.     In  Watkins  v.  Crouch,  the  Court  said:  — 

Cakr,  J.  This  case  turns  upon  the  correctness  of  the  opinions  expressed  by 
the  Court  in  instructions  to  the  jury.  These  instructions  were,  in  effect,  that  the 
indorser  having  taken  a  transfer  to  trustees  for  his  indemnity,  of  all  the  effects  of 
the  maker,  was  thereby  placed  in  the  shoes  of  the  maker;  and  as  a  demand  of 
payment  at  the  place  apjiointed  in  the  note,  is  not  necessary  to  charge  the  maker, 
so  no  such  demand  was  necessary  under  such  circumstances,  to  fix  the  liability 
of  the  indorser.  The  deed  is  made  an  exhibit  in  the  bill  of  exceptions,  and  I 
think  may  fairly  be  considered  a  conveyance  of  all  the  grantor's  property.  It  is 
given  for  the  security  of  several  enumerated  debts  ;  and  among  others,  of  oiie- 
J'aurth  of  the  note  on  which  the  suit  was  brought.  What  was  the  value  of  the 
property,  or  what  proportion  it  bore  to  the  debts  intended  to  be  secured  by  it, 
does  not  appear ;  that  it  was  not  sufficient  to  secure  the  whole,  we  are  obliged  to 
conclude.     The  question  is,  was  this  opinion  of  the  Court  correct? 

Whether,  where  the  spit  is  against  the  maker  of  a  promissory  note,  payable 
at  a  particular  place,  it  is  necessary  to  prove  a  demand  of  payment  at  such 
place,  is  a  question  that  need  not  be  discussed,  until  we  are  satisfied  that  the 
indorser  in  the  case  before  us  stands  in  the  shoes  of  the  maker.  But  we  may 
lay  it  down  as  imquestioned  law,  that  as  a  general  proposition,  the  indorser 
stands  in  a  situation  very  different  from  the  maker.  He  is  not  the  real  debtor, 
but  a  surety  only  ;  his  undertaking  is  collateral,  that  if  upon  due  diligence  having 
been  used  against  the  maker,  the  money  is  not  paid,  he  will  become  liable  ibr  it. 
This  due  diligence  is  a  condition  precedent  to  a  right  of  recovery  against  him. 
Therefore,  when  a  note  is  maile  payalile  at  a  particular  place,  proof  of  a  demand 
at  the  place,  is  indispensable,  in  a  suit  against  the  indorser.  Did  the  deed  place 
the  indorser  completely  in  the  shoes  of  the  maker?  I  should  agree  that  it  did, 
if  it  appeared,  that  the  property  conveyed  was  sufficient  for  full  indemnity 
against  the  note,  and  was  by  the  deed  appropriated  to  such  indemnity ;  but  the 
sufficiency  of  the  property  makes  no  part  of  the  case  ;  and  it  appears  by  the 
deed,  that  the  trustees  are  not  authorized  to  appropriate  any  part  of  it  to  indem- 
nity against  more  than  a  fourth  of  the   note.     It  was  said,  however,  that  the 


464  EXCUSES  OF  PRESENTMENT  AND  NOTICE. 

property,  whether  adequate  or  not,  was  all  the  maker  had  ;  and  that  havinj^  thus 
become  utterly  insolvent,  there  could  be  no  hope  of  his  provi(lin<f  funds  at  the 
bank  to  discharge  the  note,  and  therefore  no  necessity  of  presenting  it.  But  we 
see,  from  many  cases,  that  the  most  perfect  knowledge  of  the  insolvency  or  even 
bankruptcy  of  the  maker,  does  not  dispense  with  a  due  presentment  and  notice 
of  dishonor.  He  may  have  friends  or  credit ;  or  the  sagacity  and  vigilance  of 
the  indorser  may  discover  other  sources  of  indemnity.  It  is  his  own  affair,  and 
he  ought  to  be  the  judge.  It  is  in  this  aspect  of  the  case,  tliat  Lord  Eldon  in 
BouUbee  v.  Stubbs,  18  Ves.  21,  says,  that  "if  the  acceptor  of  a  bill  becomes 
bankrupt,  the  holder  must  give  notice  to  the  drawer ;  as  another  perton  has  no 
right  to  judge  what  are  his  remedies."  But  it  was  said,  that  here  the  insolvency 
is  produced  by  the  indorser  himself;  that  he  has  appropriated  to  his  own  use  the 
funds  which  might  have  gone  to  discharge  the  note ;  and  that  we  cannot  suppose 
such  a  conveyance  would  be  made,  without  an  agreement  between  the  parties, 
that  the  indorser  should  attend  to  the  note,  take  the  maker's  place,  and  release 
him  from  all  further  care  about  it.  I  cannot  perceive  the  correctness  of  this 
reasoning.  Why  should  the  indorser  take  the  maker's  place  ?  Was  it  not  better 
that  he  should  continue  to  hold  his  station  of  collateral  surety  ?  better  both  for 
himself  and  the  maker?  He  was  bound  conditionally  for  the  debt;  and  he 
might  well  say  to  the  maker,  "My  friendship  for  you  has  led  me  into  this 
engagement ;  it  is  but  fair,  that  you  secure  me,  so  far  as  you  can  ;  your  property 
may  not  pay  a  fourth  of  the  debt,  yet  it  will  be  something ;  in  the  mean  time,  we 
•will  continue  to  hold  our  relations  of  principal  and  surety :  before  the  note 
comes  to  maturity,  new  prospects  may  open  upon  you,  new  friends  may  arise, 
new  accessions  of  fortune  may  fall  in ;  and  the  holder  of  the  note  will  have  to 
proceed  with  due  diligence  before  he  can  come  upon  me."  Is  not  this  the  more 
natural  course  ?  And  does  it  invade  any  right  of  the  holder,  or  impose  any 
hardship  on  him  ?  No ;  he  has  only  to  attend  to  his  own  interest,  and  pursue 
the  beaten  track  of  due  diligence.  I  cannot  think  then  that  by  the  execution  of 
the  deed,  the  indorser  lost  his  character  of  surety,  and  became  a  principal 
debtor;  and  I  am  of  opinion,  that  in  order  to  charge  him,  it  was  incumbent  on 
the  holder  of  the  note  to  prove,  at  least,  a  presentment.at  the  place  of  payment, 
if  not  due  notice  of  such  presentment.  It  will  be  observed,  that  I  have  cited  no 
cases  in  support  of  this  opinion  ;  not  that  I  have  not  read,  and  considered,  and 
puzzled  myself  with,  the  multitude  that  were  commented  on  in  the  argument ; 
but  because,  finding  them  like  the  Swiss  troops,  fighting  on  both  sides,  I  have 
laid  them  aside,  and  gone  upon  what  seems  to  me  the  true  spirit  of  the  law.  I 
think  the  judgment  should  be  reversed. 

Cabell,  J.  As  to  the  indoi-ser,  he  does  not  become  a  debtor  by  his  indorse- 
ment. He  is  a  surety  for  the  debt  of  another,  and  becomes  bound  to  pay,  only 
on  the  condition  that  the  debt  shall  not  be  paid  by  the  maker,  after  due  diligence 
shall  have  been  used,  and  notice  given  of  non-payment.  Where  a  note  is  pay- 
able at  a  particular  time  and  place,  due  diligence  requires  that  it  shall  be  pre- 
sented at  that  time  and  place.  Such  bemg  the  terms  of  the  undertaking  of  an 
indorser,  it  is  incumbent  on  the  holder  of  a  note,  to  show  a  compliance  with 
them,  on  his  part,  by  suitable  averments  in  his  declaration,  and  by  proper  proofs 
at  the  trial,  or  to  show,  in  like  manner,  a  proper  excuse  for  their  omission. 
These  terms  not  having  been  complied  with  in  this  case,  we  have  only  to  examine 
into  the  sufficiency  of  the  excuse  offered  by  the  plaintiffs. 


BARTON   V.    BAKER.  .  465 

It  is  perfectly  settled  that  the  insolvency  or  bankruptcy  of  the  acceptor  of  a 
bill  of  txchange,  or  the  maker  of  a  promissory  note,  and  knowledge,  on  tlie  part 
of  the  indorser,  of  that  insolvency  or  bankruptcy,  and  that  the  note  cannot  and 
will  not  be  paid- l)y  the  acceptor  or  maker,  will  not  exempt  the  holder  from 
the  obli;ration  of  due  presentment  and  notice  of  dishonor.  Nicholson  v.  Gou- 
thit,  2  II.  Bl.  610;  Staples  v.  Okines,  1  Esp.  332;  Esdaile  r.  Sowerby,  11 
East,  147.  Many  other  cases  to  the  same  effect  might  be  cited  from  the  courts 
of  England  and  of  our  own  country  ;  but  it  cannot  be  necessary.  In  Staples  v. 
Okines,  the  drawer  of  a  bill  of  exchange,  having  effects  in  the  hands  of  the 
drawee,  was  told  by  the  drawee,  before  it  became  due,  that  he,  the  drawee,  could 
not  pay  it ;  and  it  was  then  nmlcrslood  between  them  that  the  drawer  would  have 
to  provide  for  it ;  yet  even  this  knowledge  on  the  part  of  the  drawer,  and  this 
understanding  between  him  and  the  drawee,  did  not  excuse  the  want  of  notice- 
In  fact,  if  the  indorser  remains  passive,  if  he  does  nothing,  and  the  holder  fails 
either  to  make  due  demand  of  payment,  or  to  give  notice  of  the  dishonor  of  the 
note,  the  indorser  can  rarely,  if  ever,  be  made  liable. 

There  are,  however,  some  acts  of  the  indorser,  antecedent  to  the  time  of 
payment  of  the  note,  that  will  excuse  the  want  of  notice.  But  an  examination 
of  the  cases  will  show  that  they  are  such  acts  of  the  indorser  as  would  make  it 
fraudulent  or  improper  in  him,  towards  the  holder  or  maker,  to  insist  on  notice. 
Thus,  where  the  drawer  of  a  bill,  a  few  days  before  it  became  due,  stated  to  the 
holder  that  he  had  no  regular  residence,  and  that  he  would  call  and  see  if  the 
bill  had  been  paid  by  the  acceptor,  it  was  held  that  he  was  not  entitled  to  notice 
from  the  holder,  "  he  having  taken  upon  himself  the  duty  of  inijuiring  if  the  bill 
■was  paid."  Phipson  v.  Kneller,  4  Camp.  285.  So  also  where  the  drawer  of  a 
bill,  upon  being  applied  to  by  the  holder,  before  it  became  due,  to  know  whether 
it  would  be  paid,  said  it  would  not  be  paid,  it  was  held  that  notice  of  non-pay- 
ment was  not  necessary.  Brett  v.  Levett,  13  East,  213.  This  case,  seemingly 
inconsistent  with  previous  decisions,  may  be  reconciled  to  them  on  this  ground, 
and  on  this  ground  only  ;  namely,  that  it  would  be  a  fraud  in  the  drawer  towards 
the  holder  to  avail  himself  of  the  omission  to  give  notice  of  the  non-payment  of 
the  bill,  after  he  himself  had  declared  to  the  holder  that  it  would  not  be  paid;  a 
declaration  which  probably  produced  the  very  omission  of  which  he  sought  to 
avail  hiin.self.' 

In  Cornay  r.  Da  Costa,  1  Esp.  303,  it  was  decided,  that  where  the  indorser 
of  a  note  had  taken  from  the  maker,  before  the  note  became  due,  eflects  to  the 
amount  of  the  note,  for  the  ])urpose  of  paying  it,  he  was  not  entitled  to  notice. 
Bayley,  in  his  treatise  on  Bills  of  Exchange,  p.  202,  referring  to  this  case, 
says:  "  If  the  payee  of  a  note  lends  his  name,  and  takes  effects  of  the  drawer 
to  answer  it,  he  is  not  entitled  to  notice,  because  he  is  the  proper  person  to  pay 
it,  and  would  be  entitled  to  no  remedy  over  on  making  payment.''  And  in 
Brown  t'.  Malfey,  lo  East,  217,  222,  lie  farther  explains  the  ground  of  the  deci- 
sion, by  saying,  that  "it  would  have  been  a  fraud  in  the  indorser  to  call  upon 
the  maker  of  the  note,  because,  before  it  became  due,  the  maker  had  deposited 
effects  in  his  hands  to  answer  the  amount  of  his  indorsement." 

Let  us  now  see  if  the  case  before  us  comes  within  the   ])rinciples  of  any  of 

1  See  post,  p.  475. 
80 


4 
466  EXCUSES    OF    PRESENTMENT    AND    NOTICE. 

these  cases.  In  our  case,  there  was  no  communication  between  the  indorscr  and 
holder;  nothing  was  said  or  done,  calculated  to  mislead  the  holder,  and  seduce 
him  into  the  neglect  of  a  duty  which  he  might  otherwise  have  performed.  As  to 
his  consent  that  the  note  should  be  negotiated  at  the  Bank  of  the  United  States, 
it  was  of  no  kind  of  consequence ;  the  holder  had  a  right,  without  his  consent, 
to  negotiate  it  where  he  pleased.  The  face  of  the  note  told  the  holder  that  it 
has  to  be  paid  at  the  Farmers'  Bank.  It  is,  therefore,  unlike  the  cases  of  Phip- 
son  V.  Kneller,  and  of  Brett  v.  Levett,  already  commented  on.  It  is  equally 
unlike  the  case  Cornay  v.  Da  Costa;  in  that  case,  there  was  an  assignment  to 
the  indorscr,  of  effects  to  ihe  amount  of  the  indorsement.  Here,  there  is  an 
assignment  of  all  the  property  of  the  maker ;  but  it  does  not  appear  that  it  was 
equal  to  the  amount  of  the  indorsement.  We  are  not  at  liberty  to  say  that  it 
was  so  ;  for  it  is  neither  averred  nor  proved.  And  we  must  not  forget  that  the 
burden  of  proving  every  matter  of  excuse  is  upon  the  holder.  It  was  not 
incumbent  on  the  indorser  to  prove  any  thing.  We  must  take  it,  then,  in  this 
case,  that  the  property  was  not  sufficient ;  and,  not  being  sufficient  to  discharge 
the  whole  amount  of  the  indorsement,  "  the  indorser  was  not  the  proper  person 
to  pay  the  note ; "  that  part  of  it  at  least  to  which  the  assigned  eflfects  were 
insufficient.  It  cannot  be  said  of  him,  as  was  said  of  the  drawer  in  Cornay  v. 
Da  Costa,  that  "he  had  no  remedy  over  on  making  payment,"  or,  that  "it 
would  have  been  a  fraud  in  the  indorser  to  call  on  the  maker."  As  to  the  part 
of  the  note,  to  the  payment  of  which  the  assigned  property  was  insufficient,  he 
had  an  unquestionable  right  to  call  on  the  maker ;  and  as  to  this  he  stood  on  his 
original  undertaking  as  indorser,  under  no  more  obligation  to  pay  it  than  he 
would  have  been  to  pay  the  whole  note  if  no  property  at  all  had  been  assigned, 
and,  consequently,  all  the  original  obligations  of  the  holder  still  subsisted. 

The  indorser,  in  taking  an  assignment  of  property  sufficient  to  pay  only  part 
of  the  note,  did  not  undertake  to  pay  the  residue.  It  may  be  confidently 
asserted  that  there  is  not,  in  the  terms  of  the  assignment,  any  express  contract 
to  that  effect ;  nor  can  I  see  a  single  circumstance  in  the  whole  transaction  from 
which  such  a  contract  can  be  implied.  The  assignment  of  property  sufficient 
only  for  the  partial  indemnity  of  the  indorser  was  a  matter  between  him  and 
the  maker  of  the  note.  There  was  no  motive  in  either  of  the  parties  to  that 
arrangement,  which  could  induce  a  wish  that  the  indorser  should  waive  the  con- 
dition of  his  liability.  How,  then,  can  we  imply  such  waiver,  in  favor  of  a  per- 
son who  was  no  party  to  the  arrangement?  In  the  case  of  Staples  v.  Okines, 
where  the  acceptor  of  a  bill  of  exchange  told  the  drawer  that  he,  the  acceptor, 
could  not  pay  it,  and  where  it  was  even  understood  between  the  drawer  and 
acceptor  that  the  drawer  would  have  to  provide  for  it,  no  waiver  of  notice  was 
implied,  in  favor  of  the  holder.  How  then  can  we  imply  it  from  the  mere  fact 
of  a  partial  indemnity  ?  Suppose  the  maker  of  this  note  had  had  no  other  prop- 
erty but  money  (not  equal  however  to  the  amount  of  the  note),  and  had  put 
that  money,  all  he  had,  into  the  hands  of  the  indorser,  to  be  applied  by  him  to 
the  payment  of  the  note.  Would  this  have  exempted  the  holder  from  the  obliga- 
tion of  presenting  the  note,  and  giving  notice  of  its  dishonor?  Certainly  not; 
and  I  am  unable  to  see  any  difference  between  the  deposrt  of  money  and  the 
assignment  of  property  so  far  as  regai'ds  the  point  under  consideration. 

Nor  is  there  any  resemblance  between  an  indorser  of  a  note,  partly  indem- 


BARTON    V.    BAKER.  467 

nified,  and  the  drawer  of  a  hill  of  exchange,  who  withdraws  his  cfTccts  from  the 
hands  of  the  acceptor,  before  the  day  of  payment.  In  the  latter  case,  the 
drawer  has  no  right  to  expect  that  the  acceptor  will  pay ;  and  therefore  he  is 
not  entitled  to  notice.  But  the  indorser's  right  to  notice  from  the  holder,  de- 
pends on  another  principle ;  namely,  his  remedy  over  against  the  maker.  And 
tbis  principle  ajjplies  as  forcibly  to  a  case  where  a  part  only  of  a  note  remains 
unpaid  or  unprovideil  for  by  the  maker,  as  where  the  whole  of  it  remains  so  uniiaid 
or  unprovided  for 

Again,  the  assignment  in  this  case  was  made  about  a  month  before  the  note 
was  to  fall  due.  It  is  impossible  for  us  to  say,  that  no  accession  was  made,  in 
that  interval,  to  the  maker's  means  of  payment;  and,  of  course,  we  cannot  say, 
that  notice  to  the  indorser  would  have  been  unavailing. 

Although  I  have  not  adverted,  by  name,  to  the  cases  which  have  been  decided 
on  this  subject,  in  our  sister'States,  I  have  not  been  inattentive  to  them.  I  have 
not,  however,  bi-en  convinced  by  them  ;  and  I  have,  in  the  course  of  the  preced- 
ing remarks,  controverted  every  reason  on  which  they  were  founded ;  whether 
successfully  or  not,  is  left  for  others  to  determine. 

Upon  the  whole,  I  am  of  opinion,  that  the  holders  of  the  note  before  us,  were 
bound  to  proceed  strictly  with  it,  as  respects  the  indorser,  both  as  to  demand  of 
payment,  and  as  to  notice ;  and,  consecjuently,  that  the  judgment  must  be 
reversed,  on  account  of  the  erroneous  instruction  given  at  the  trial. 

Judgment  reversed. 

However  the  rule  may  be  in  case  the  fund  assigned  is  not  sufficient  to  cover 
the  paper,  though  embracing  all  the  effects  of  the  payor,  the  authorities  are 
agreed  that  if  the  fund  is  placed  directly  in  the  hands  of  the  indorser  or  drawer, 
and  is  sufficient  to  protect  liim,  notice  may  be  dispensed  with.  Farther  than  this 
it  seems  difficult  to  go,  without  impairing  one  of  the  most  salutary  and  reason- 
able rules  of  the  law.  It  is  impossible  to  predict  what  may  be  the  circumstances 
or  situation  of  the  insolvent  to-morrow.  It  is  not  infrequent  for  fortune  and 
friends  to  favor  such  a  one  in  his  adversity,  and  place  him  in  a  situation  to  meet 
his  obligations.  At  any  rate  it  is  a  slight  matter  for  the  holder  to  present  his 
paper  and  give  notice  of  dishonor;  he  expected  and  assumed  that  duty  in  taking 
it ;  and  he  would  be  either  careless  or  imprudent  to  fail  in  performing  it.  From 
this  the  law  should  not  e.xcuse  him. 


468  EXCUSES   OP   PRESENTMENT    AND  •  NOTICE. 


The  President.  Directors,  &c.,  of  the  Berkshire  Bank 
V.  Isaac  Jones. 

(6  Massachusetts,  524.     Supreme  Court,  September,  1810.) 

Waiver  of  notice.  Payable  at  bank.  —  Waiving  notice  by  an  indorser  does  not  excuse 
the  indorsee  from  making  demand  of  payment ;  but  if  the  paper  was  payable  at  a 
designated  place,  and  tlie  indorsee  was  ready  to  receive  payment  at  tlie  time  and 
place,  no  further  demand  is  necessary. 

The  plaintiffs  declare  on  a  promissory  note  made  by  one  Amasa 
Glesen,  on  the  twenty-first  of  October,  1807,  by  which  he  promised 
the  defendant  to  pay  him  or  his  order  $125,  at  the  Berkshire  Bank, 
in  sixty-one  days ;  and  on  an  indorsement  by  the  defendant,  he 
waiving  all  right  to  the  notice,  to  which,  by  law  or  custom,  he  was 
entitled  as  indorser.  The  plaintiffs  also  allege  a  request  and  re- 
fusal by  Glesen,  the  maker,  and  also  notice  to  the  defendant. 

The  action  was  tried  before  iSedgwick,J.,  who  directed  a  nonsuit, 
subject  to  the  opinion  of  the  Court,  whether  it  was  necessary  to  the 
support  of  this  action,  that,  previous  to  the  commencement  thereof, 
the  contents  of  the  note  declared  on  should  have  been  demanded 
of  the  promisor. 

Parsons,  C.  J.  The  defendant  has  argued  that,  although  he 
waived  notice  of  a  refusal  of  payment  by  the  maker,  yet  he  did  not 
thereby  dispense  with  a  demand  upon  him  ;  for  he  might  waive  the 
notice  from  a  confidence  that  the  maker  would  pay  the  note  on 
demand. 

This  construction  of  the  waiver  we  think  correct ;  and  the  ob- 
jection would  be  conclusive,  if  the  indorsement  had  not  been  made 
to  the  plaintiffs,  at  whose  office  the  note  was  to  be  demanded  and 
paid.  The  note  was  payable  on  a  day  and  at  a  place  certain  ;  and 
the  place  is  the  Berkshire  Bank.  A  demand  of  payment  need  not 
be  made  at  any  other  place ;  and  if  the  holder  of  the  note  is  at  the 
bank  on  the  prescribed  day,  ready  to  receive  the  money,  if  the  maker 
be  there,  it  is  enough  for  him.  And  if  the  maker  does  not  come  to 
the  bank,  or  direct  the  payment  there,  he  has  broken  his  promise ; 
and  no  other  notice  to  him  is  necessary. 


BERKSHIRE  BANK  V.    JONES.  4G9 

In  the  case  at  bar,  as  the  plaintiffs  lield  this  ^ote,  we  must  pre- 
sume it  was  in  their  bank,  and  there  it  was  made  payable.  They 
were  not  to  look  up  Glesen,  or  to  "demand  payment  of  him  at  any 
other  place.  The  defendant,  by  his  indorsement,  guaranteed  that 
on  the  day  of  payment  the  maker  would  be  at  the  bank,  and  pay 
the  note ;  and  if  he  did  not  pay  it  there,  he  agreed  that  he  would 
be  answerable  in  a  suit  at  law,  without  previous  notice  of  the  de- 
fault of  the  jjromisor. 

Although  we  arc  satisfied  that  the  judge  was  correct  in  his  con- 
struction of  the  terms  of  the  defendant's  waiver  of  notice,  consid- 
ered in  a  general  view,  yet  we  are  of  opinion  that,  from  the  special 
tenor  of  the  note  decjarcd  on,  the  nonsuit  ought  to  be  set  aside ; 
and  if,  on  the  trial,  the  plaintiffs  can  show  that  on  the  day  of  pay- 
ment the  note  was  in  the  bank,  and  that  the  servants  or  officers  of 
the  plaintiffs  were  there  during  the  usual  bank  hours,  to  receive 
payment  and  give  up  the  note,  they  will  be  entitled  to  recover,  as, 
by  the  terms  of  the  note,  they  were  not  holden  to  demand  payment 
but  at  the  bank,  which  was  impracticable  tlirough  the  default  of 
the  maker ;  and  by  the  defendant's  waiver  he  cannot  claim  notice. 

# 
The  doctrine  that  waiver  of  notice  does  not  embrace  waiver  of  demand  may 
be  regarded  as  well  settled.  See  Buchanan  v.  Marshall,  22  Vt.  561 ;  Low  v. 
Howard,  11  Cush.  268,  270;  Drinkwater  v.  Tebbetts,  17  Me.  (5  Shepl.)  16; 
Burnbam  v.  Webster,  ib.  50;  Lane  v.  Steward,  20  Me.  (2  Appl.)  98;  Backus 
V.  Shii)herd,  11  Weiid.  629.  But  the  contrary  was  held  in  ]\Iatthey  c.  Gaily,  -4 
Cal.  (i2. 

The  indorsement,  "eventually  accountable,  E.  A.  E.,"  is  held  to  waive  both 
demand  and  notice.  McDonald  v.  Bailey,  14  Me.  (2  Shepl.)  101.  So  of  the 
following:  "William  Arnold,  Holden,  Aug.  11th,  1836."  Bean  v.  Arnold,  16 
Me.  (1  Shepl.)  251. 

Whether  waiver  of  protest  will  excuse  both  demand  and  notice  has.  been  the 
subject  of  conflict.  The  (jue.stion  is  discu^iscd  in  Union  Bank  v.  Hyde,  6  Wheat. 
572,  and  arose  from  the  following  writing,  signed  by  the  defendant,  an  indorser : 
"  I  do  request  that  hereafter  any  notes  that  may  fall  due  in  the  Union  Bank,  on 
which  I  am  or  may  be  indorser,  shall  not  be  protested,  as  I  will  consider  myself 
bound  in  the  same  manner  as  if  tlie  said  notes  had  been  or  should  be  legally  pro- 
tested." The  Court  held  that  this  constituted  a  waiver  of  demand  and  notice,  in 
connection  with  the  fact  that  both  ])arties  had  had  a  course  of  dealing  founded  on 
that  con.'-truction.  Mr.  Justice  Johnson,  in  delivering  the  opinion  of  the  Court, 
said  :  "  The  case  presents  the  right  of  the  plaintilTs  under  two  a.^^pects  :  1.  Upon 
the  just  construction  of  the  written  instrument.  2.  The  practical  exposition  of 
it  by  the  defendant  himself;  and  it  might  also  have  presented  a  third  :  the  spe- 
cific waiver  ol demand  and  notice  on  the  note  in  suit.  By  some  assumed  an.alogy, 
or   mistaken  notions  of  law,  this   practice  of  protesting   inland   bills  has   now 


470  EXCUSES    OP    PRESENTMENT    AND    NOTICE. 

become  very  jijenerally  prevalent ;  and  since  the  inundation  of  the  country  with 
bank  transactions,  and  the  general  resort  to  this  mode  of  exposing  the  breaclies  of 
punctuality  which  occur  upon  notes,  a  solemnity,  cogency,  and  legal  effect  have 
been  given  to  such  protests  in  public  opinion,  -which  certainly  has  no  foundation 
in  the  law  merchant.  The  nullity  of  a  protest  on  the  legal  obligations  of  the 
parties  to  an  inland  bill,  is  tested  by  the  consideration  that,  independently  of 
statutory  provision  (if  any  exists  anywhere)  or  conventional  understanding,  the 
protest  on  an  inland  bill  is  no  evidence  in  a  court  of  justice  of  either  of  the  inci- 
dents which  convert  the  conditional  undertaking  of  an  indorser  into  an  absolute 
assumption. 

"The  protest  belongs  altogether  to  foreign  mercantile  transactions,  upon 
which,  on  the  contrary,  it  is  an  indispensable  incident  to  making  a  drawer  of  a 
bill,  or  indorser  of  a  note,  liable.  On  foreign  bills,  it  is  the  evidence  of  demand, 
and  an  indispensable  step  towards  the  legal  notice  of  non-payment,  in  conse- 
quence of  which  the  undertaking  of  the  drawer  or  indorser  becomes  absolute. 
Hence,  as  to  foreign  transactions,  it  is  justly  predicated  of  a  protest,  that  it  has 
a  legal  or  binding  effect. 

"  But  the  writing  under  consideration  has  reference  exclusively  to  inland  bills, 
and  as  to  them  the  protest  has  no  legal  or  binding  effect.  The  indorser  became 
liable  only  on  demand  and  notice,  and  of  these  facts  the  protest  is  no  evidence. 
How,  then,  shall  the  waiver  of  the  protest  be  adjudged  a  waiver  of  demand  and 
notice,  or  in  effect  convert  his  conditional  into  an  absolute  undertaking? 

"Had  the  defendant  omitted  one  word  from  his  undertaking,  it  would  have 
been  difficult  to  maintain  an  affirmative  answer  to  this  proposition.  But  what 
are  we  to  understand  him  to  intend,  when  he  says :  '  I  will  consider  myself 
bound  in  the  same  manner  as  if  said  notes  had  been  or  should  be  legally  pro- 
tested ? '  Except  as  to  foreign  bills,  a  protest  has  no  legal  binding  effect,  and 
as  to  them  it  is  evidence  of  demand,  and  incident  to  legal  notice.  It  either  then 
had  this  meaning  or  it  had  none. 

"  This  reasoning,  it  may  be  said,  goes  no  further  than  to  a  waiver  of  the  de- 
mand ;  but  what  effect  is  to  be  given  to  the  word  bound  ?  It  must  be  to  pay  the 
debt,  or  it  means  nothing.  But  to  cast  on  the  indorser  of  a  foreign  bill  an  obli- 
gation to  take  it  up,  protest  alone  is  not  sufficient ;  he  is  still  entitled  to  a  rea- 
sonable notice  in  addition  to  the  technical  notice  communicated  by  the  protest. 
To  bind  him  to  pay  the  debt,  all  these  incidents  were  indispensable,  and  may, 
therefore,  be  well  supposed  to  have  been  in  contemplation  of  the  parties,  when 
entering  into  this  contract. 

"It  is  not  unworthy  of  remark,  that  the  writing  under  consideration  asks  a 
boon  of  the  plaintiff,  for  which  it  tenders  a  consideration.  It  requests  to  be 
exempted  from  an  expense,  exposure,  or  mortificati6n,  on  the  one  hand ;  and  on 
the  other,  what  is  tendered  in  return  ?  The  ihtcnded  object  and  conceived  effect 
of  the  protest,  on  the  one  hand,  is  to  convert  his  undertaking  into  an  uncondi- 
tional assumption,  and  the  natural  return  is  to  make  his  undertaking  at  once 
absolute,  as  the  effectual  means  of  obtaining  the  benefit  solicited. 

"  If  this  course  of  reasoning  should  not  be  held  conclusive,  it  would  at  least  be 
sufficient  to  prove  the  language  of  the  undertaking  equivocal ;  and  that  the  sense 
in  which  the  parties  used  the  words  in  which  they  express  themselves,  may  fairly 
be  sought  in  the  practical  exposition  furnished  by  their  own  conduct,  or  the 


BERKSHIRE  BANK  V.    JONES.  471 

conventional  use    of  language  establisheil   by  their   own    customs  or   received 
opinions. 

"  On  this  point  the  evidi'nce  proves  that,  by  the  understanding  of  both  j)artic'8, 
this  writing  <lid  dispense  with  demand  and  refusal ;  that  the  company,  on  tlie  one 
hand,  discontinued  their  practice  of  putting  the  notes  indorsed  by  defendant  in 
the  usual  course  for  rendering  his  assumption  absolute,  and  the  defendant,  on  the 
other,  continued  up  to  the  last  moment  to  accjuiesce  in  this  practice,  by  renewing 
his  indorsements,  without  ever  reijuiring  demand  or  notice.  This  was  an  une- 
quivocal acquiescence  in  the  sense  given  by  the  com[)any  to  his  undertaking, 
and  he  cannot  be  permitted  to  lie  by,  and  lull  the  company  into  a  state  of  secu- 
rity, of  which  he  might  at  any  moment  avail  himself,  after  making  the  most  of  the 
credit  thus  acquired. 

"  Judgment  reversed,  and  venire  facias  de  novo  awarded." 

See  Duvall  r.  Farmers'  Bank,  7  Gill  &  J.  44 ;    9  id.  31. 

The  same  (juestion  arose  in  ("oddington  i'.  Davis,  1  Comst.  1^6.  Gardner,  3 ., 
in  delivering  the  opinion  of  the  Court,  said:  "  The  plaintifFin  error,  the  defendr 
ant  below,  was  the  indorser  of  a  note  made  by  Thomas  Coddington  for  810,000. 
Th/amas  Coddington  failed,  and  on  the  twenty-third  of  January,  1840,  made  an 
assignment  to  Davis,  one  of  the  firm  of  Davis,  Brooks,  &  Co.,  the  indorsees 
and  holders  of  the  note  and  the  plaintiffs  below.  On  the  twenty-eighth  of  Jan- 
uary, and  prior  to  the  maturity  of  the  note,  the  defendant,  with  full  knowledge 
of  the  above  facts,  wrote  the  following  letter :  — 

"  'Mf.ssrs.  Davis,  Brooks,  &  Co.  Gents,  — Please  not  protest  T.  B.  Cod- 
dington's  note  due  second  of  February,  for  ten  thousand  dolhrs,  and  1  will 
waive  the  necessity  of  the  protest  thereof;  and  oblige  respect'ly,  &c. 

'Samuel  Coddixgtox.' 

"  The  construction  of  this  letter  is  the  first  important  question  presented  in  the 
cause. 

"  The  term  protest  in  a  strict  technical  sense  is  not  applicable  to  promissory 
notes.  The  word,  however,  as  I  apprehend,  has  by  general  usage,  acquired  a 
more  extensive  signification,  and  in  a  case  like  the  present  includes  all  those  acts 
which  by  law  are  necessary  to  charge  an  indorser.  When  among  men  of  busi- 
ness a  note  is  said  to  be  protested,  something  more  is  understood  than  an  official 
declaration  of  a  notary.  The  expression  would  be  used  indifferently  to  indicate 
a  series  of  acts  necessary  to  convert  a  conditional  into  an  alisolute  liability, 
whether  those  acts  were  performed  by  a  mere  ilerk  or  a  public  officer.  It  is 
obvious  that  the  word  was  used  in  its  popular  acceptation  by  the  defendant  bilow. 
He  requests  the  indorsees  '  not  to  protest  the  note,  and  tiiat  he  would  waive  the 
necessity  of  the  protest  thereof.' 

"The  protest  to  which  the  indorser  alluded  was  something  '  necessary"  to  be 
done,  something  also  for  the  benefit  of  the  indorser,  for  he  assumed  to  waive  it. 
It  could  not  therefore  be  a  memorandum,  or  a  declaration  matle  by  a  notary, 
because  neither  of  them  were  rcipiired.  Nor  could  he  have  intended  to  waive 
that  which  whether  performed  or  omitted,  his  right  would  in  no  maimer  be 
affected.  The  only  things  necessary  on  the  part  of  the  indorsees  was  a  demand 
of  payment  of  the  maker,  and  notice  to  the  indorser.  By  waiving  the  necessity 
of  protest  the  defendant  dispensed  with  both,  or  his  communication  is  destitute  of 
all  meaning. 


472  EXCUSES   OF   PRESENTMENT   AND   NOTICE. 

"  It  was  arjuied  indeed  that  the  defendant  mifjht  have  referred  to  the  notarial 
«  .  ?  . 

certificate  authorized  by  statute.  But  this  certificate  is  made  prima  Jacie  evi- 
dence of  a  demand  and  notice  in  favor  of  the  indorsees.  It  is  for  their  benefit. 
The  defendant  in  making  such  reference  must  have  supposed  that  the  certificate 
■was  necessary  evidence,  because  he  waives  the  necessity  of  a  protest,  which, 
according  to  the  argument  is  equivalent  to  dispensing  with  the  necessity  of  a 
notarial  certificate.  Now  to  every  fair  mind,  waiver  of  proof  necessary  to  estab- 
lish a  particular  fiict,  is  equivalent  to  an  agreement  to  admit  it.  Whether,  there- 
fore, the  defendant  by  waiving  the  necessity  of  a  protest,  intended  to  dispense 
•with  demand  and  notice,  or  with  the  evidence  of  them,  the  result  would  be  the 
same,  and  in  either  case  he  is  concluded  by  his  own  stipulation  from  raising  the 
objection  taken  upon  the  trial.  I  agree  with  the  learned  judge  who  delivered 
the  opinion  of  the  Supreme  Court,  that  the  circumstances  attending  the  written 
stipulation  of  the  defendant  confirm  this  view ;  but  I  prefer  to  rest  my  opinion 
upon  the  letter  alone,  as  furnishing  prima  facie  evidence  of  an  intent  by  the 
jndorser  to  waive  demand  of  payment  and  notice  to  which  be  was  otherwise 
entitled." 

But  it  is  held  in  Buckley  v.  Bentley,  42  Barb.  646,  that  waiver  of  notice  of 
protest  does  not  waive  presentment  and  demand.  The  expression  "  I  waive  de- 
mand of  protest"  was  held  in  Porter  v.  Kemball,  53  Barb.  467,  to  include  pre- 
sentment and  notice.  It  was  also  held  in  that  case  that  if  the  expression  was 
ambiguous,  pai'ol  evidence  was  admissible  to  explain  its  meaning.  See  1  Par- 
sons, Notes  and  Bills,  584,  585. 

The  strict  construction  has  been  adopted  in  Louisiana,  upon  the  authority  of 
Union  Bank  v.  Hyde,  supra.  In  that  State  it  is  held  that  waiver  of  protest 
does  not  dispense  with  notice.  Bird  v.  LeBlanc,  6  La.  An.  470;  Wall  v.  Bry, 
1  La.  An.  312.  In  Bird  v.  Le  Blanc,  the  case  of  Coddington  v.  Davis,  siqjra, 
was  before  the  Court.     See  also  Scott  v.  Greer,  10  Penn.  State,  103. 

K  one  write  a  guaranty  over  his  name,  on  the  back  of  a  bill  or  note,  the  bet- 
ter opinion  is  that  his  liability  is  that  of  guarantor,  and  not  of  an  indorser ;  so 
that  demand  and  notice  are  not  required  as  to  him.  See  Hall  v.  Newcomb,  7 
Hill,  416,  aiite,  p.  131. 


8IGERS0N    V.    MATilKWS.  473 


John  Sigerson,   Plaintiff  in  Error,  v.  Edward    Matiit.ws. 

(20  Howard,  496.     Supreme  Court  of  the  United  States,  December,  18.j7.) 

Promise  to  jxiy,  when  a  imirer.  —  If,  before  tlie  maturity  of  a  note,  tlie  indorscr  dis- 
pensed with  a  presentation  of  the  note  and  demand  of  payment,  and  promised  to 
pay  it  or  to  provide  for  its  payment  at  maturity,  lie  cannot  set  up  sis  a  defence  to  a 
suit  upon  the  note,  tiiat  it  was  not  presented  for  payment,  and  demand  made  there- 
for, when  it  was  due,  and  tliat  no  notice  of  its  dislionor  was  j^iven.  Or  if,  atler  the 
maturity  of  the  note,  tlie  indorser  promised  the  holder  or  his  agent  to  pay  the 
same,  having?  at  the  time  of  making  said  promise  knowledge  of  the  fact  that 
the  note  had  not  been  presented  for  pajment,  and  that  no  demand  had  been  made 
therefor,  or  notice  of  non-payment  given,  the  indorser  cannot  now  set  uj)  as  a  de- 
fence to  the  note,  a  want  of  such  demand  and  notice. 

The  case  is  stated  in  the  opinion  of  the  Court. 

McLean,  J.  This  is  a  writ  of  error  to  the  Circuit  Court  for 
the  district  of  Missouri. 

An  action  was  brought  by  Mathews  against  John  Sigerson,  as 
indorser  on  a  note  of  James  Sigerson,  now  deceased,  dated  the  tentli 
of  March,  1852,  for  the  payment  of  the  sum  of  two  tliousand  dol- 
lars, two  years  after  date,  at  the  Bank  of  the  State  of  Missouri, 
with  interest  from  the  date. 

It  was  proved  on  the  trial  that  in  1851  Mathews  advanced 
largely  to  John  Sigerson  on  some  transactions  in  pork,  whereby 
Sigerson  became  indebted  to  him  in  the  sum  of  two  tliousand  dol- 
lars;  that  Sigerson  wanted  two  years'  time,  on  which  Mathews 
required  a  mortgage  on  real  estate  as  security ;  but  Sigerson 
offered  to  give  the  note  of  his  brother  James,  indorsed  by  himself, 
instead  of  the  mortgage  ;  and  he  represented  that  his  brother  James 
was  the  owner  of  a  vahiable  real  estate  near  St.  Louis  ;  which  otler 
was  accepted,  and  the  note  was  given. 

Some  time  in  the  fall  of  1852,  Joseph  E.  Elder,  a  witness,  re- 
ceived the  note  from  Matiiews  for  collection,  soon  after  the  death 
of  James  Sigerson,  and  before  the  note  became  due.  Witness 
called  on  John  Sigerson,  and  asked  him  if  he  should  have  the  note 
protested  against* the  estate  of  James  Sigerson.  lie  replied,  that 
the  witness  need  not  do  so,  and  that  the  note  should  be  paid  at 
maturity.  The  witness  then  placed  tlic  note  in  his  portfolio, 
where  it  remained  until    after   due.     After  it  was   due,  witness 


474  EXCUSES    OP    PRESENTMENT    AND    NOTICE. 

called  on  John  Sigerson,  and  informed  him  that  he  had  neglected 
to  put  the  note  in  bank  for  collection,  and  asked  him  what  lie  was 
going  to  do ;  he  said  he  would  see  witness  in  a  few  days,  and 
arrange  it.  Afterwards  Sigerson  said  to  the  witness  that  he  did 
not  consider  himself  liable  as  indorser,  as  the  note  had  not  been 
protested. 

In  February,  1852,  John  Sigerson  sold  his  interest  in  the  farm 
near  St.  Louis,  which  was  one-half  of  it,  and  which  contained  about 
one  thousand  acres,  to  James  Sigerson,  who  was  to  pay  off  the 
incumbrances  on  the  land,  which  amounted  to  about  sixteen  thou- 
sand dollars.  James  executed  twenty  notes  for  two  thousand  dollars 
each,  payable  in  six,  twelve,  and  eighteen  months  ;  and  John  Siger- 
son made  him  a  deed.  In  July,  1852,  James  reconveyed  the  land 
to  John,  and  the  bargain  was  rescinded.  This  was  done  because 
James  had  not  fulfilled  his  contract.  Nineteen  of  the  notes  were 
given  up,  but  the  note  now  in  suit  was  not  surrendered,  and  for 
which  the  account  of  James  was  credited  on  tlie  books  of  John. 
James,  on  his  decease,  left  no  property. 

On  the  above  facts,  the  Court  charged  the  jury,  "  if  they  believe 
from  the  evidence,  that,  before  the  maturity  of  the  note,  in  conver- 
sation with  the  agent  of  the  plaintiff,  the  defendant  dispensed  with 
a  presentation  of  the  note  and  demand  of  payment,  and  promised 
to  pay  it  or  provide  for  its  payment  at  maturity,  he  cannot  now  set 
up  as  a  defence  to  this  suit,  that  the  note  was  not  presented  for 
payment,  and  demand  made  therefor,  when  it  was  due,  and  that  no 
notice  of  its  dishonor  was  given." 

Tliat,  "  if,  after  the  maturity  of  the  note,  the  defendant  promised 
the  plaintiff  or  his  agent  to  pay  the  same,  having  at  the  time  of 
making  said  promise  knowledge  of  the  fact  that  the  note  had  not 
been  presented  for  payment,  and  that  no  demand  had  been  made 
therefor,  or  notice  of  non-payment  given,  the  defendant  cannot 
now  set  up,  as  a  defence  to  said  note,  a  want  of  such  demand  or 
notice." 

"  If  the  defendant  dispensed  neither  with  the  presentation  of  the 
note  and  notice,  nor  promised  to  pay  the  same,  having  knowledge 
as  above  stated,  the  plaintiff  cannot  recover." 

Exception  was  taken  to  these  instructions.       • 

Certain  instructions  were  asked  by  the  defendant,  which  were 
refused  ;  but  it  is  unnecessary  to  state  them,  as  they  are  substan- 
tially embraced  in  those  given  by  the  Court. 


RIGERSON    V.    MATHEWS.  476 

As  there  was  no  formal  demand  of  {)ayment,  nor  protest  for  non- 
payment and  notice,  those  requisites  must  have  been  waived  by  the 
defendant,  to  make  liini  responsible  as  indorscr  '  and  to  this  effect 
were  the  instructions  of  the  Court ;  and  we  think  the  testimony 
not  only  authorized  the  instructions  given,  but  also  the  verdict 
rendered  l)y  the  jury.  IJefore  the  note  was  due,  the  defendant 
said  to  Elder,  the  agent  of  Mathews,  and  who  held  the  note,  that 
he  need  not  take  steps  to  collect  it  from  the  estate  of  his  brother 
James,  as  it  should  l)c  paid  at  maturity.  This  was  an  assurance 
which  could  not  be  mistaken,  and  it  was  relied  on  by  the  agent. 
He  placed  the  note  in  his  portfolio,  where  It  remained  until  after 
it  became  due.  After  tliis,  the  agent  called  on  tiie  defendant,  and 
informed  him  that  he  had  neglected  to  take  measures  for  the  col- 
lection of  the  note,  and  asked  him  what  he  was  going  to  do ;  he 
answered,  that  in  a  few  days  he  would  see  the  witness,  and  arrange 
it.  This  was  an  unconditional  promise  to  pay  the  note,  which  no 
one  could  misunderstand,  and  which  he  could  not  repudiate  at  any 
subsequent  period. 

A  promise  by  an  indorser  to  pay  a  note  or  l)ill,  dispenses  with 
the  necessity  of  proving  a  demand  on  the  maker  or  drawer,  or 
notice  to  himself.  Pierson  v.  Hooker,  3  Johns.  68  ;  Hopkins  v. 
Liswell,  12  Mass.  o2.^  Where  the  drawer  of  a  protested  bill,  on 
being  applied  to  for  payment  on  behalf  of  the  holder,  acknowledged 
the  debt  to  be  due,  and  promised  to  pay  it,  saying  nothing  about 
notice,  it  was  held  that  the  holder  was  not  bound  to  prove  notice 
on  the  trial.  Walker  v.  Laverty,  6  Munf.  487.  An  unconditional 
promise  by  the  indorser  of  a  bill  to  pay  it,  or  an  acknowledgment 
of  his  lial)ility,  and  knowledge  of  his  discharge  by  the  laches  of 
the  holder,  will  amount  to  an  implied  waiver  of  due  notice  of  a 
demand  of  the  drawee,  acceptor,  or  maker.  Thornton  *.  Wynn, 
12  Wheat.  183  ;  Bank  of  Georgetown  v.  Magruder,  7  Peters,  287. 
We  think  the  instructions  of  the  Court  were  correct,  and  that 
consequently  the  judgment  must  be  affirmed,  with  costs. 

But  the  promise  to  pay  niusit  be  dear  and  distinct.  Creamer  v.  Perry,  17 
Pick.  332.  In  delivering  the  opinion  of  the  Court  in  this  case,  Chief  Justice 
Shaw  said  :  "  If  an  indorser,  knowing  that  there  has  been  no  demand  and  no- 
tice, and  conversant  witli  all  the  circumstances,  will  promise  to  pay  the  note,  this 
is  to  be  deemed  a  waiver.     But  these  rules  in  regard  to  notice  and  waiver  are  to 

1  Sec  aute,  p.  465. 


476  EXCUSES   OF   PRESENTMENT   AND   NOTICE. 

be  held  with  some  strictness,  in  order  to  insure  uniformity  of  practice  and  regu- 
larity in  their  ap[)lic;ition.   .   .   . 

In  the  present  case  we  are  of  opinion  that  the  evidence  falls  short  of  proving 
a  promii<e  by  the  defendant,  either  to  pay  the  note  or  see  it  paid.  The  agent  of 
the  plaintiff  applied  to  the  defendant,  some  days  after  the  note  had  become  due, 
obviously  for  the  purpose  of  obtaining  from  him  a  renewed  promise.  The  strong- 
est expression  used  by  the  defendant  in  the  course  of  a  long  conversation  was, 
*  the  note  will  be  paid.''  This  is  quite  as  consistent  with  tlie  hypotiiesis  that  it 
was  a  mere  assertion  of  his  expectation  that  it  would  be  paid  by  the  promisor, 
as  of  a  promise  on  his  part  to  pay  it ;  and  from  the  general  tenor  of  the  conver- 
sation, we  think  it  cannot  be  inferred  that  it  was  his  intention,  knowing  of  his 
discharge,  to  waive  his  defence  and  promise  to  pay  the  note,  or  see  it  paid  at  all 
events."  In  Rogers  v.  Stephens,  2  T.  R.  713,  however,  it  was  held  that  the  reply 
of  the  drawer  of  a  bill  upon  its  dishonor  that  "  it  must  be  paid,"  amounted  to  a 
promise  to  pay,  and  removed  the  necessity  of  notice.  See  also  Borradaile  v. 
LoAve,  4  Taunt.  93 ;  Richter  v.  Selin,  8  Serg.  &  Rawle,  425,  438 ;  Griffin  v.  Goff, 
12  Johns.  423 ;  Martin  v.  IngersoU,  8  Pick.  1 ;  Harrison  v.  Bailey,  99  Mass.  620; 
Low  V.  Howard,  11  Gush.  268 ;  Kelley  v.  Brown,  5  Gray,  108 ;  Arnold  v.  Dres- 
ser, 8  Allen,  435.  In  the  last  case  Bigelow,  C.  J.,  said  in  reference  to  waiver  of 
demand :  "  No  such  waiver  is  made  where  an  Indorser  promises  to  pay  the  note 
in  ignorance  of  the  fict  that  he  has  been  discharged  by  the  laches  of  the  holder, 
in  not  making  due  demand  of  the  promisor,  or  where  such  promise  is  made  under 
a  misapprehension  or  mistake  of  facts  concerning  the  due  presentment  and  de- 
mand of  the  note."  See  to  the  same  effect,  Walker  v.  Rogers,  40  111.  278 ; 
Morgan  v.  Peet,  32  111.  281,  288 ;  Tobey  v.  Berly,  26  111.  426  ;  Farrington  v. 
Brown,  7  N.  Hamp.  271 ;  Woods  v.  Dean,  3  Best'&  S.  101. 

In  Gove  v.  Vining,  7  Met.  212,  Shmv,  C.  J.,  said  :  "  The  Court  are  of  opinion 
that  when  the  indorser,  at  or  shortly  before  the  time  when  the  note  becomes  due, 
says  to  the  holder  that  an  arrangement  for  its  payment  is  about  being  made,  and  in 
direct  terms  or  by  reasonable  implication  requests  the  holder  to  wait  or  give  time, 
it  amounts  to  an  assurance  that  the  note  will  be  paid,  —  that  the  promisor  or  in- 
dorser will  pay  it,  —  and  is  a  waiver  of  demand  and  notice.  It  tends  to  put  the 
holder  off  his  guard,  and  induces  him  to  forego  making  a  demand  at  the  proper 
time  and  place ;  and  it  would  be  contrary  to  good  faith  to  set  up  such  want  of 
demand  and  notice  —  caused  perhaps  by  such  forbearance  — as  a  ground  of  de- 
fence. Leffingwell  v.  White,  1  .lohns.  Cas.  99 ;  Mechanics'  Bank  v.  Griswold, 
7  Wend.  165 ;  Leonard  v.  Gary,  10  Wend.  504  ;  Taunton  Bank  v.  Richardson, 
5  Pick.  436 ;  Thornton  v.  Wynn,  12  Wheat.  183 ;  Wood  v.  Brown,  1  Stark. 
217."  See  also  Union  Bank  v.  Magruder,  7  Peters,  287;  Spencer  t\  Harvey, 
17  Wend.  489;  Creamery.  Perry,  17  Pick.  332;  Hoadley  v.  Bliss,  9  Ga.  303; 
Marshall  v.  Mitchell,  35  Me.  221 ;  Phipson  v.  Kneller,  1  Stark.  116  ;  Sheldon  v. 
Horton,  53  Barb.  23 ;  Amoskeag  Bank  v.  Moore,  37  N.  Hamp.  539 ;  Baa-clay  v. 
Weaver,  19  Penn.  State,  396 ;  Ridgway  v.  Day,  13  id.  208 ;  Kent  v.  Warner, 
12  Allen,  561 ;  Wood  v.  Price,  46  111.  435. 


PEARCE   V.    AUSTIN.  477 


ACTIONS. 


Pearce  v.  Austin. 

(4  Wharton,  489.     Supreme  Court  of  Pennsylvania,  March,  1839.) 

Who  may  sue.  —  One  to  whom  negotiable  paper  is  indorsed  as  agent  for  another,  may 
bring  an  actior^upon  the  same  in  iiis  own  name  ;  unless  such  agent's  possession  is 
shown  to  be  malajide. 

The  case  is  stated  in  tlie  opinion  of  tlie  Court. 

Rogers,  J,  The  suit  was  brought  to  recover  the  amount  due 
on  a  promissory  note,  drawn  by  John  Pearce,  tlie  defendant,  pay- 
able sixty  days  after  date,  to  the  order  of  John  Houghtin.  It  was 
indorsed  in  blank  to  Charles  B.  Austin,  agent  of  the  Union  Glass 
Works,  transferred  by  him  to  T.  W.  Dyott,  and  the  suit  is  brought 
in  the  name  of  Charles  B.  Austin,  agent  of  the  Union  Glass  Works, 
who  is  the  holder  of  the  bill.  The  question  is,  can  an  agent  bring 
a  suit  on  a  promissory  note  in  his  own  name  ?  This  is  a  question 
whicli  depends  altogether  on  authority.  A  holder  of  negotiable 
paper  can  maintain  an  action  on  it  in  his  own  name,  witliout  show- 
ing title  to  it.  The  Court  will  not  inquire  into  his  right  to  the 
paper,  or  his  right  to  maintain  a  suit  upon  it,  unless  circumstances 
appear  showing  his  possession  to  be  mala  fide.  Dean  i\  Hewit,  5 
Wend.  257  ;  Talman  r.  Gibson,  1  Hall,  808  ;  Livingston  v.  Clinton 
[cited],  3  Johns.  Cas.  2()4. 

In  Ogilby  v.  Wallace,  2  Hall,  553,  the  right  to  sue  even  by  a  fic- 
titious |)erson,  when  the  name  of  tlie  real  party  was  disclosed, 
unless  some  question  arose  as  to  the  mala  fide  possession,  was 
asserted.  The  Court  nonsuited  the  plaintiff,  on  the  ground  that 
he  was  a  fictitious  person  ;  but  on  an  a))peal  tlic  nonsuit  was  set 
aside,  that  the  question  of  fact,  connected  with  the  possession  and 
presentation  of  the  note,  should  be  submitted  to  a  jury.  This 
principle  applies  to  a  note  payable  to  bearer  or  indorsed  in  blank  ; 


478  ACTIONS. 

for  ill  either  case  an  action  can  be  maintained  in  the  name  of  any 
person,  without  the  plaintiff  being  required  to  sliow  that  he  has 
any  interest  in  it,  unless  he  came  into  the  possession  of  the  note 
under  suspicious  circumstances.  Here  there  is  no  allcgatiort  of 
mala  fide^  so  that  the  case  stands  clear  of  that  objection.  Tlie  suit 
is  brought  by  Austin,  who  is  a  trustee  or  agent  for  the  company. 
He  has  the  legal  title  to  the  bill,  and  the  suit  is  brought  in  the 
name  of  the  legal  owner.  Stating  that  he  is  the  agent  of  the  Union 
Glass  Works  is  equivalent  to  saying  that  the  suit  is  for  their  use. 
This  brings  it  within  the  principle  of  the  cases  cited.  But  Mauran 
V.  Lamb,  7  Cow.  174,  is  still  nearer  the  point.  It  is  there  held 
that  one  holding  a  check  or  note  payable  to  bearer,  as  a  mere  agent, 
may  sue  on  it  in  his  own  name,  and  that  it  does  not  lie  with  the 
opposite  party  to  assert  the  plaintiff's  want  of  interest.  It  can 
certainly  make  no  difference  whether  the  note  is  payable  to  bearer, 
or  indorsed  in  blank  and  in  the  possession  of  a  bona  fide  holder. 

Judgment  affirmed. 

The  doctrine  in  a  word  is  this  :  Possession  of  negotiable  paper  indorsed  in  blank 
IS  prima  facie  evidence  of  title  ;  to  defeat  this  presumptive  title  and  right  to  sue, 
the  defendant  must  prove  that  the  plaintiff's  possession  is  mala  fide.  This  will 
shift  the  burden  of  proof  upon  the  plaintiff.  See  Goodman  v.  Simonds,  ante,  p. 
242,  and  note;  Pettee  v.  Prout,  ante,  p.  217  ;  Way  v.  Richardson,  ante,  p.  220. 

In  the  case,  however,  of  unnegotiable  paper,  or  negotiable  paper  payable  to 
order,  the  rule  requires  some  qualification ;  for  if  A  sues  as  payee  of  a  bill  or 
note  payable  to  the  firm  of  A,  B,  &  Co.,  he  must  show  that  he  alone  constitutes 
that  firm.  2  Greenl.  Ev.  §§  163,  478;  Ferguson  v.  King,  5  La.  An.  G42 ;  Robb 
V.  Bailey,  13  La.  An.  457  ;  Fletcher  v.  Dana,  4  Blackf.  377  ;  Desha  v.  Stewart, 
6  Ala.  852. 

If  the  paper  be  payable  to  order  and  not  indorsed,  the  rule  is  qualified  to  this 
extent,  that  the  holder  under  the  payee  cannot  sue  in  his  own  name,  but  must 
bring  his  action  in  the  name  of  the  payee.  Farwell  v.  Tyler,  5  Iowa,  535; 
Allen  V.  Newbury,  8  Iowa,  65.  So  if  it  is  payable  to  A  for  the  use  of  B,  A 
is  the  proper  party  to  bring  the  action.  Cramlington  v.  Evans,  2  Ven.  307  ; 
Barry  County  v.  McGiothlin,  19  Mo.  307.  But  in  Vermont  the  person  bene- 
ficially interested  may  sue  upon  the  paper  in  his  own  name.  Arlington  v.  Hinds, 
1  D.  Chip.  431 ;  Rutland  &  B.  R.  Co.  v.  Cole,  24  Vt.  33;  Johnson  v.  Catlin,  27 
Vt.  87. 

In  the  case  of  a  note  or  bill  given  by  a  firm  to  one  of  its  members,  the  prom- 
isee cannot  sue,  as  that  would  be  to  bring  an  action  in  part  against  himself;  but 
if  he  indorse  the  paper,  the  indorsee  may  sue.  Thayer  v.  Buffum,  11  Met.  398 ; 
Pitcher  v.  Barrows,  17  Pick.  361 ;  Smith  v.  Lusher,  5  Cow.  688  ;  Davis  v.  Briggs, 
39  Me.  304. 

But  a  different  doctrine  has  been  declared  in  Kentucky.  Morrison  v.  Stock- 
well,  9  Dana,  172;  AUin  v.  Shadburne,  1  Dana,  68.     It  is  there  held  that  where 


PEARCE    V.    AUSTIN.  47'J 

the  name  of  a  firm  is  sif^ned  by  one  of  two  partners  to  a  note  payable  to  tin- 
other,  it  is,  in  cfleft,  merely  the  note  of  the  former  to  the  latter;  the  payee  may 
sue  the  other  [lartner  upon  tlie  note  and  recover  the  whole  amount. 

It  is  held  in  Kii^^land  that  where  the  maker  or  aceiptor  has  become  executor 
of  the  payee,  the  debt  is  discharged,  so  that  an  indorsee  cannot  sue  upon  the 
paper.  Freakley  v.  Fox,  9  Barn.  &  C.  130.  Lord  Tenterden  explains  that  "  it 
is  considered  to  have  been  paid  by  the  executor  to  himself,  and  becomes  assets 
in  his  hands."  But  see  Kent  v.  Somervell,  7  Cill  &  J.  -JO.^,  271;  Mitchell  v. 
Rice,  6  J.  J.  Marsh.  G23.  G28. 

One  wiio  has  inilorsed  pa{)cr  for  collection  may  sue  uj)on  it  in  his  own  name, 
notwithstanding  his  indorsement.  I)u{,'an  v.  United  States,  3  Wheat.  172.  Mr. 
Justice  Livingston,  on  p.  182,  went  a  step  further  and  said:  "If  any  person 
who  indorses  a  bill  of  exchange  to  another,  whether  for  value  or  for  the  purpose 
of  collection,  shall  come  to  the  possession  thereof  again,  he  shall  be  regarded, 
unless  the  contrary  appear  in  evidence,  as  the  honajide  holder  and  i)roprietor  of 
such  bill,  and  shall  be  entitled  to  recover,  notwithstanding  there  be  on  it  one  or 
more  indorsements  in  full,  subsequent  to  the  one  to  him,  without  producing  any 
receipt  or  indorsement  back  from  either  of  such  indorsees,  whose  names  he  may 
strike  from  the  bill  or  not,  as  he  may  think  proper."  Welch  v.  Lindo,  7  Cranch, 
159,  is  overruled  by  this  case ;  and  Dugan  v.  United  States  is  now  the  settled 
law.  See  Bank  of  the  United  States  r.  United  States,  2  How.  711  ;  Dollfus  v. 
Frosch,  1  Denio,  367  ;  Watervliet  Bank  v.  AVhite,  1  Denio,  608 ;  Bowie  v.  Du- 
vall,  1  Gill  &  J.  175;  Wood  v.  Tyson,  13  La.  An.  104. 

Possession  is  not  necessary  to  the  plaintiff's  right  of  action  where  the  paper 
has  been  indorsed  to  another  as  agent  or  trustee  for  the  plaintiff,  if  it  be  shown 
that  such  agent  or  trustee  is  ready  to  give  up  possession  of  the  paper  to  the 
plaintiff  for  the  purposes  of  the  suit.  Stones  v.  Butt,  2  Cromp.  &  Mees.  416. 
See  Iladwen  v.  Mendizabel,  10  J.  B.  Moore,  477;  Marsh  r.  Newell,  1  Taunt. 
109 ;  Fisher  v.  Bradford,  7  (Jreenl.  28. 

Though  a  person  who  holds  commercial  paper  as  agent  or  trustee  can  sue  upon 
it  in  his  own  name,  a  mere  depositary  must  sue  in  the  name  of  his  principal. 
Sherwood  v.  Roys,  14  Pick.  172. 

"  The  maker  of  a  note  payable  to  bearer,  cannot  defeat  an  action  thereon 
brought  in  the  name  of  one  who  had  possession  of  the  note  at  the  coinmenceniont 
of  the  suit,  and  has  contmued  to  hold  it  ever  since,  by  showing  that  a  third  par- 
ty was  the  real  owner  of  the  note,  when  it  ap[)ears  that  such  third  parly  has 
never  objected  to  the  possession  of  the  plaintid'and  the  suit  brought  by  him,  but 
has  expressly  consented  to  and  ratified  such  possession,  and  the  prosecution  of 
the  action."  Per  Foster,  J.,  in  Wheeler  v.  Johnson,  97  Mass.  39;  citing  Beek- 
man  v.  Wilson,  9  Met.  436. 


480  ACTIONS. 


James  N.  Staples  et  al.  v.  President,  Directors,  &c.,  of 
THE  Franklin  Bank. 

(1  Metcalf,  43.     Supreme  Court  of  Massachusetts,  March,  1840.) 

When  aclion  may  be  brought.  —  The  maker  of  a  promissory  note  is  bound  to  pay  it 

upon  demand  made  at  any  seasonable  hour  of  the  last  day  of  grace,  and  may  be 

sued  on  that  day,  if  lie  fail  to  pay  on  such  demand. 
Post-notes,  issued  by  a  bank,  are  payable  on  demand  made  at  any  time  on  the  last 

day  of  grace,  after  the  known  and  usual  hour  of  opening  the  bank  for  business, 

and  may  be  -put  in  suit  on  that  day,  if  payment  is  refused. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Shaw,  C.  J.  The  present  question  comes  before  the  Court  upon 
the  petition  of  a  subsequent  attaching  creditor,  to  set  aside  and 
dissolve  the  attachment  in  the  present  suit.  The  Rev.  Sts.  c.  90, 
§§  83-94,  authorize  an  after  attaching  creditor  to  come  in  and  ob- 
tain a  dissolution  of  the  prior  attachment,  by  showing,  if  he  can, 
either  that  the  sum  demanded  in  the  first  suit  was  not  justly  due,  or 
that  it  was  not  payable  when  the  action  was  commenced.  The  peti- 
tioner insists  that  his  case  is  within  the  last  provision  of  the  stat- 
ute ;  that  the  sum  demanded  in  this  writ  was  not  payable  when 
the  action  was  commenced  ;  and  this  is  the  question  for  our  con- 
sideration. 

The  action  is  brought  upon  a  bank  post-note  issued  by  the  de- 
fendants, dated  November  8,  1836,  demanded  at  the  bank,  July 
11,  1837,  in  the  forenoon,  after  the  commencement  of  banking 
hours.  Payment  was  then  refused,  and  an  action  was  commenced, 
after  the  demand,  the  same  forenoon.  No  tender,  or  offer  of  the 
amount,  was  made  to  the  plaintiffs,  either  on  the  same  day,  or  at 
any  time  afterwards. 

In  a  recent  case,  it  was  held  that  the  statute,  giving  days  of 
grace  on  all  promissory  notes  payable  at  a  future  day  certain,  in 
which  there  is  not  an  express  stipulation  to  the  contrary,  Rev. 
Sts.  c.  33,  §  5,  applies  to  bank  post-notes,  and  is  not  controlled  or 
affected  by  the  usages  of  banks.  Perkins  v.  Franklin  Bank,  21 
Pick.  483.  This  note  being  entitled  to  grace  by  the  statute,  the 
eleventh  of  July  was  the  last  day  of  grace  ;  and  then  the  question 


STAPLES   V.    FRANKLIN   BANK.  481 

is,  whether  upon  a  demand  and  refusal  of  payment,  within  banking 
hours  on  the  last  day  of  grace,  a  right  of  action  immediately 
accrue8»to  the  holder,  so  that  he  may  then  commence  his  action  ; 
or  whether  he  is  bound  to  wait  till  the  next  succeeding  day.  It 
certainly  struck  me  with  some  surprise  that  such  a  question 
should  now  be  made,  thinking,  as  I  did,  that  it  was  well  settled, 
by  the  law  and  practice  of  this  Commonwealth,  that  a  promissory 
note  was  due  at  any  time  within  reasonable  hours,  on  the  last  day 
of  grace,  and  that  upon  presentment  to  the  promisor,  and  a  demand 
of  payment,  and  on  a  neglect  or  refusal  to  pay,  the  note  was  dis- 
honored, and  a  right  of  action  immediately  accrued  to  the  holder 
against  the  maker  ;  and  after  due  notice,  actual  or  constructive,  to 
the  indorser,  a  like  right  of  action,  on  the  same  day,  accrued  to 
the  holder  against  the  indorser.  But  as  it  appeared  upon  the  argu- 
ment that  there  is  respectable  authority  for  the  contrary  opinion, 
it  becomes  necessary  to  examine  the  subject  with  attention.  Noth- 
ing is  more  important  to  a  commercial  community,  than  to  have 
all  questions  relative  to  the  rights  and  duties  of  holders,  and  all 
other  parties  to  negotiable  bills  and  notes,  definitely  settled.  And 
it  is  greatly  desirable,  that  throughout  all  the  States  of  the  Union, 
which,  to  many  purposes,  constitute  one  extended  commercial 
community,  the  rules  upon  this  subject  should  be  uniform. 

We  will  first  consider  the  Massachusetts  authorities  on  this  sub- 
ject, and  then  see  how  far  they  are  supported  or  opposed  by  those 
of  England  or  the  other  States. 

The  only  question  now  is,  whether  a  note  is  payable  on  demand 
on  the  last  day  of  grace,  when  a  note  is  entitled  to  grace.  A  dif- 
ferent construction  may  perhaps  apply,  when  a  note  is  payable 
without  grace.  As  grace  was  originally  matter  of  indulgence  and 
courtesy,  and  not  of  contract,  it  perhaps  may  be  contended,  that 
although  a  debtor  has  the  whole  of  the  last  day  of  the  credit  stip- 
ulated for  by  contract  to  make  payment,  yet  a  different  rule  may 
apply  to  grace,  which  is  not  part  of  the  contract.  So  when  the 
third  day  of  grace  falls  on  Sunday,  as  the  riglit  of  one  or  the 
other  of  the  parties  must  yield,  it  shall  be  that  of  the  one  who 
claims  jndulgence,  and  not  of  him  who  claims  of  right ;  whereas 
if  a  bond  were  to  be  payable  on  Sunday,  the  debtor  would  have 
till  the  close  of  Monday,  to  pay  it.  Some  of  the  cases  appear  to 
turn  on  this  distinction. 

Formerly  it  was  held,  in  Massachusetts,  that  unless  a  promissory 

81 


• 


482  ACTIONS. 

note  expressed  grace,  it  was  payable  without  grace ;  now  it  is 
otherwise  by  statute.  Whether  a  note,  expressed  to  be  payable 
in  thirty  days,  without  grace,  is  considered  due  on  demand*  on  the 
thirtieth  day  after  the  day  of  the  date,  it  is  not  now  necessary  to 
decide ;  tliough  we  are  inclined  to  think  that  such  was  the  rule 
formerly,  when  notes  were  not  entitled  to  grace. 

The  first  case  of  which  a  report  is  published,  and  which  is 
directly  in  point,  is  a  nisi  prius  decision  of  Chief  Justice  Parsons, 
and  is  reported  in  an  American  edition  of  Chitty  on  Bills,  p.  225, 
note  1/,  published  in  1809,  and  edited  by  Mr.  Story,  now  Mr.  Jus- 
tice Story,  of  the  Supreme  Court  of  the  United  States,  that  of 
Park  V,  Page,  Suffolk,  November  term,  1808.  He  says,  "  the  note 
is  due  on  the  last  day  of  grace,  and  if  payment  is  refused,  the 
maker  may  be  sued  on  that  day."  I  have  examined  the  record  of 
that  case,  and  find  that  it  was  a  suit  by  the  indorsee  against  the 
indorser  of  a  promissory  note,  dated  7  July,  1807,  payable  at 
sixty  days  with  customary  grace.  The  last  day  of  grace  was 
therefore  the  eighth  of  September.  The  writ  is  dated  on  the  eighth 
of  September,  and  was  served  by  an  attachment  of  real  estate,  at 
eleven  o'clock  on  that  day.  To  this  opinion  at  nisi  prius,  no  excep- 
tion appears  to  have  been  taken,  and  parties  and  counsel  acquiesced. 
The  only  difference  between  the  case  thus  appearing,  and  the  note 
cited  is,  that  the  action  was  against  the  indorser  and  not  against  the 
maker.  But  if  an  action  wovild  lie  against  the  indorser,  who  is  only 
provisionally  liable  on  the  default  of  the  maker,  rt/oriiori,  as  it  seems, 
would  it  lie  against  the  maker,  who  is  the  principal  debtor.  This 
edition  of  Chitty,  by  Mr.  Justice  Story,  was  extensively  in  use  in  this 
Commonwealth,  for  many  years,  amongst  lawyers  and  merchants, 
and  was  regarded  as  high  authority  on  the  law  of  negotiable  bills 
and  notes. 

The  case  of  Henry  v.  Jones,  8  Mass.  453,  decided  in  1812,  ap- 
pears to  me  to  have  a  strong  application  to  the  point  in  question. 
It  was  a  suit  against  an  indorser,  on  a  note  dated  March  4,  1809, 
payable  in  sixty  days ;  and,  as  the  law  then  stood,  was  not  en- 
titled to  grace.  The  question  was,  whether  the  day  of  the  date 
should  be  excluded  from  the  computation  of  the  sixty  day^  ;  if  it 
should  be,  the  note  was  at  maturity  on  the  third  of  May ;  if  in- 
cluded, it  was  on  the  second.  The  note  was  presented  to  the 
maker  on  the  second,  and  payment  refused,  and  notice  was  given 
to  the  indorser  at  a  very  early  hour  on  the  morning  of  the  third. 


STAPLES  V.   FRANKLIN   BANK.  483 

and  payment  not  being  made,  a  suit  was  then  commenced.  The 
Court  held  that  the  day  of  the  date  should  be  excluded,  and  from 
there  l^ing  no  grace,  the  third  of  May  was  the  last  day  of  the 
sixty  days'  credit  stipulated  for  by  the  contract.  The  Court,  in 
concluding  their  judgment  say  :  "  No  auction  lies  against  tiie  in- 
dorscr,  until  after  demand  made  on  the  day  of  the  maturity  of  the 
note.  In  this  case  the  demand  was  made  on  the  day  preceding, 
and  not  on  the  day  fixed  by  the  parties  for  the  payment."  Here, 
it  will  be  perceived,  the  rule  was  prescribed,  as  well  when  the  note 
was  payable  witliout  grace,  as  when  it  is  with  grace;  and  it  is 
payable  on  demand,  on  the  last  of  the  days  specified  in  the  note. 
Otherwise,  the  note  in  question  would  not  have  been  demandable 
till  the  fourth. 

Tliis  case  is  recognized  and  confirmed,  as  to  a  demand  on  the 
day  of  maturity,  in  Farnum  v.  Fowle,  12  Mass.  89. 

But  the  case  in  which  the  point  was  directly  decided,  and  a  case 
which  received  great  consideration,  is  that  of  Shed  v.  Brett,  1 
Pick.  401.  Several  other  questions  were  considered,  and  the  case 
underwent  great  discussion.  The  action  was  commenced  against 
tiie  indorser,  on  the  last  day  of  grace,  after  a  demand  on  the 
promisor,  and  notice  put  in  the  post-office  for  the  indorser,  who 
lived  in  another  town,  and  held  well  to  lie.  The  point,  that  all 
parties  are  in  default,  and  liable  to  an  action  on  the  last  day  of 
grace,  after  demand  and  refusal  to  pay,  seems  rather  to  have 
been  taken  as  a  well-settled  rule,  than  an  open  question.  The 
Court,  in  giving  judgment,  say  that  the  right  of  action  accrues 
against  the  indorser  of  a  note,  when  the  maker  refuses  to  pay. 

The  case  of  N.  E.  Bank  v.  Lewis,  2  Pick.  125,  goes  on  the  same 
ground.  The  action  was  against  the  indorser,  and  commenced  on 
the  last  day  of  grace,  and  it  was  conceded  that  if  the  notice  had 
been  given  to  the  indorser  before  the  service  of  the  writ,  which 
might  have  been  done  in  a  few  minutes,  the  action  might  have  been 
sustained.  The  case  was  decided  on  a  distinction  between  the 
case  where  the  parties  live  in  the  same  and  in  diflerent  towns.  In 
the  latter  case,  putting  a  letter  in  the  post-office  is  held  sufficient 
constructive  notice,  although  it  cannot  by  possibility  have  reached 
the  indorser  by  the  course  of  the  mail.  And  the  point  in  this 
case  was,  that  if  the  notice  precedes  the  suit  ever  so  short  a  time, 
as  if  the  officer  go  with  the  notice  in  one  hand,  and  the  writ  in  the 
other,  it  will  be  sufficient.  This  is  an  express  declaration,  that  an 
action  will  lie  after  a  default  on  the  last  day  of  grace. 


484  ACTIONS. 

The  case  of  City  Bank  v.  Cutter,  3  Pick.  414,  is  quite  decisive 
of  the  same  point.  In  that  case,  wliich  was  against  an  indorser, 
the  defendants  pleaded  a  tender  on  the  day  after  the  las#day  of 
grace.  If  the  promisor  and  indorser  had  to  the  last  hour  of  the 
last  day  of  grace  to  make  payment,  there  was  no  default  till  the 
day  after  ;  and  as  there  can  be  no  fraction  of  a  day  in  such  case, 
a  tender  on  that  day  would  be  a  complete  performance  of  the 
contract,  and  a  good  bar  to  the  action.  Tiie  Court,  in  overruling 
the  plea,  say :  '•  Our  doctrine,  as  established  in  the  case  of  Shed  v. 
Brett,  and  indeed  always  practically  recognized  is,  that  the  suit 
may  be  brought  on  the  very  day  the  note  becomes  due,  after  de- 
mand and  notice,  for  there  is  then  a  breach  of  the  promise.  If 
the  note  is  not  paid  during  the  business  |jours  of  the  day,  if  the 
money  is  to  be  paid  into  a  bank,  a  right  of  action  has  accrued." 

The  same  doctrine  is  recognized  and  declared  in  Boston  Bank 
V.  Hodges,  9  Pick.  420.  The  Court,  on  dealing  with  an  argument 
of  the  plaintiff,  that  the  note  being  due  on  the  ninth  of  May,  the 
last  day  of  grace,  a  demand  and  refusal  to  pay  on  any  part  of  that 
day,  with  immediate  notice  to  the  indorser,  will  give  a  right  of 
action  against  the  latter,  say  :  '•  This  is  true,  when  there  is  an 
actual  demand  upon  the  maker  according  to  the  general  rule  of 
law."  But  the  case  was  decided  against  the  plaintiffs,  on  the 
ground  that  they  had  neither  conformed  to  the  general  rule  of 
law,  nor  to  the  substituted  course  established  by  their  own  usage. 

The  principle  I  am  stating  was  again  recognized  in  Church  v. 
Clark,  21  Pick.  310,  The  note  was  made  payable  at  a  bank,  and 
the  suit  was  commenced  against  the  maker  at  one  minute  after 
twelve  o'clock  at  night,  being  the  morning  of  the  last  day  of  grace. 
Held,  that  it  would  not  lie.  The  Court  again  repeat  the  general 
rule,  that  a  note  is  payable  at  any  time  on  demand  on  the  last  day 
of  grace,  or  day  it  becomes  due.  But  such  a  rule  may  be  mod- 
ified by  the  terms  of  the  note  ;  and  making  a  note  payable  at  a 
bank,  is  making  it  payable  within  usual  banking  hours. 

From  this  view  of  the  cases  decided  in  Massachusetts,  it  seems 
to  have  been  uniformly  held,  that  on  demand  and  refusal  of  pay- 
ment by  the  maker,  at  any  reasonable  time  on  the  last  day  of  grace, 
the  note  is  due  and  payable  ;  that  if  not  then  paid  an  action  may 
be  immediately  commenced  against  the  maker,  and  after  actual  or 
constructive  notice  to  the  indorser,  against  him.  And  as  stated 
by  Chief  Justice  Parker,  in  3  Pick.  418,  this  rule  seems  to  have 
been  always  practically  recognized. 


STAPLES   V.    FRANKLIN    BANK.  485 

This  j)oiiit  has  lieen  decided  in  the  same  way  in  Maine.  It  is 
there  hel<l,  that  l)ills  and  notes  are  payable  on  demand,  at  any 
reasonable  hour,  on  the  day  they  fall  due,  and  if  n(jt  then  paid, 
the  acceptor  or  maker  may  be  sued,  and  also  the  drawer  and  iu- 
dorser,  after  notice.  Greeley  v.  Thurston,  4  Greenl.  479 ;  Flint 
V.  Rogers,  3  Shepl.  G7.  It  is  a  little  remdrkable,  as  mentioned 
by  Mr.  Justice  Weston,  that  there  is  no  direct  English  authority 
upon  this  point.^  There  appears  to  be  no  case  in  which  it  has  been 
decided,  either  that  an  action  may  or  cannot  be  commenced  on 
the  last  day  of  grace,  or  day  the  note  becomes  due.  The  general 
rule  in  regard  to  payment  of  debts,  for  rent,  on  bond,  for  goods 
sold  on  credit  or  otherwise,  is,  that  the  debtor  has  till  the  last 
hour  of  the  day  in  which  to  make  payment :  Webb  v.  Fairmaner, 
3  Mees.  &  W.  473 ;  but  the  case  of  negotiable  bills  and  notes 
is  uniformly  treated  as  an  exception.  All  the  authorities  hold, 
that  a  foreign  h\\\  must  be  demanded  on  the  last  day  of  grace, 
and,  if  not  paid,  must  be  noted  for  protest ;  and  the  authorities 
are  equally  uniform,  that  if  not  thus  paid  on  demand*  on  the  last 
day,  by  the  acceptor  or  maker,  they  may  be  treated  as  dishonored, 
and  notice  may  be  immediately  given  to  the  drawer  and  indorsers, 
and  they  will  be  held  liable.  Leftley  v.  Mills,  4  T.  R.  170.  In 
this  case,  Mr.  Justice  Buller  lays  down  the  rule  very  explicitly, 
and  it  seems  to  have  been  subsequently  followed.  He  states  the 
rule  to  be,  that  if  not  paid  on  demand,  on  tiie  last  day,  the  bill  is 
dishonored,  the  parties  are  in  default,  and  the  bill  may  be,  and, 
in  case  of  a  foreign  bill  must  be,  protested  on  that  day,  although 
notice  will  be  seasonable  if  given  the  following  day.  Burbridge 
V.  Manners,  3  Camp.  193  ;  £x  parte  Moline,  1  Rose,  Bankr.  Cas. 
303  ;  s.  c,  19  Ves.  216.  It  was  there  held,  that  demand  on  the 
acceptor  at  eleven  o'clock,  and  notice  of  non-payment  to  the 
drawer  the  same  morning,  was  good,  and  warranted  the  proof  of 
a  debt  against  the  drawer,  who  had  become  bankrupt. 

The  rule  is  uniformly  laid  down  by  the  text-writers,  that  the 
bill  must  be  presented  for  payment  on  the  last  day  of  grace. 
Bayley,  Bills,  12G  ;  Chitty,  Bills,  365.  The  latter  writer  seems 
to  consider  the  rule  established,  that  the  contract  of  the  maker 
of  a  note  or  acceptor  of  a  bill,  is  to  pay  on  demand  on  the  ap- 
pointed day,  and  if  payment  be  not  made  on  such  demand,  the 
contract  is  broken,  and  the  holder  may  treat  the  bill  as  dis- 
honored. 

1  See  Castrique  i'.  Bernabo,  6  Q.  B.  498,  note,  post,  492. 


486  ACTIONS. 

In  a  late  work,  Byles  on  Bills,  it  is  stated,  p.  131,  that  the  ac- 
ceptor of  a  bill,  whether  inland  or  foreign,  or  the  maker  of  a  note, 
should  pay  it  on  a  demand  made,  at  any  time  within  business 
hoiirs,  on  the  day  it  falls  due,  and  if  it  be  not  paid  on  such  demand, 
the  holder  may  instantly  treat  it  as  dislionored.  But  the  acceptor 
has  the  whole  of  that  day  within  which  to  make  payment ;  and 
though  he  should,  in  the  course  of  that  day,  refuse  payment, 
which  entitles  the  holder  to  give  notice  of  dishonor,  yet  if  lie  sub- 
sequently, on  the  same  day,  makes  payment,  the  payment  is  good, 
and  the  notice  of  dishonor  becomes  of  no  avail. 

This  writer  cites  Hartley  v.  Case,  1  Car.  &  P.  556,  676  ;  s.  c, 
4  Barn.  &  C.  339,  341.  The  point  was  made  in  that  case,  that  no- 
tice coiild  not  be  given  on  the  day  the  note  becomes  due  ;  but  the 
case  went  off  on  another  ground,  and  no  opinion  was  given  on 
this  question. 

The  passage  cited  appears  contradictory  to  itself,  inasmuch  as 
it  declares  that  the  note  is  due  and  payable  on  demand  on  the  last 
day  of  gracS,  and  is  dishonored  if  not  then  paid,  and  yet  that  the 
maker  and  acceptor  have  the  whole  day  to  pay  it  in.  It  would 
seem  that  there  could  be  no  dishonor,  unless  the  maker  had  failed 
to  comply  with  his  contract :  and  if  he  has  failed  to  comply  with 
his  contract,  then,  by  a  general  rule  of  law,  the  holder  has  his 
remedy  by  action. 

Perhaps  the  state  of  the  law  upon  this  point  may  be  accounted 
for  by  a  remark  made  in  Chitty  on  Bills,  36,  who,  after  saying  that 
notice  of  dishonor  may  be  given  on  the  same  day,  adds,  it  is  not 
usual  or  necessary  to  give  notice  of  non-payment  before  the  fol- 
lowing morning,  and  therefore  there  can  be  no  objection  to  the 
allowance  of  the  whole  day  on  which  the  bill  becomes  due,  to  pay 
it  in.  It  is  probable,  therefore,  that  though  the  holder  may  have 
a  strict  right  to  proceed  in  all  respects  as  upon  a  dishonored  bill 
on  the  last  day,  after  demand,  refusal,  and  notice,  yet  it  is  so  far 
the  general  practice  to  postpone  notice  and  other  proceedings  till 
the  day  following,  that  it  is  regarded  amongst  merchants  as  a  right. 
That  it  seems  so  to  have  been  understood  by  men  of  business, 
appears  by  a  remark  of  Mr.  Justice  Buller,  in  Colkett  v.  Freeman, 
2  T.  R.  59,  61,  and  also  by  an  obiter  dictum  of  Bolland,  B.  in  Webb 
V.  Fairmaner,  3  Mees.  &  W.  473,  4'74.  But  the  case  of  negotiable 
bills  and  notes  was  not  then  under  consideration. 

No  doubt  there  is  a  prevailing  understanding  in  England,  that 


STAPLES   V.    FRANKLIN    BANK.  487 

the  maker  or  acceptor  has,  by  right  or  by  courtesy,  the  whole  of 
tlie  last  day  to  make  payment  in,  and  if  it  is  so  in  fact  paid  or 
tendered,  there  would  be  little  occasion  for  the  holder  to  insist 
on  his  right  of  action,  and  decline  receiving  payment;  and  so  no 
case  has  arisen  in  which  it  has  become  necessary  to  decide  that 
precise  question.  Possibly  it  may  be  considered,  that  the  holder 
has  a  right  to  treat  the  bill  as  dishonored,  after  demand  and 
refusal,  and  even  to  commence  an  action,  sulyect  to  be  defeated 
and  barred  in  case  the  maker  should  pay  the  amount  due,  at 
any  time  on  the  last  day  of  grace  ;  though  it  is  difficult  to  per- 
ceive how  the  holder  can  have  a  perfect  right  to  treat  the  note  as 
dishonored  by  breach  of  the  contract,  and,  at  the  same  time, 
that  tiie  acceptor  can  have  a  perfect  right,  by  payment  of  the  bill, 
to  perform  his  contract  and  save  himself  from  the  consequences 
of  such  breach.  In  Hartley  v.  Case,  1  Car.  &  P.  556,  already 
cited,  Abbott,  C.  J.,  on  a  motion  to  show  cause,  says:  "I  think 
the  notice  of  dishonor,  given  on  the  day  on  which  the  bill  is  pay- 
able, will  be  good  or  bad,  as  the  acceptor,  may,  or  may  not,  after- 
wards pay  the  bill.  If  he  does  not  afterwards  pay  it,  the  notice 
is  good  ;  and  if  he  does,  it  of  course  comes  to  nothing." 

This  certainly  implies  that  after  non-payment  on  demand,  on 
any  part  of  the  last  day,  there  is  a  breach  of  the  contract  of  the 
maker,  and  no  further  demand  is  necessary  to  complete  the 
holder's  right  against  the  maker,  acceptor,  and  indorsers.  But 
whether,  after  such  breach  and  before  the  close  of  the  day,  an 
action  might  be  commenced  against  either,  does  not  appear  by 
this  case,  nor,  as  we  believe,  by  any  case  decided  in  England. 

The  only  decided  case  opposed  to  the  opinion  which  we  have 
adopted,  and  one  entitled  to  great  respect,  is  that  of  Osborn  v. 
Moncure,  3  Wend.  170.^  In  this  case,  which  was  an  action  by  the 
payee  against  the  maker  of  a  note,  demand  was  made  on  the  last 
day  of  grace,  and,  payment  being  refused,  a  suit  was  commenced 
at  three  o'clock  on  the  same  day.  The  Court  were  of  opinion 
that  a  demand  on  the  maker  should  be  made  on  the  third  day  of 
grace,  and,  on  refusal,  the  holder  might  treat  the  bill  as  dis- 
honored, so  far  as  immediately  to  give  notice  to  the  indorser  ; 
yet  that  the  maker  has  the  whole  day  to  pay  it  in,  if  he  thinks 
proper  to  seek  the  holder.  They  rely  upon  the  general  rule  appli- 
cable to  the  case  of  other  debts,  that  the  debtor  has  to  tiie  last 

1  Post,  p.  493. 


488  ACTIONS. 

instant  of  the  day  to  make  payment,  and  they  consider  that  in  this 
respect  there  is  no  disthiction  in  case  of  negotiable  bills  and 
notes. 

It  had  been  frequently  held  in  the  courts  of  New  York,  that 
demand  must  be  made  on  the  last  day  of  grace,  as  well  on  inland 
bills  and  promissory  notes  as  on  foreign  bills  ;  and  if  not  then 
paid,  the  holder  might  treat  them  as  dishonored  and  notify  the 
drawer  and  indorsers.  Jackson  v.  Richards,  2  Caines,  344 ; 
Corp  V.  M'Comb,  1  Johns.  Cas.  328. 

Indeed  the  rule  seems  to  be  settled  l>y  all  the  authorities,  Eng- 
lish and  American,  that  a  demand  must  be  made  on  the  maker 
or  acceptor,  within  reasonable  hours,  on  the  day  of  maturity,  and 
when  the  bill  or  note  is  in  a  bank,  which  has  certain  fixed  and 
known  hours  for  being  open  for  business,  those  will  be  construed 
to  be  reasonable  hours  ;  that  if  the  bill  or  note  is  not  paid  on  de- 
mand, it  is  dishonored,  and  notice  may  be  immediately  given  to 
the  drawer  and  indorsers,  and,  without  further  demand  or  notice, 
they  will  be  legally  bound  to  make  payment.  Tindal  v.  Brown, 
1  T.  R.  1(37,  affirmed  in  Ex.  Ch.  2  T.  R.  186,  note  ;  Bussard  v. 
Levering,  G  Wheat.  102.  But  what  shall  be  the  legal  consequence 
of  such  dislionor,  does  not  appear  to  have  been  decided  in  Eng- 
land. In  the  case  cited,  1  Car.  &  P.  676,  it  was  argued  by  coun- 
sel, Scarlett,  Holt,  and  Chitty,  and  not  controverted  by  the  Court, 
because  the  decision  of  the  case  did  not  require  it,  that  a  pay- 
ment of  a  bill  on  the  day  of  maturity,  but  after  actual  dishonor, 
is  no  better  than  paying  at  any  time  before  action  brouglit.  And 
it  had  long  before  been  decided  in  Hume  v.  Peploe,  8  East,  168, 
that  a  plea  of  tender  after  the  day  of  payment,  though  of  all  the 
money  due  on  the  bill,  was  not  a  good  plea  in  bar,  because  it  did 
not  show  a  performance  of  the  contract.  If  then  there  is  a  breach 
of  contract,  by  a  non-payment  on  demand,  and  the  tender  after  a 
breach  is  no  bar,  it  would  seem  to  follow  as  a  necessary  legal  con- 
sequence that  an  action  would  then  lie. 

But  upon  this  point,  the  courts  of  different  States  have  come  to 
different  conclusions.  In  New  York  it  has  been  decided,  as  in 
the  case  cited,  that  an  action  will  not  lie  till  after  the  day.  In 
Maine,  as  we  have  already  seen,  it  has  been  decided  that  an  action 
will  lie,  against  all  the  parties,  on  the  day  of  maturity,  after  an 
actual  dishonor. 

In  New  Hampshire,  Dennie  v.  Walker,  7  N.  Hamp.  201,  the 
Court  say,  it  may  now  be  considered  as  settled,  that  notice  may 


STAPLES   V.    FRANKLIN    BANK.  489 

be  given  and  suit  brought  against  the  indorscr  on  the  last  day  of 
grace,  after  demand  and  notice.  * 

In  Maryland,  in  the  case  of  Farmers'  Bank  v.  Duvall,  7  Gill 
<fe  Johns.  89,  the  Court  say,  it  is  now  settled,  that  demand  may  be 
made  on  the  last  day  of  grace,  and  if  payment  be  not  made,  the 
holder  may  at  once  treat  the  note  as  dishonored,  and  give  notice 
accordingly.  It  is  not  however  stated,  in  terms,  that  an  action 
may  be  at  once  brought. 

In  South  Carolina,  in  Wilson  v.  Williman,  1  Nott  &  M'Cord, 
440,  it  was  decided  on  great  consideration,  by  a  majority  of  the 
Court,  that  the  maker  may  be  sued  on  the  third  day  of  grace 
after  demand. 

On  the  whole,  we  think  the  weight  of  authority  is  in  favor  of 
the  conclusion  to  which  we  have  come  ;  and  if  it  were  a  new 
question,  it  seems  to  follow,  on  legal  principles,  as  a  fair  and  legiti- 
mate conclusion  from  the  established  fact  that  the  contract  of 
the  acceptor  or  maker  is  broken  by  a  neglect  or  refusal  to  i)ay  on 
demand,  within  reasonable  time,  on  the  last  day  of  grace,  that 
the  holder  may  then  have  his  remedy  by  action.  But  in  this 
Commonwealth  it  is  not  a  new  question  ;  it  has  been  settled,  we 
believe,  by  a  uniform  series  of  decisions,  and  by  a  long  and  un- 
broken course  of  practice. 

It  may  be  proper  to  make  a  remark  on  the  point,  that  some  of 
the  cases  in  Massachusetts  "manifestly  go  upon  the  ground  that 
when  a  third  person  has  accepted  a  bill  or  made  a  note  payable 
at  a  bank,  or  when,  from  circumstances,  it  may  be  inferred  that 
the  parties  intended  tliat  the  note  should  be  paid  at  a  bank,  the 
maker  has  the  whole  of  the  usual  time  of  banking  hours  to  pay  it. 
This  proceeds  upon  the  ground  that  the  parties  have  entered  into 
an  express  or  implied  agreement,  that  the  note  shall  be  so  paid 
and  treated.  But  when  the  bank  itself  has  undertaken  to  pay  a 
sum  on  any  given  day,  they  are  bound,  like  any  other  promisor, 
to  pay  on  demand,  on  that  day  ;  and  the  only  difference,  in  this 
respect,  between  a  bank  and  an  individual  is  this,  that  what  would 
be  reasonable  time  for  a  demand,  in  case  of  individuals,  is  fixed, 
in  case  of  a  bank,  by  their  known  usual  hours  of  being  open  for 
business.  This  is  the  case  in  regard  to  common  bank-notes,  and 
it  would  be  most  jjernicious,  in  regard  to  them,  to  establish  a  dif- 
ferent rule,  or  raise  a  doubt  respecting  it.  And  a  post-note,  when, 
by  the  lapse  of  time  and  the  force  of  the  contract,  it  has  become 


490  .  ACTIONS. 

payable  on  demand,  stands  in  this  respect  on  tlie  same  footing  with 
a-  bank-note,  which  is  payable  on  demand  in  its  terms. 

The  Court  are  therefore  of  opinion,  that  the  post-note  in  ques- 
tion was  due  and  payable  when  the  action  was  commenced  ;  that 
the  attachment  of  the  plaintiffs  was  well  made,  and  that  the  peti- 
tion must  be  dismissed. 

The  rule  in  Pennsylvania,  California,  Illinois,  Mississippi,  and  perhaps  in 
England,  is  different  from  that  laid  down  above.  See  Smith  v.  Bank  of  Wash- 
ington, infra,  and  note,  p.  492. 

Shaw,  C.  J.,  again  says  in  Pierce  v.  Gate,  12  Cush.  190,  193  :  "  The  rule  in  re- 
gard to  notes  like  the  one  in  question  is,  that  the  note  is  payable  at  any  time  on  act- 
ual demand,  on  the  last  day  of  grace  ;  and  if  such  actual  presentment  and  demand 
are  so  made  and  paj'ment  is  not  made,  the  maker  is  in  default,  and  notice  of  dis- 
honor may  forthwith  be  given  to  the  indorser.  But  if  no  presentment  or  demand 
is  made  by  the  holder  upon  the  maker,  the  latter  is  not  in  default  till  the  end  of 
the  business  day." 

See  also  the  following  cases  which  sustain  the  above  doctrine :  Ammi- 
down  V.  Woodman,  31  Me.  580;  Veazie  Bank  v.  Wynn,  40  Me.  62;  Butler  «. 
•Kimball,  5  Met.  94;  Coleman  v.  Ewing,  4  Humph.  241;  McKenzie  v.  Durant, 
9  Rich.  61 ;  Crenshaw  v.  McKiernan,  Minor,  295.  See  Radolph  v.  Cook,  2 
Porter  (Ala.),  286;  Poole  v.  Tumbrldge,  2  Mees.  &  W.  223;  Ex  jmrte  Moline, 
19  Ves.  216. 


Smith  v.  The  Bank  of  Washington. 

(5  Sergeant  &  Rawle,  318.     Supreme  Court  of  Pennsylvania,  1819.) 

When  action  may  be  brom/fd.  —  Notice  to  an  indorser  of  non-payment  of  a  promissory 
note  was  put  into  the  post-office  on  the  13th,  and  by  the  course  of  the  mail  could 
not  reach  him  before  the  19th.  Suit  was  brought  on  the  16th.  Held,  that  it  was 
premature. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Gibson,  J.  The  note  which  the  defendant  indorsed  to  the  plain- 
tiff was  protested  at  Washington  for  non-payment,  on  the  13th 
May,  and  on  the  morning  of  that,  or  the  next  day,  a  regular  notice 
of  the  protest  and  non-payment  was  sent  by  the  mail  in  a  letter 
addressed  to  the  defendant  at  Burgettstown,  near  which  he  lived. 
According  to  the  course  of  the  mail,  which  left  Washington  but 


SMITH  V.   THE  BANK  OF  WASHINGTON.  491 

once  a  week,  the  notice  could  not  have  reached  the  defendant  before 
the  nineteenth,  and  the  present  suit  was  commenced  on  the  sixteenth 
of  the  same  month.  The  Court  instructed  the  jury  that,  the  object 
of  tlie  notice  being  to  enable  the  indorser  to  arrange  his  relations 
with  the  drawer,  it  was  necessary  that  notice  should  be  given  only 
in  a  reasonable  time,  and  that  it  was  not  an  essential  ground  of 
the  plaintiff's  action  ;  in  so  far  that,  if  it  were  received  from  the 
post-office  by  the  usual  and  regular  operations  of  the  mail  at  a 
period  subsequent  to  the  issuing  of  the  writ,  the  suit  might,  never- 
theless, be  sustained.  In  support  of  this  it  has  been  argued  that 
the  only  use  of  notice  being  to  warn  the  indorser  that  it  is  neces- 
sary for  him  to  look  to  the  drawer,  and  secure  himself  if  he  can, 
it  is  a  measure  re([uisite  only  to  ])revent  the  previous  responsibil- 
ity of  the  indorser  from  being  discharged ;  but  that  it  was  not  an 
ingredient  in  the  right  of  action,  which  arose  immediately  on  fail- 
ure to  pay  by  the  drawer.  But  I  think  it  clear  that,  whether 
notice  be  necessary  only  to  enable  the  indorser  to  look  to  his  con- 
cerns with  the  drawer,  or  whether  it  be  to  apprise  him  that  he  has , 
encountered  an  immediate  instead  of  a  secondary  responsibility, 
it  is  nevertheless  a  substantive  part  of  the  plaintiff's  title  to  bring 
the  action.  This  was  expressly  decided  in  Rushton  i'.  Aspinall,  2 
Doug.  679,  on  great  consideration,  and,  as  Lord  Mansfield  tells  us, 
against  the  wishes  of  the  Court ;  by  whom  it  was  held,  in  a  case 
exactly  like  the  present,  that  the  want  of  an  allegation  of  notice  of 
non-payment  was  fatal,  even  after  verdict ;  and  this  on  the  ground 
that  the  title  of  the  plaintiff  was  not  merely  set  out  defectively, 
but  that  he  had  set  out  no  title.  Now  as  the  plaintiff's  title  must 
be  complete  before  suit  is  brought,  it  follows  the  indorser  must 
have  notice  before  the  impetration  of  the  writ ;  or,  at  least,  that 
some  fact  be  averred  and  proved,  that  will  excuse  the  giving  of 
notice  altogether ;  such,  for  instance,  as  that  the  indorser  had  ac- 
cepted of  a  general  assignment  of  the  drawer's  effects  and  estate. 
But  the  question  is,  what  shall  be  considered  notice.  It  is  not  ne- 
cessary that  actual  notice  be  given  in  every  case ;  but  it  will  be 
sufficient,  and  considered  constructive  notice,  if  it  be  left  at  the 
house  of  the  indorser  or  sent  by  the  mail,  even  though  the  letter 
should  miscarry.  To  affect  a  party  with  constructive  notice  is 
always  a  harsh  measure,  and  sometimes  attended  with  absolute 
injustice,  though  general  convenience  requires  that,  in  particular 
cases,  it  should  be  resorted  tO.  Still,  however,  neither  policy  nor 
convenience  requires  that  the  party  should  be  affected,  unless  there 


492  .  ACTIONS. 

was  at  least  a  possibility  of  his  having  had  actual  notice.  From 
certain  facts  the  law  raises  a  conclusive  presumption  of  actual 
notice  ;  but  it  is  not  so  absurd  as  to  raise  it  from  facts  which  nega- 
tive all  possibility  .that  the  presumption  accords  with  the  truth  of 
the  case.  The  putting  a  letter  into  the  post-office  shall  be  consid- 
ered as  notice  whether  it  be  received  or  not,  provided  it  might  have 
reached  the  person  to  be  affected  in  the  regular  course  of  the  mail, 
but  it  shall  be  so  only  from  the  time  at  which  it  ought  to  have 
been  received.  Here  there  is  no  question  about  the  reasonableness 
of  the  notice ;  the  material  point  is  the  time  when  it  shall  be  con- 
sidered as  having  been  received  ;  for  before  that  time  the  plaintiff 
had  no  right  to  commence  an  action.  It  may  be  said  that  if  the 
plaintiff  wait  until  the  actual  receipt  of  notice,  the  indorser  may 
abscond  before  a  writ  can  be  served  on  him  ;  but  the  same  reason 
might  be  urged  in  every  other  case  where  a  plaintiff  sues  before 
his  cause  of  action  is  complete.  The  notice  being  for  the  benefit 
of  the  indorser,  cannot  be  dispensed  with  ;  and  it  would  be  ex- 
tremely absurd  to  suppose  that  any  benefit  could  flow  from  it 
before  there  was  a  possibility  of  its  having  been  received.  The 
judgment  must  therefore  be  reversed,  and  a  venire  facias  de  novo 
awarded. 

See  Bevan  v.  Eldridge,  2  Miles,  353  (1840).  In  this  case,  Stroud,  J.,  said: 
"The  practice  of  including  interest  in  this  way  [to  the  end  of  the  third  day  of 
grace],  is  generally,  if  not  universally,  adopted  by  the  banks  in  Pennsylvania. 
If,  then,  interest  can  be  charged  to  the  end  of  the  last  day  of  grace,  there  can 
be  no  propriety  in  treating  any  party  to  a  note  as  in  default  in  respect  to  pay- 
ment, until  that  day  has  expired." 

Castrique  v.  Bernabo,  6  Q.  B.  498  (1844),  holds  the  same  rule,  that  the  hold- 
er cannot  sue  the  indorser  until  time  has  elapsed  for  notice  to  reach  him.  Lord 
Denman,  C.  J.,  said:  "  The  rule  of  law  is  that,  when  there  is  a  doubt  which  of* 
two  occurrences  took  place  first,  the  party  who  is  to  act  upon  the  assumption 
that  they  took  place  in  a  particular  order  is  to  make  the  inquiry.  That  is  found- 
ed on  reason.  An  opposite  rule  would  justify  a  party  in  suing  where  he  had  not 
ascertained  his  right.  It  follows  that  the  plaintiff  in  this  case  has  taken  upon 
himself  to  show  that  a  right  of  action  existed  before  he  commenced  his  suit ;  and, 
not  having  done  this,  he  must  fail." 

So  in  Mississippi:  Wiggle  v.  Thomason,  11  Sm.  &  M.  452;  and  in  Cali- 
fornia :  McFarland  v.  Pico,  8  Cal.  626 ;  and  in  Illinois :  Walter  v.  Kirk,  14  111. 
555. 


08B0RN    V.    MONCURE.  493 


OSBORN    V.    MoNCURE    AND    RoBINSON. 

(3  "Wendell,  170*.     Supreme  Court  of  New  York,  August,  182'J.) 

When  action  may  he  brour/ht.  —  An  action  brought  against  the  maker  of  a  promissory 
note  on  tlie  thinl  day  of  grace  is  premature. 

This  was  an  action  of  assumpsit,  tried  at  the  New  York  circuit, 
in  June,  1828,  before  the  Hon.  Ogden  Edwards  one  of  the  cir- 
cuit judges. 

The  suit  was  by  the  plaintiff,  as  payee  against  the  defendants,  as 
makers  of  a  promissory  note.  On  tlic  tliird  day  of  grace,  pay- 
ment was  demanded  at  the  counting  house  of  the  defendants,  of 
a  clerk  therein  (the  defendants  not  being  present),  who  said  the 
note  would  not  be  paid.  The  defendants  had  stopped  payment  a 
few  days  before.  The  defendant  had  a  capias  issued,  upon  which 
the  defendants  were  arrested  previous  to  three  o'clock  p.m.  of  the 
third  day  of  grace.  The  note  having  been  proved,  and  these  facts 
appearing,  the  defendant's  counsel  moved  for  a  nonsuit,  on  the 
ground  that  the  action  was  prematurely  brought.  The  judge  re- 
fused to  grant  the  motion,  and  a  verdict  was  rendered  for  the 
plaintiff.  The  defendants  excepted  to  the  opinion  of  the  judge, 
and  now  moved  to  set  aside  the  verdict. 

SuTHKRLAND,  J.  The  Only  question  in  this  case  is,  whether  the 
case  was  prematurely  commenced.  It  is  admitted  that  the  writ 
was  served  before  three  o'clock  p.m.  of  the  third  day  of  grace, 
payment  having  previously  l)een  regularly  demanded  and  refused  ; 
the  defendants  having  failed  some  days  before.  It  is  not  denied 
that  the  maker  is  entitled  to  the  days  of  grace.  2  Cowen,  7GG  ; 
8  Cowen,  205,  and  the  cases  there  cited.     Chitty,  Bills,  420,  421. 

Notice  to  the  indorser  vn  the  third  day  of  grace,  after  a  demand 
upon  the  maker  and  his  default  of  payment,  is  good,  although  it 
need  not  be  given  until  the  following  day.  It  being  earlier  than 
is  required,  cannot  form  any  objection  on  the  part  of  the  indorser. 
1  Johns.  Cas.  328  ;  Ciiitty,  Bills,  3(i2  ;  3  Camp.  193.  The  demand 
upon  the  maker  should  be  made  on  third  day  of  grace,  and  within 
a  reasonable  time  before  the  expiration  of  the  day,  2  Caiiies.  244 ; 


494  ACTIONS. 

12  Johns.  424 ;  and  if  he  then  refuses  payment,  the  holder  has 
done  all  that  is  incumbent  upon  him  to  do,  and  may  treat  it  as  a 
dishonored  bill,  so  far  as  immediately  to  give  notice  to  the  in- 
dorser  ;  but'  still  I  apprehend  the  maker  has  the  whole  of  the  day 
to  pay  in,  if  he  thinks  proper  to  seek  the  holder.  It  is  undoubt- 
edly true  in  relation  to  other  contracts,  that  the  party  has  until 
the  last  instant  of  the  day  to  make  payment ;  and  I  perceive  no 
reason  for  making  negotiable  paper  an  exception  to  the  general 
rule.  3  Bos.  &  Pul.  602  ;  4  T.  R.  170  ;  Chitty,  Bills,  365,  note. 
Mr.  Chitty  seems  to  think  the  rule  is  differently  settled. 

The  cases  of  Crygier  v.  Long,  1  Johns.  Cas.  393,  and  Lawrence 
V.  Bowne,  2  Johns.  Cas.  225,  seem  to  decide,  that  after  appear- 
ance and  pleading  in  chief,  a  defendant  cannot  object,  the  suit 
being  upon  a  note,  that  it  was  commenced  before  the  note  was 
due  ;  and  it  is  there  said  that  he  should  apply  to  the  Court  to  be 
discharged  from  the  arrest.  But,  upon  general  principles,  I  do 
not  see  how  a  defendant  can  be  deprived  of  the  benefit  of  such  a 
defence  upon  the  trial.  The  plaintiff,  under  the  plea  of  non-as- 
sumpsit, is  bound  to  show  a  good  cause  of  action  at  the  thne  of  the 
commencement  of  the  suit,  and  the  defendant  may  give  in  evidence 
any  thing  which  shows  that  the  plaintiff  had  not  such  cause  of 
action  at  that  time.  1  Phil.  Ev.  131.  It  is  well  settled  that  the 
issuing  of  the  capias  is  the  commencement  of  the  suit,  and  the 
plaintiffs'  cause  of  action  must  exist  at  that  time.  3  Johns.  Cas. 
149  ;  1  Caines,  69,  72  ;  3  id.  133  ;  2  Johns  346  ;  3  id.' 42  ;  10  id. 
119,  and  8  Cowen,  205,  where  the  cases  are  collected.  Mr.  Chitty, 
1  Chitty,  Plead.  443,  says,  that  where  a  suit  is  prematurely  brought, 
it  is  ground  of  demurrer  or  nonsuit.  This  appears  to  me  to  be 
the  true  rule.     I  am,  therefore,  of  opinion  that  the  judge  ought 

to  have  nonsuited  the  plaintiff. 

Wew  trial  granted. 

The  foregoing  cases  will  be  sufficient  to  show  the  different  views  that  have 
been  entertained  by  courts  of  high  authority  upon  a  very  important  branch  of  the 
law. 

The  doctrine  of  Osborn  v.  Moncure  is  reaffirmed  in  Smith  v.  Aylesworth,  40 
Barb.  104.  Mr.  Justice  Johnson,  who  delivered  the  opinion  of  the  Court  in  this 
case,  said :  "  The  action  is  brought  by  the  payee,  against  the  maker  of  the  note  in 
question.  Of  course  no  demand  was  necessary  in  order  to  charge  the  defendant. 
The  only  question  in  the  case  is  whether  the  action,  having  been  commenced 
after  banking  hours  at  the  bank  where  the  note  was  payable,  on  the  last  day  of 
grace,  is  not  prematurely  brought.     This  precise  question  was  decided  in  Osborn 


OSBORN   V.    MONCURE.  495 

V.  Moncure,  3  Wend.  170,  upon  full  argument  and  mature  deliberation.  That 
case,  like  this,  was  an  action  between  payee  and  makers,  and  the  action  was 
brouglit  before  three  o'clock  in  the  aftqpnoon  of  the  last  day  of  grace,  but  after 
demand  of  payment  and  refusal.  The  Court  unanimously  held  that  the  makers 
had  the  whole  of  the  third  day  of  grace  in  which  to  make  payment,  and  that  an 
action  commenced  upon  the  third  day,  though  after  demand,  was  brought  prema- 
turely, and  could  not  be  maintained.  Sutherland,  J.,  who  delivered  the  opinion 
of  the  Court,  says  :  '  It  is  undoubtedly  true  in  relation  to  other  contracts,  that 
the  party  has  until  the  last  instant  of  the  day  to  make  payment ;  and  I  perceive 
no  reason  for  making  negotiable  paper  an  exception  to  the  general  rule.'  It 
would  be  difficult  to  assign  any  valid  reason  for  any  distinction.  Negotiable 
paper,  by  law,  becomes  due  on  the  third  day  of  grace,  precisely  as  other  con- 
tracts do  on  the  day  when  the  term  of  credit  expires  according  to  their  date,  and 
not  otherwise  in  any  respect,  that  I  am  able  to  perceive.  That  is  the  law  in 
regard  to  such  paper,  and  it  is  part  and  parcel  of  the  obligation,  precisely  as 
much  as  though  it  were  written  in  the  note.  The  only  dillerence  between  the 
two  cases  is,  that  in  this  case  the  note  was  payable  at  a  bank,  while  in  that  case 
it  was  payable  generally,  at  no  particular  place.  But  in  that  case  demand  was 
actually  made  before  action  brought,  and  no  question  raised  that  the  demand 
was  insuHicient,  or  in  any  respect  improper,  There  is  no  essential  difference, 
therefore,  in  the  two  cases.  I  am  aware  that  the  rule  is  laid  down  differently  in 
Chitty  on  Bills,  which  the  Court  notice  in  the  case  referred  to. 

"  Parsons,  in  his  recent  work  on  Notes  and  Bills,  also  lays  down  the  rule  as 
follows  :  '  We  are  however  of  opinion  that  after  demand  and  refusal  on  that  day 
an  action  may  be  at  once  maintained.'  He  also  says  :  '  But  without  such  prior 
demand  and  refusal,  an  action  commenced  on  the  day  of  maturity  is  premature, 
unless  the  note  is  payable  at  a  bank,  when  it  seems  that  a  suit  may  be  commenced 
after  bank  or  business  hours.'  2  Parsons,  Notes  and  Bills,  461,  4G2.  Several 
cases  are  cited,  decided  in  other  States,  to  sustain  the  rule  as  laid  down  in  the 
text,  though  the  author  admits  that  the  rule  may  not  be  positively  determined  by 
authority.  If  it  be  true,  as  our  Supreme  Court  has  decided,  that  the  maker  has 
up  to  the  last  instant  of  the  last  day  of  grace  in  which  to  make  ])aymciit,  as  part 
of  his  contract,  I  do  not  see  how  a  demand  before  that  time,  or  the  expiration  of 
the  business  hours  at  a  bank  where  the  note  is  payable,  can  alter  the  time  of  the 
note  becoming  due  and  payable.  Generally  the  law  does  not  notice  the  fractions 
of  a  day,  and  it  is  difficult  to  see  how  the  act  of  a  payee  or  holder,  in  making 
demand  of  payment  at  any  particular  hour  in  the  day,  or  the  custom  of  a  bank  in 
closing  its  doors  ?it  a  particular  hour,  is  to  work  a  severance  of  time,  so  that  a 
note  payable  on  a  particular  day,  and  not  at  any  specified  hour  of  such  day,  shall 
be  both  due,  and  not  due,  on  the  same  day.  Certainly  there  is  nothing  in  the 
contract,  nor,  so  far  as  I  am  advised,  in  the  mercantile  custom,  by  which  a  payee 
by  his  own  voluntary  act  can  shorten  the  day  or  the  hour  of  payment.  It  seems 
to  me  our  rule  is  the  only  safe  and  consistent  one,  and  that  it  ought  to  be  fol- 
lowed, especially  by  this  Court.  All  that  is  decided  in  the  Bank  of  Syracuse  v. 
Ilollister,  17  N.  Y.  46,  is  that  a  presentment  of  a  note  and  demand  of  payment 
by  a  notary,  of  himself,  at  the  bank  door  after  banking  hours,  and  after  the  bank 
was  closed,  was  a  sufficient  presentment  to  charge  an  indorser.  This  only 
relates  to  the  rtde  between  holder  and  indorser,  and  is  to  the  effect  that  a  holder 


496  ACTIONS. 

is  not  confined  to  banking  hours  in  making  his  demand,  but  may  make  it  at  any 
time  in  the  day,  afterwards,  provided  he  can  find  a  proper  person  at  t]ie  place,  to 
answer.  If  this  decision  has  any  bearmg  upon  the  present  case,  it  is  rather 
against  the  plaintiff  than  in  his  favor.  It  necessarily  holds  that  the  demand  was 
made  before  the  time  for  the  payment  of  the  note  had  expired.  Otherwise  the 
demand  could  not  have  been  held  sufficient  to  charge  the  indorser. 

"  On  the  whole  I  am  of  the  opinion  that  the  action  was  prematurely  brought, 
and  that  the  nonsuit  should  have  been  granted. 

"The  judgment  must  therefore  be  reversed,  and  a  new  trial  ordered,  with 
costs  to  abide  the  event." 

Whether  the  above  is  or  is  not  sound  as  to  paper  payable  at  bank,  —  and  our 
opinion  is  that  it  is  not,  —  it  is  certainly  the  true  doctrine,  as  it  seems  to  us,  in 
the  case  of  paper  payable  generally.  The  maker  or  acceptor  by  analogy  to  all 
other  branches  of  contract,  and,  as  we  think,  by  the  weight  of  authority  upon 
this  point,  and  by  reason,  should  have  in  this  case  until  the  close  of  the  third 
day  of  grace  within  which  to  make  payment.  There  can  then  be  no  breach  during 
that  day ;  and  an  action  before  the  fourth  day  would  be  premature. 

The  circumstance  of  refusal  is  considered  in  some  of  the  cases  as  sufficient  to 
warrant  suit  before  business  hours  have  expired,  in  the  first  case  above  stated, 
and  before  the  close  of  the  third  day,  in  the  second ;  but  this  is  not  satisfactory. 
The  maker  or  acceptor,  notwithstanding  his  refusal,  may  change  his  mind,  and 
tender  the  money  within  the  time  allowed  him ;  and  shall  the  holder  by  excessive 
zeal,  perhaps  by  malice,  throw  upon  him  the  burden  of  costs  by  suing  within 
that  time  ?     Such  a  rule  would  be  unreasonable  and  productive  of  no  good. 

If  the  above  is  sound  doctrine  respecting  the  party  primarily  liable,  a  fortiori 
■will  it  apply  to  the  case  of  an  indorser.  But  we  apprehend  that  the  Pennsylvania 
rule  has  gone  too  far  in  this  direction,  in  requiring  the  holder  to  wait  until  the 
indorser  shall  have  had'time  to  receive  notice.  He  should  not  sue  until  after  a 
breach  of  the  contract,  it  is  true,  —  and  we  have  indicated  when  that  occurs,  as 
we  understand  it,  —  but  as  soon  as  the  contract  is  broken  and  notice  is  sent,  his 
title  has  accrued  against  the  indorser.  Chief  Justice  Parsons  forcibly  states  this 
view  in  Shed  v.  Brett,  1  Pick.  401,  411.  He  says:  "The  argument  is,  that 
notice  of  the  non-payment  is  essential  to  the  plain tiflf's  right  of  action ;  that  it  is 
necessary  to  aver  it  in  the  declaration  as  a  fact  existing ;  and  that  as  the  case 
shows  this  could  not  be  true,  the  plaintiff  has  failed  in  an  essential  point.  But 
this  argument  proceeds  upon  the  ground  that  there  must  be  an  actual  reception 
of  notice  before  the  plaintiff  can  sue ;  and  this  is  certainly  fallacious.  If  the 
putting  the  letter  into  the  post-office  is  notice  in  itself,  which  we  have  shown,  then 
it  was  given  before  the  commencement  of  the  suit.  And  it  would  be  mischievous 
to  decide  otherwise;  for  every  plaintiff's  right  of  action  would  commence  at 
different  times  according  to  the  distance  of  the  party  sued ;  and  the  time  of  suing 
must  be  conjectured,  as  it  cannot  be  known  when  the  notice  will  be  actually 
received.  Besides  if  the  object  of  waiting  be  to  give  the  party  opportunity  to 
take  up  the  note,  there  must  be  a  sort  of  double  usance ;  for  the  holder  must 
wait  till  his  letter  is  received,  and  for  a  reasonable  time  afterwards  for  the  party 
receiving  it  to  come  and  pay  the  money.  Who  would  take  a  bill  or  note  remitted 
from  New  Orleans,  if  this  doctrine  be  correct?  And  if  the  parties  liable  be 
beyond  sea,  such  instruments  would  be  mere  waste  paper.     If  the  bill  could  not 


OSBORN    V.    MONCURE.  497 

be  accepted,  or  the  indorsed  note  not  paid,  the  unfortunate  holder,  witli  prop- 
erty belonging  to  the  drawer  or  indcjrser  before  his  eyes,  must  remain  an  idle 
spectator  of  the  scramble  of  other  creditors  for  it,  or  suffer  it  to  be  withdrawn  by 
the  debtor  himself  without  the  power  of  arresting  it.  This  cannot  be  sound 
doctrine ;  an  averment  of  notice  will  be  sufficiently  proved,  by  showing  that  the  ' 
steps  necessary  to  give  the  notice  have  been  taken ;  if  subsequently  received,  it 
will  relate  to  the  time  when  it  was  sent;  if  never  received,  the  fact  of  having  put 
it  in  the  proper  train  is  enough." 

It  will  be  observed  that  the  doctrine  combated  above  is  a  step  in  advance  of 
the  position  taken  in  Pennsylvania;  the  doctrine  of  that  State  requiring  the 
holder  only  to  wait  until  sufficient  time  has  elapsed  for  notice  to  reach  the  in- 
dorser,  and  not  until  an  actual  reception  of  the  notice.  But  the  reasoning  of 
Chief  Justice  Parso7is  overturns  this  position  also.  In  every  case  under  the  rule 
in  Pennsylvania,  the  time  must  be  uncertain  when  the  holder  can  sue  the  indorser 
or  drawer,  and  the  probability  of  satisfying  his  claim  by  execution  will  grow  more 
and  more  remote  in  proportion  as  the  distance  increases  over  which  the  notice 
must  travel;  at  least  in  all  cases  where  the  debtor  has  vigilant  creditors,  and 
especially  if  he  himself  possesses  a  disposition  to  take  advantage  of  the  holder  by 
removing  or  secreting  bis  property. 


32 


498  EVIDENCE. 


EVIDENCE. 


Wells  v»  Whitehead. 

(15  Wendell,  527.     Supreme  Court  of  New  York,  July,  1836.) 

Production.  Bill  drawn  in  sets.  —  In  a  suit  against  the  indorser  of  a  bill  of  exchange 
drawn  in  sets,  the  defendant  may  require  the  production  of  the  identical  one  of  the 
set  dishonored. 

Assumpsit  against  the  indorser  of  a  bill  of  exchange  drawn  in 
sets.  The  plaintiff  declared  on  the  first  of  the  set,  but  without 
producing  or  accounting  for  the  non-production  of  the  third,  which 
was  the  one  actually  dishonored. 

Nelson,  J.  Two  objections  were  taken  in  this  case  to  the  plain- 
tiff's right  to  recover,  which  were  overruled  by  the  circuit  judge  : 

1.  Tliat  the  suit  being  against  an  indorser,  on  a  protest  for  non- 
acceptance  of  a  bill  of  exchange  drawn  in  parts,  it  was  incumbent 
upon  the  plaintiff  to  produce  at  the  trial  the  identical  bill,  or  num- 
ber of  the  set  that  was  protested,  or  account  for  its  absence  ;  and 

2.  That  sufficient  evidence  was  not  given  to  establish  the  fact  that 
the  defendant  had  been  duly  notified  of  the  non-acceptance,  or  that 
due  diligence  had  been  used  for  that  purpose. 

The  law  on  this  point  is  correctly  laid  down  by  Chancellor  Kent 
in  his  Commentaries.  He  says :  "  If  several  parts,  as  is  usual,  of 
a  bill  of  exchange  be  drawn,  they  all  contain  a  condition  to  be  paid, 
provided  the  others  remain  unpaid,  and  they  collectively  amount  to 
one  bill,  and  a  payment  to  the  holders  of  either  is  good,  and  a  pay- 
ment of  one  of  a  set  is  payment  of  the  whole.  The  drawer  or  in- 
dorser, to  be  charged  on  non-acceptance  or  non-payment,  is  entitled 
to  call  for  the  protest,  and  the  identical  bill  or  number  of  the  set 
protested,  before  he  is  bound  to  pay  ;  and  it  would  be  sufficient  to 
produce  it  at  the  trial,  or  account  for  its  absence.  His  rights  at- 
tach to  the  bill  dishonored,  and  he  is  entitled  to  call  for  it.     He 


WELLS    V.    WUITEHKAD.  499 

may  want  it  for  his  own  indemnity,  and  without  it  he  might  he  ex- 
posed to  chiinis  for  some  bona  fide  holder,  or  person  who  liad  pai<l 
supra  protest  for  his  honor."  3  Kent,  Com.  109.  As  to  the  right 
of  the  drawer  or  indorser  to  call  for  the  i)rotest,  the  chancellor 
must  be  considered  as  referring  to  a  foreif/n  bili,  no  |)rotest  l)eing 
necessary  in  respect  to  a  domestic  or  inland  bill. 

Where  the  bill  has  been  protested  for  non-acceptance,  any  per- 
son may  accept  it  mpra  protect  for  the  honor  of  the  bill,  the  draw- 
er, or  any  particular  indorser.  This  usage  promotes  the  negotiation 
of  it  when  the  drawers  credit  is  suspected,  and  may  save  the 
character  and  prevent  the  prosecution  of  some  of  the  parties,  in 
case  the  drawee  cannot  be  found,  is  not  capable  of  accepting,  or 
refuses.  Chitty,  Bills,  241  ;  3  Kent,  Com.  87.  The  person  accept- 
ing supra  protest  subjects  himself  to  the  same  obligations  as  if  the 
bill  had  been  directed  to  him ;  and  if  he  accepts  for  the  honor  of 
the  drawer  or  indorser,  though  without  his  knowledge,  he  has  a 
remedy  against  such  persons  and  all  others  liable  to  them,  for  his 
responsibilities  assumed,  the  same  as  if  he  acted  under  their  direc- 
tion. Chitty,  243  ;  3  Kent,  Com.  87  ;  1  Esp.  N.  V.  113  ;  1  Ld. 
Raym.  57;').  If  he  takes  up  the  bill  for  the  honor  of  the  in- 
dorser, he  stands  in  the  light  of  an  indorsee  paying  full  value  for 
it,  and  has  the  same  remedies  to  which  he  would  be  entitled  against 
all  prior  parties.  From  this  doctrine  it  seems  to  me  clearly  to  fol- 
low, that  if  the  hill  presented  to  the  payees  in  this  case  had  been 
accepted  by  a  friend  of  the  defendant  for  his  honor,  after  the  re- 
fusal by  the  payees  to  accept,  the  defendant  would  be  bound  to 
indemnify  him,  notwithstanding  a  recovery,  on  the  number  of  the 
set  produced  at  the  trial.  It  is  true,  as  a  general  rule,  payment  of 
one  of  the  set  is  payment  of  the  whole  ;  l)ut  if  the  drawer  or  in- 
dorser is  entitled  to  call  for  the  identical  bill  dishonored  before  he 
is  obliged  to  pay  it,  the  omission  to  do  so  would  subject  him  to  the 
charge  of  negligence,  and  make  him,  notwithstanding,  accounta- 
ble to  the  persons  who  had  accepted  it  for  his  honor.  Indeed,  if 
he  stands  in  the  light  of  an  indorsee  for  the  value  of  a  bill  trans- 
ferred before  due,  there  is  no  escape  from  this  liability.  His  se- 
curity, therefore,  requires  that  he  should  be  allowed  to  call  for 
the  bill  protested  before  a  recovery  is  permitted  to  be  had  against 
him. 

The  view  of  the  law  as  taken  by  Chancellor  Kent  is  supported  by 
several  approved  authorities.     Chitty,  Bills,  387  ;  2  Stark.  Evid. 


500  EVIDENCE. 

142 ;  1  Saund.  PI.  &  Ev.  275,  318  ;  4  Petersdorff,  Abr.  536.  Ac- 
cordinp:  to  these  autliorities,  all  the  sets  should  be  produced  iu  case 
of  aforctf/ii  bill.  In  tlie  case  of  Keuworthy  v.  Hopkins,  1  Johns. 
Cas.  107,  to  which  Chancellor  Kent  refers  to  sustain  his  qualifica- 
tion of  this  rule,  the  second  of  the  set  was  declared  on,  which  was 
the  one  accepted  and  the  only  one  produced  at  the  trial.  It  was 
there  objected  tliat  notice  of  protest  for  non-payment  was  insuffi- 
cient, on  tlie  ground  that  tlie  identical  bill  protested  had  not  accom- 
panied it.  It  was  accompanied  by  one  of  the  set  that  had  not  been 
accepted  or  protested,  and  payment  was  refused  on  that  ground. 
The  Court  decided  that  the  holder  had  a  right  to  retain  the  bill 
accepted,  as  he  might  want  it  to  proceed  against  other  parties,  and 
intimated  that  the  production  or  presentation  of  it  was  essential 
only  when  payment  was  demanded.  The  margiiial  note  of  that 
case  does  not  correctly  state  the  point  decided ;  nor  did  the  facts 
call  for  an  examination  or  decision  of  the  question  as  there  stated. 
The  note  would  sustain  tlie  ruling  of  the  judge  in  this  case  :  it  is 
there  laid  down  that,  where  one  of  a  set  of  three  bills  of  exchange 
on  London  was  protested  for  non-payment,  it  was  held  an  action 
miglit  be  maintained  here  against  the  indorsers  on  one  of  the  set 
not  protested,  with  the  protest  of  the  other.  In  truth  the  point 
particularly  examined  in  that  case  is  no  longer  of  any  importance, 
because  the  better  opinion  now  is  that  a  copy  of  the  bill  and  protest 
need  not  accompany  the  notice  in  the  case  of  a  foreign  bill.  No- 
tice of  the  fact  of  non-acceptance  or  non-payment  is  sufficient. 
Chitty,  Bills,  217,  and  cases  there  cited  ;  3  Kent,  Com.  93,  109  ; 
3  Camp.  334  ;  2  Esp.  N.  P.  511 ;  10  Mass.  5,  and  note ;  1  Selw. 
273  ;  4  Esp.  N.  P.  48.  Production  of  the  protest  at  the  trial  is  all 
that  is  necessary. 

Whether  the  bill  in  this  case  be  considered  a  foreign  or  inland 
bill  can  make  no  difference,  so  far  as  the  material  question  involved 
is  concerned.  The  rule  of  evidence  should  be  the  same  in  both 
cases  as  to  the  production  on  the  trial  of  the  identical  bill  presented. 
Either  may  be  accepted  supra  protest,  and  the  reasons  for  the  pro- 
duction or  accounting  for  the  absence  of  the  protested  bill  on  the 
trial,  are  alike  applicable  in  both  cases.  In  Buckner  v.  Finley  and 
Van  Lear,  2  Peters,  58(3,  bills  of  exchange  drawn  in  one  State  on 
persons  residing  in  another,  were  held  to  partake  of  the  character 
of  foreign  bills.  It  had  been  before  held,  in  Townsley  v.  Sumrall, 
ib.  170,  that  such  bills  were  to  be  deemed  foreign  in  respect  to  the 


WELLS    V.    WHITEHEAD.  501 

protest  and  proof  of  the  dishonor.  A  dift'erent  opinion  liad  hoLMi 
expressed  hy  Mr.  Justice  (  a/t  Ness,  in  Miller  r.  Hiickhn*,  ">  Johns. 
375.  It  was  not,  however,  the  point  in  the  case,  and  should  not, 
perhaps,  1x3  considered  as  conclusive  upon  the  Ccnirt.  When  the 
question  arises  directly  for  consideration,  it  may  be  proper  to  re- 
view.it.  The  convenience  of  trade  and  commerce  preponderates 
strongly  in  favor  of  viewing  such  bills  as  foreign,  so  far,  at  least, 
as  respects  the  protest  and  proof,  as  then  the  certificate  of  the  no- 
tary, under  the  seal  of  office,  is  evidence  of  the  protest  in  the  for- 
eign State  without  any  auxiliary  support,  and  is  so  received  in  all 
courts,  according  to  the  usage  and  custom  of  merchants. 
New  trial  granted,  costs  to  abide  the  event. 

On  the  second  point,  respecting  diligence,  the  decision  was  in  favor  of  the 
plaintiir.  That  subject  has  already  been  considered,  under  Pkk.sentmext  and 
Demand  for  Pay.ment. 

Upon  the  question  of  production  it  has  been  held  in  the  Supreme  Court  of 
the  United  States  that  in  an  action  by  the  holder  on  the  particular  one  of  the  set 
which  was  dishonored,  the  defendant  cannot  require  the  plaintiff  to  produce  the 
other  numbers  of  the  set,  or  account  for  their  non-production.  Downes  v.  Church, 
13  Peters,  205.  The  principal  case  was  before  the  Court.  Mr.  Justice  Story, 
who  delivered  the  opinion  in  Downes  r.  Church,  said :  "  This  is  the  case  of  a 
certificate  of  division  of  the  judges  of  the  Circuit  Court  for  the  district  of  Mis- 
sissippi. The  action  was  assumpsit,  founded  on  the  second  part  of  a  foreign  bill 
of  exchange,  by  the  indorsee  against  the  indorser  for  non-acceptance.  The 
plaintiffs  declared  upon  the  second  of  the  set  of  exchange,  which  second  of  the 
set  was  protested  for  non-acceptance,  and  the  same,  with  the  protest  attached 
thereto,  was  read  to  the  jury.  Whereupon  a  question  arose,  whether  the  plain- 
tiffs could  recover  upon  the  said  second  of  exchange  without  j)roducing  the  first 
of  the  same  set,  or  accounting  for  its  non-production  ;  upon  which  question  the 
judges  were  opposed  in  opinion.  And  the  same  has  l)een  accordingly  certified 
to  this  Court  under  the  Act  of  Congress. 

"  We  are  of  opinion  that  the  plaintiffs  are  entitled  to  recover  upon  the  second 
of  the  set  without  produiing  the  first,  or  accounting  for  its  non-production.  No 
authority  has  been  referred  to  which  is  exactly  in  point,  nor  are  we  aware  that 
the  question  has  ever  been  judicially  decided.  Mr.  Starkie,  in  his  work  on 
Evidence,  part  4,  p.  228,  1st  ed.,  has  said  :  '  In  the  case  of  a  foreign  bill  drawn 
in  sets,  both  the  sets  should  be  produced.'  But  for  this  proposition  he  has  cited 
no  authority.  The  question  must,  then,  be  decided  upon  principle.  The  object 
of  drawing  a  foreign  bill  in  sets  is  for  the  convenience  of  the  payee,  or  other 
holder,  to  enable  him  to  forward  the  same  for  acceptance  by  diflerrnt  convey- 
ances, and  thus  to  guard  against  any  loss,  by  acciilent  or  otherwise,  which  might 
occur  if  there  were  but  a  single  bill.  Btit  from  the  very  frauu-  of  the  set,  if  one 
is  paid  or  discharged  by  the  acceptor,  or  other  party  liable  on  it,  he  is  ordinarily 
discharged  from  the  others,  since  each  part  contaijis  a  condition  that  it  shall  be 


502  EVIDENCE. 

payable  only  when  the  others  remain  unpaid.  Now,  when  one  of  the  set  is  pro- 
tested for  non-acceptance,  and  due  noti<'e  is  given  to  an  indorser,  and  on  the 
trial  of  an  action  brought  against  him  by  the  indorsee,  the  same  bill  of  the  set 
on  whieh  the  protest  is  made  is  produced,  that  is  prijna  facie  proof  of  his  being 
responsible  thereon.  J^ither  of  the  set  may  be  presented  for  acceptance,  and,  if 
not  accepted,  a  right  of  action  presently  arises  upon  due  notice  against  all  the 
antecedent  parties  to  the  bill,  without  any  others  of  the  set  being  presented  ;  for 
it  is  by  no  ineans  necessary  that  ail  the  parts  should  be  presented  for  acceptance 
before  a  right  of  action  accrues  to  the  holder.  Under  such  circumstances,  it  is 
properly  a  matter  of  defence  on  the  other  side,  to  show  either  that  some  other 
bill  of  the  set  has  been  presented  and  accepted,  or  paid ;  or  that  it  has  been 
presented  at  an  earlier  time  and  dishonored,  and  due  notice  has  not  been  given ; 
or  that  another  ])crson  is  the  proper  holder,  and  has  given  notice  of  big  title  to 
the  party  sued  ;  or  that  some  other  ground  of  defence  exists,  which  displaces  the 
prima  facie  title  made  out  by  the  plaintiff.  The  law  will  not  presume  that 
the  otlier  bills  of  the  set  have  been  negotiated  to  other  persons,  merely  because 
they  are  not  produced.  And  the  indorser  is  not  put  to  any  hazard  or  peril  by 
the  non-production  of  them ;  since,  like  the  acceptor,  if  he  once  pay  the  bill, 
without  notice  of  any  superior  adverse  claim,  by  a  negotiation  of  another  of  the 
set  to  another  party,  he  will  be  completely  exonerated.  On  the  other  hand, 
great  inconveniences  might  arise  from  compelling  the  plaintiff  to  produce  the 
other  parts  of  the  set,  or  to  account  for  their  non-production,  as  he  might  not 
be  able  satisfactorily  to  prove  that  they  had  not  been  negotiated,  or  that  they 
had  been  lost.  In  short,  if  the  plaintiff,  before  he  could  recover,  were  required 
to  produce  or  to  account  for  all  the  parts  of  the  set,  he  would  be  obliged,  in 
every  case  where  the  bills  had  been  transmitted  by  different  conveyances  abroad, 
to  arm  himself  with  proofs  of  every  stage  of  their  route  and  progress,  until  they 
should  come  back  again  into  his  hands,  as  preliminaries  to  his  right  to  recover 
upon  their  being  dishonored.  Such  a  requirement  would  create  most  serious 
embarrassments  in  all  commercial  transactions  of  this  sort ;  and  instead  of  bills 
drawn  in  sets  being  a  public  convenience,  they  would  be  greatly  obstructed  in 
their  negotiability,  since  the  rights  and  the  remedies  of  the  holder  might  be 
materially  impaired  thereby.  We  are  therefore  of  opinion  that  the  question 
upon  which  the  judges  of  the  Circuit  Court  were  opposed,  ought  to  be  answered 
in  the  affirmative,  and  we  shall  send  a  certificate  to  the  Court  accordingly." 

It  may  be  worthy  of  note  that  no  counsel  appeared  for  the  defendant  in  this 
case.     Upon  the  general  subject  of  production,  see  Chitty,  Bills,  625. 

It  is  a  general  rule  that  the  paper  sued  upon  must  be  produced,  or  its  absence 
accounted  for ;  and  this  rule  is  not  changed  by  a  statute  which  dispenses  with 
pi'oof  of  signatures  unless  their  genuineness  be  denied  on  oath.     Sebree  v.  Dorr, 

9  Wheat.  558 ;  Matossy  v.  Frosh,  9  Texas,  610.     See  also  Shearm  v.  Burnard, 

10  Adol.  &  Ellis,  593;  Read  v.  Gamble,  ib.  597,  note;  s.  c.  5  Nev.  &  M.  433; 
Cunliffe  V.  Whitehead,  3  Dowl.  634. 


BANK  OP  THE  PNITED  STATES  V.    DUNN.  503 


Bank  of  the  United  States,  Plaintiffs  in  Error,  v.  John  O. 
Dunn,  Defendant  in  Error. 

(6  Peters,  51.     Supreme  Coiiit  of  tlie  United  States,  January,  18I52.) 

Evidence  to  vary  liahililij  of  indorser.  —  The  indorser  of  commercial  paper  will  not  be 
permitted  to  show  tliat  his  indorsement  was  intended  to  be  merely  formal ;  and 
that  he  was  informed  by  the  payor  that  he  would  incur  no  responsibility  by  in- 
dorsing the  paper,  as  its  payment  had  been  secured  by  a  pledge  of  stock. 

The  case  is  stated  in  the  opinion  of  the  Court. 

McLean,  J.  In  the  Circuit  Court  for  the  District  of  Columbia, 
from  wliich  this  cause  is  brought  by  writ  of  error,  the  plaintiffs  com- 
menced their  action  on  the  case  against  the  defendant,  as  indorser 
of  a  promissory  note.  The  general  issue  was  pleaded,  and  at  the 
trial  the  plaintiffs  read  in  evidence  the  following  note  :  — 

"  $1000.  Sixty  days  after  date,  I  promise  to  pay  John  0.  Dunn, 
or  order,  one  thousand  dollars,  for  value  received,  negotiable  and 
payable  at  the  United  States  Branch  Bank  in  Washington. 

"John  Scott." 
On  the  back  of  which  was  indorsed, 

"  Overton  Carr, 
"  J.  0.  Dunn." 

The  signatures  of  the  parties  were  admitted,  and  proof  was  given 
of  demand  at  the  bank,  and  notice  to  the  indorsers. 

The  defendant  then  offered  as  a  witness,  Overton  Carr,  an  in- 
dorser of  said  note,  who  testified  tliat  before  he  indorsed  the  same, 
he  had  a  conversation  with  John  Scott,  the  maker,  and  was  in- 
formed by  him  that  certain  bank  stock  had  been  pledged,  or  was  to 
be  pledged,  by  Roger  C.  Weightman,  as  security  for  the  ultimate 
payment  of  tlie  said  note,  and  that  there  would  be  no  risk  in  in- 
dorsing it.  That  the  witness  tlien  went  into  the  room  of  tlie  cashier 
of  the  plaintiffs'  oflice  of  discount  and  deposit  at  Washington,  and 
found  there  the  said  cashier,  and  Thomas  Swann,  the  president  of 
the  said  oflice,  to  whom  he  communicated  the  conversation  with 
Mr.  Scott,  and  from  whom  he  understood,  upon  inquiry,  that  the 
names  of  two  indorsers  residing  in  Washington  were  required  upon 
the  said  note,  as  matter  of  form  ;  and  that  he  would  incur  no  re- 


504  EVIDENCE. 

sponsibility  (or  no  risk)  by  indorsing  the  said  note.  He  does  not 
recollect  the  conversation  in  terms,  but  such  was  the  impression 
he  received  from  it. 

That  he  went  immediately  to  the  defendant  and  persuaded  him 
to  indorse  the  note,  by  representing  to  him  that  he  would  incur  no 
responsibility  or  no  risk  in  indorsing  it,  as  the  payment  was  secured 
by  a  pledge  of  stock ;  and  to  whom  he  repeated  the  conversation 
with  Mr.  Scott,  and  said  president  and  cashier.  That  no  person 
was  present  at  the  conversation,  the  tefms  of  which  he  does  not 
recollect ;  but  that  the  impression  he  received  from  this  conversa- 
tion with  the  aforesaid  president  and  cashier,  and  with  the  said 
Scott,  and  which  impression  he  conveyed  to  the  defendant  was, 
that  the  indorsers  of  said  note  would  not  be  looked  to  for  payment, 
until  the  security  pledge  had  been  first  resorted  to  ;  but  that  the 
said  indorsers  would  be  liable  in  case  of  any  deficiency  of  the  said 
security  to  supply  the  same.  That  neither  this  witness  nor  Mr. 
Dunn  was,  at  the  time,  able  to  pay  such  a  sum,  and  that  both  in- 
dorsed the  note  as  volunteers,  and  without  any  consideration,  but 
under  the  belief  that  they  incurred  no  responsibility  (or  no  risk), 
and  were  only  to  put  their  names  to  the  paper  for  form  sake. 

To  which  evidence  the  plaintiffs,  by  their  counsel,  objected ;  but 
the  Court  permitted  it  to  go  to  the  jury. 

The  plaintiffs  examined  as  a  witness  Richard  Smith,  the  cashier, 
whose  testimony  was  overruled;  and  then  Thomas  Swann,  the 
president  of  the  bank,  was  offered  as  a  witness  and  rejected  ;  it 
appearing  that  they  were  both  stockholders  in  the  bank.  To  this 
decision  of  the  Court,  a  bill  of  exceptions  was  taken  by  the  plain- 
tiffs, and  exception  was  also  taken  to  the  evidence  of  Overton  Carr. 
On  this  last  exception  the  plaintiffs  rely  for  a  reversal  of  the 
judgment  of  the  Circuit  Court.  And  first,  the  question  as  to  the 
competency  of  this  witness  is  raised. 

He  is  not  incompetent  merely  from  the  fact  of  his  name  being 
indorsed  on  the  bill.  To  exclude  his  testimony,  on  this  ground, 
he  must  have  an  interest  in  the  result  of  the  cause.  Such  interest 
is  not  apparent  in  this  case  ;  and  any  objection  which  can  arise 
from  his  being  a  party  to  the  bill,  goes  rather  to  his  credibility 
than  his  competency. 

But  it  is  a  well-settled  principle,  that  no  man  who  is  a  party  to 
a  negotiable  note  shall  be  permitted,  by  his  own  testimony,  to  in- 
validate it.     Having  given  it  the  sanction  of  his  name,  and  thereby 


BANK   OF   THE   UNITED   STATES   V.    DUNN.  505 

added  to  the  value  of  the  instrument  by  giving'  it  currency,  lie  shall 
not  be  permitted  to  testify  that  the  note  was  given  for  a  gambling 
consideration,  or  under  any  other  circumstances  which  would  de- 
stroy its  validity.  This  doctrine  is  clearly  laid  down  in  the  case 
of  Walton  et  al.  assignees  of  Sutton  v.  Shelley,  reported  in  1  T.  R, 
296,  and  is  still  held  to  be  law,  although  in  7  T.  R.  56,  it  is  decided 
that  in  an  action  for  usury,  the  borrower  of  the  money  is  a  compe- 
tent" witness  to  prove  the  whole  case. 

Several  authorities  arc  cited  by  the  plaintiff's  counsel  to  show 
that  parol  evidence  is  not  admissible  to  vary  a  written  agreement. 

In  the  case  of  Hoare  et  al.  v.  Graham  et  al..,  3  Camp.  o7,  the 
Court  lay  down  the  principle  that,  "  in  an  action  on  a  promissory 
note  or  bill  of  exchange,  the  defendant  cannot  give  in  evidence  a 
parol  agreement  entered  into  when  it  was  drawn,  that  it  should 
be  renewed  and  payment  should  not  be  demanded  when  it  became 
due." 

This  Court,  in  the  case  of  Renner  v.  The  Bank  of  Columbia,  9 
Wheat.  581,1  jj^  answer  to  the  argument  that  the  admission  of  proof 
of  the  custom  or  usage  of  the  bank  would  go  to  alter  the  written 
contract  of  the  parties,  say :  "  If  this  is  the  light  in  which  it  is  to 
be  considered,  there  can  be  no  doubt  that  it  ought  to  be  laid  en- 
tirely out  of  view ;  for  there  is  no  rule  of  law  better  settled,  or 
more  salutary  in  its  application  to  contracts,  than  that  which  pre- 
cludes the  admission  of  parol  evidence  to  contradict  or  substantially 
vary  the  legal  import  of  a  written  agreement." 

Parol  evidence  may  be  admitted  to  explain  a  written  agreement 
where  there  is  a  latent  ambiguity,  or  a  want  of  consideration  may 
be  shown  in  a  simple  contract ;  or,  to  defeat  the  plaintiffs'  action, 
the  defendant  may  prove  that  the  note  was  assigned  to  the  plaintiffs, 
in  trust,  for  the  payor.     6  Mass.  482. 

It  is  competent  to  prove  by  parol  that  a  guarantor  signed  his 
name  in  blank,  on  the  back  of  a  promissory  note,  and  autliorized 
another  to  write  a  sufficient  guarantee  over  it.     7  Mass.  233. 

To  show  in  what  cases  parol  evidence  may  be  received  to  explain 
a  written  agreement,  and  where  it  is  not  admissible,  the  following 
authorities  have  been  referred  to :  8  Taunt.  92 ;  1  Chitty,  G61 ; 
Peake's  Cases,  40;  Gilbert.  154. 

On  the  part  of  the  defendant's  counsel  it  is  contended,  tiiat  be- 
tween parties  and  privies  to  an  instrument  not  under  seal,  a  want 
of  consideration,  in  whole  or  in  part,  may  be  shown.     That  the 

1  Ante,  297. 


506  EVIDENCE. 

indorsement  in  question  was  made  in  blank,  and  that  it  is  compe- 
tent for  the  defendant  to  prove  under  what  circumstances  it  was 
made.  That  if  an  assurance  were  given  at  the  time  of  the  indorse- 
ment that  the  names  of  the  defendant  and  Carr  were  only  required 
as  a  matter  of  form,  and  that  a  guarantee  had  been  given  for  the 
payment  of  the  note,  so  as  to  save  the  indorsers  from  responsibil- 
ity, it  may  be  proved,  under  the  rule  which  permits  the  promisor 
to  go  into  the  consideration  of  a  note  or  bill  between  the  original 
parties. 

In  support  of  this  position,  authorities  are  read  from  5  Serg.  & 
Rawle,  303,  and  4  Wash.  C.  C.  480.  In  tlie  latter  case,  Mr.  Jus- 
tice WciHlnngton  says  :  "  The  reasons  which  forbid  the  admission  of 
parol  evidence  to  alter  or  explain  written  agreements  and  other 
instruments,  do  not  apply  to  those  contracts  implied  by  operation 
of  law,  such  as  that  which  the  law  implies  in  respect  to  the  indorser 
of  a  note  of  hand.  The  evidence  of  the  agreement  made  between 
the  plaintiffs  and  defendants,  whereby  the  latter  were  to  be  dis- 
charged on  the  liappening  of  a  particular  event,  was  therefore 
properly  admitted."  The  decision  in  5  Serg.  &  Rawle  was  on  a 
question  somewhat  analogous  to  the  one  under  consideration,  ex- 
cept in  the  present  case  there  is  no  allegation  of  fraud,  and  the 
decision  in  that  case  was  made  to  turn  in  part,  at  least,  on  that 
ground. 

In  Pennsylvania,  there  is  no  Court  of  Chancery,  and  it  is  known 
that  the  courts  in  that  State  admit  parol  proof  to  affect  written 
contracts,  to  a  greater  extent  than  is  sanctioned  in  the  States 
where  a  chancery  jurisdiction  is  exercised.  The  rule  has  been  dif- 
ferently settled  in  this  Court. 

The  note  in  question  was  first  indorsed  by  the  defendant  to  Carr, 
and  by  him  negotiated  with  the  bank.  It  was  discounted  on  the 
credit  of  the  names  indorsed  upon  the  note.  This  is  the  legal  pre- 
sumption that  arises  from  the  transaction  ;  and  if  the  first  indorser 
were  permitted  to  prove  that  there  was  a  secret  understanding  be- 
tween himself  and  his  assignees  that  he  should  not  be  held  respon- 
sible for  the  payment  of  the  note,  would  it  not  seriously  affect  the 
credit  of  this  description  of  paper  ?  Might  it  not,  in  many  cases, 
operate  as  a  fraud  upon  subsequent  indorsers  ? 

The  liability  of  parties  to  a  bill  of  exchange,  or  promissory  note, 
has  been  fixed  on  certain  principles  which  are  essential  to  the  credit 
and  circulation  of  such  paper.     These  principles  originated  in  the 


TOWNSEND    V.    BUSH.  507 

convenience  of  commercial  transactions,  and  cannot  now  be  de- 
parted from. 

The  facts  stated  by  the  witness  Carr  are  in  direct  contradiction 
to  tbc  obligations  implied  from  the  indorsement  of  the  defendant. 
By  bis  indorsement,  be  promised  to  pay  the  note  at  maturity,  if  the 
drawer  should  fail  to  pay  it.  The  only  condition  on  which  this 
promise  was  made  was,  that  a  demand  should  be  made  of  the 
drawer  when  the  note  should  become  due,  and  a  notice  given  to  the 
defendant  of  its  dishonor.  But  the  facts  stated  by  the  witness 
would  tend  to  sliow  that  no  such  promise  was  made.  Does  not 
this  contradict  the  instrument?  and  would  not  the  precedent  tend 
to  shake,  if  not  destroy,  the  credit  of  commercial  paper?  On  this 
ground  alone  the  exception  would  be  fatal ;  but  the  most  decisive 
objection  to  the  evidence  is,  that  the  agreement  was  not  made  with 
those  persons  who  have  power  to  bind  the  bank  in  such  cases.  It 
is  not  the  duty  of  the  cashier  and  president  to  make  such  con- 
tracts ;  nor  have  they  the  power  to  bind  the  bank,  except  in  the 
discharge  of  their  ordinary  duties. 

Upon  a  full  view  of  the  case,  the  Court  are  clearly  of  the  opinion, 
that  the  evidence  of  Carr  should  have  been  overruled  by  the  Circuit 
Court ;  or  they  should  have  instructed  the  jury  that  the  facts  proved 
were  not  in  law  sufficient  to  release  the  defendant  from  liability  on 
his  indorsement.  The  judgment  of  the  Circuit  Court  must,  there- 
fore, be  reversed,  and  a  venire  de  novo  awarded. 

See  the  following  cases. 


K.    AND    E.    ToWNSEND    V.    BuSH. 
(1  Connecticut,  260.     Supreme  Court,  November,  1814.) 

Competeucy  of  parly  to  commercial  paper  to  prove  it  invalid.  —  A  party  to  a  negotiable 
instrument,  who  is  divested  of  interest,  is  competent  to  prove  usury  in  the  incep- 
tion of  the  paper. 

This  was  an  action  of  assumpsit  against  Bush  as  acceptor  of  a 
bill  of  exchange  drawn  by  Ebenezer  and  Atwater  Townsend,  and 
payable  to  the  plaintiffs  or  order.  There  was  also  a  count  for 
money  paid,  laid  out,  and  expended  for  the  defendant's  use.  The 
cause  was  tried  at  New  Haven,  August  term,  1814,  before  Swift^ 


508  EVIDENCE. 

Brainard  and  Baldivin,  JJ.  On  the  trial,  the  defendant  admitted 
the  drawing  and  acceptance  of  the  bill,  as  stated  in  tlie  declara- 
tion. His  defence  was  usury  under  the  following  circumstances. 
E.  and  A.  Townsend,  applied  to  W.  Leffingwell  in  New  York  for 
the  loan  of  a  sum  of  money.  Leffingwell  agreed  to  loan  them  the 
money  at  twelve  per  cent  interest,  upon  their  giving  him  a  bill  of 
exchange  for  the  amount,  drawn  by  themselves  on  the  defendant 
and  accepted  by  him  payable  to  the  plaintiffs  K.  and  E.  Townsend, 
and  by  them  indorsed.  These  terms  were  complied  with  ;  the 
defendant  at  the  time  of  accepting  the  bill,  and  the  plaintiifs  at 
the  time  of  indorsing  it,  having  no  notice  of  the  corrupt  agree- 
ment. Leffingwell  indorsed  the  bill  to  the  Derby  Bank,  and  there 
procured  it  to  be  discounted.  When  it  became  payable,  the  Derby 
Bank  gave  due  notice  to  the  several  parties  to  the  bill ;  and  after- 
wards commenced  a  suit  against  the  plaintiffs  on  their  indorse- 
ment in  the  State  of  New  York,  and  by  the  judgment  of  the 
Supreme  Court  of  that  State  recovered  the  amount  of  the  bill 
with  interest  and  costs,  which  the  plaintiffs  accordingly  paid.  The 
defendant  accepted  the  bill  for  tlie  honor  of  the  drawers,  having 
no  effects  of  the  drawers  in  his  hands.  To  prove  these  facts,  the 
defendant  offered  the  individuals  composing  tlie  firm  of  E.  and  A. 
Townsend  as  witnesses  ;  offering  also,  at  the  same  time,  to  show, 
that  they  had  no  interest  in  this  suit,  being  discharged  from  all 
liability  on  the  bill  under  an  act  of  insolvency  in  the  State  of  New 
York.  The  plaintiffs  objected  to  the  admission  of  these  witnesses, 
on  the  ground  that  having  drawn  the  bill,  and  thereby  given  credit 
to  it,  they  were  incompetent  to  show  that  it  was  invalid  on  account 
of  usury ;  and  also  on  the  ground  that  any  proof  of  said  corrupt 
agreement  would  be  irrelevant  on  this  trial.  The  Court  excluded 
the  witnesses,  and  directed  the  jury  to  find  a  verdict  for  the  plain- 
tiffs ;  which  being  accordingly  done,  the  defendant  moved  for  a 
new  trial.  This  motion  was  reserved  for  the  consideration  of  all 
the  judges. 

Tkumbull,  J.  The  principal  question  in  this  case  is.  Whether 
Ebenezer  and  Atwater  Townsend,  the  drawers  of  the  bill  in  ques- 
tion, are  admissible  witnesses  in  an  action  by  the  plaintiffs  as 
payees  of  the  bill  against  the  defendant  as  acceptor,  to  prove  that 
it  was  executed  on  an  iisurious  contract,  and  therefore  is  void  in 
law. 

The  rule  that  no  person  can  be  permitted  to  give  testimony  to 


TOWNSEND    V.    BUSH.  509 

invalidate  any  instrument  to  which  lie  has  made  himself  a  party 
by  aflixing  iiis  signatnre,  in  cases  wherein  he  has  no  interest  in 
the  event  of  the  suit  on  trial,  was  first  adopted  in  the  case  of  Wal- 
ton V.  Shelley,  1  Durn.  &  East,  29G,  by  Lord  Mansfield,  and  the 
other  judges  of  the  King's  Bench.  He  states  that  "  the  rule  is 
founded  in  public  policy  ;  that  there  is  a  sound  reason  for  it;  be- 
cause every  man,  who  is  a  party  to  an  instrument  gives  a  credit  [to] 
it ;  that  it  is  of  consequence  to  mankind,  that  no  person  should 
hang  out  false  colors  to  deceive  them,  by  first  affixing  his  signa- 
ture to  a  paper,  and  then  afterwards  giving  testimony  to  invalidate 
it;  that  it  is  emphatically  right  in  case  of  notes,  because  in  conse- 
quence of  different  statutes,  two  very  hard  cases  have  arisen  :  first, 
with  respect  to  a  gaming  note,  which,  though  in  possession  of  a 
bona  fide  purchaser  without  notice,  is  void ;  and  in  the  case  of 
usury,  a  note  given  for  an  usurious  consideration,  though  in  the 
hands  of  a  fair  indorsee,  is  equally  void  ;  and  therefore,  whenever 
a  man  signs  these  instruments,  he  is  always  understood  to  say, 
that  to  his  knowledge  there  is  no  legal  objection  to  them  what- 
ever." He  then  quotes  the  maxim  of  the  civil  law,  nemo  suam 
allegans  turpitudinem  est  audiendus,  and  applies  it  as  conclusive  on 
the  present  point.  The  other  judges  concurred,  and  established 
this  as  a  general  rule  of  law. 

The  English  courts  soon  found  the  principle  was  laid  down  on 
too  broad  a  scale,  and  narrowed  it  in  its  application,  to  negotiable 
instruments  only.  No  new  or  additional  reasons  were  ever  ad- 
duced in  its  support.  It  was  adhered  to  on  the  grounds  stated  by 
Lord  3Iansfield,  and  the  authority  of  the  decision  in  that  case. 
But  at  length,  the  rule  was  exploded  in  the  King's  Bench,  and 
such  a  witness  determined  to  be  admissible,  unless  interested  in 
the  event  of  the  suit  on  trial.  See  Jordaine  v.  Lashbrooke,  7 
Durn.  &  East,  601. 

As  the  decisions  of  the  highest  court  and  ablest  judges  at  West- 
minster Hall  have  been  thns  directly  contradictory,  and  as  their 
principle  (notwithstanding  the  dicta  of  several  of  the  judges  in 
Allen  V.  Holkins,  1  Day's  Cases  in  Error,  p.  17,  adopting  the  rule 
as  sound  law,  and  the  decision  in  Webb  v.  Danforth,  p.  301,  de- 
nying its  application  as  to  facts  subsequent  to  the  execution'  of  the 
instrument)  has  never  till  now  come  directly  in  question  before 
the  highest  courts  in  this  State,  it  is  our  duty  to  decide  it  accord- 
ing to  the  general  rules  and  principles  of  law  respecting  admissi- 
bility of  testimony ;  and  if  the  grounds  and  reasons  in  Walton  v. 


510  EVIDENCE. 

Shelley  are  found  to  be  fallacious,  we  cannot  consider  the  case  and 
its  authority  conclusive. 

Tiie  first  ground  Lord  Mansfield  takes,  is,  that  every  person  who 
signs  an  instrument,  thereby  gives  it  a  credit,  and  can  never  be 
admitted  to  dispute  its  validity.  Before  we  adopt  this  principle  of 
universal  exclusion  and  estoppel,  we  must  inquire  what  credit 
each  several  party,  by  putting  his  signature  upon  a  negotiable  in- 
strument, thereby  gives  to  it,  and  what  obligation  he  thereby 
incurs ;  for  each  signer  stands  on  a  different  ground. 

The  drawer  of  a  bill  or  [indorser  of  a  ?]  negotiable  note,  acknowl- 
edges himself  indebted  to  the  payee  to  the  amount  of  the  sum  it 
contains,  and  engages  to  pay  the  damages,  in  case  the  bill  shall  be 
dishonored,  or  the  note  uncollected,  without  the  fault  of  the  payee, 
or  of  those  to  whom  it  may  be  indorsed. 

The  indorser  of  a  bill  or  note  acknowledges  his  receipt  of  a 
valuable  consideration,  and  contracts  to  pay  the  sum,  in  case  it 
cannot  be  obtained  of  the  drawer.^ 

The  acceptor  acknowledges  it  to  be  duly  drawn  ;  he  is  not  ad- 
mitted to  deny  the  handwriting  of  the  drawer  ;  and  lie  contracts 
to  pay  the  sum  according  to  its  contents  to  the  legal  holder. 

These  are  the  rules  and  principles  of  common  law  as  adopted 
and  sanctioned  by  the  courts  in  this  State. 

The  indorsee  or  holder  of  a  negotiable  security  has  nothing  to 
do  with  the  transaction  between  the  original  parties.  See.  Jordaine 
V.  Lashbrooke.  Nor  has  the  drawer  or  acceptor  any  thing  more 
to  do  with  the  contracts  between  subsequent  indorsers  and  indor- 
sees. Each  party  is  bound  only  so  far  as  his  own  obligation  ex- 
tends, and  cannot  be  precluded  from  denying  any  fact  not  acknowl- 
edged by  his  signature.  All  these  contracts  are  separate  and 
independent.  No  party  by  his  signature  warrants  the  validity  of 
any  contract  but  his  own,  or  gives  any  farther  credit  to  the 
security,  or  is  interested  in  the  event  of  any  suit  on  the  several 
contracts  of  other  parties,  whose  names  may  appear  on  the  instru- 
ment. He  warrants  nothing  farther  with  respect  to  the  validity  of 
the  draft,  he  hangs  out  no  false  colors,  and  is  not  estopped  by  his 
signature  from  testifying  to  any  facts  respecting  the  instrument,  or 
any  legal  objections  within  his  knowledge.^ 

1  Tliis  word  "  drawer  "  is  of  course  used  for  "  maker ;  "  and  the  words  "  or  of 
the  acceptor  "  should  have  been  added. 

2  An  indorser  warrants  the  genuineness  of  all  prior  signatures.  See  Story,  Prom- 
issory Notes,  §  135. 


TOWNSEND   V.    BUSH.  511 

The  only  fundamental  principle  of  the  common  law,  applicable 
to  the  present  question,  is  this,  that  no  man  can  be  a  witness  in 
his  own  cause  ;  and  this  rule  hath  ever  been  considered  as  appli- 
cable to  every  case  in  which  lie  is  a  party,  or  is  interested,  and  to 
no  others.  It  was  formerly '*holden  as  well  in  the  Engli.sh  courts 
as  our  own,  that  an  interest  in  the  question  was  a  sufficient  ground 
for  excluding  a  witness.  It  is  now  settled  law  in  both,  that  an 
interest  in  the  event  of  the  suit  is  the  only  ground  on  which  he 
can  be  rejected  ;  and  that  a  mere  interest  in  the  question  does  not 
affect  his  competency,  but  his  credit  with  the  jury  only.  But  this 
distinction  was  not  fully  settled  at  the  time  the  case  of  Walton  v. 
Shelley  was  tried.  Justice  Buller,  though  he  concurred  in  the 
principle  that  no  man  can  invalidate  his  own  security,  relied  much 
in  his  argument  on  the  fact  that  the  witness  was  interested  in  the 
question,  because  the  question  put  to  him  was  upon  the  validity  of 
the  notes  he  had  indorsed ;  although  he  clearly  was  not  interested 
in  the  event  of  the  suit  on  trial,  as  it  must  be  uncertain  whether 
he  would  ever  be  subjected  to  a  subsequent  action  on  the  instru- 
ment, was  already  liable  on  his  signature,  and  could  never  give  the 
verdict  in  evidence  in  his  favor. 

The  maxim  of  the  civil  law,  that  no  man  is  to  be  l\pard  who 
alleges  his  own  turpitude  or  crime,  was  never  by  any  court  or 
judge,  before  Lord  Mansfield^  applied  to  the  inadmissibility  of  a 
witness,  but  only  to  the  rights  of  the  parties  in  a  suit  or  action. 
No  suitor  can  support  a  claim  in  which  the  ground  or  considera- 
tion is  an  unlawful  act  of  his  own  ;  nor  can  any  defendant  be 
heard  on  a  defence  grounded  on  his  own  unlawful  act.  But  an 
accomplice  in  a  crime,  a  fraud,  or  any  illegal  transaction,  was  al- 
ways an  admissible  witness,  unless  immediately  interested  in  the 
suit.  I  may  further  observe,  that  the  term  "  turpitude,"  can  with 
no  propriety  be  applied  to  an  act,  not  malum  in  se,  but  only  malum 
prohibihim,  by  force  of  some  statute,  making  it  penal  in  some  par- 
ticular country,  or  jurisdiction. 

In  Jordaiue  v.  Lashbrooke,  Lord  Kent/on  says :  "  The  rule  con- 
tended for  is  this :  Whatever  fraud  may  have  been  committed,  if 
the  party  to  the  fraud  can  get  on  the  instrument  the  name  of  the 
person  who  may  be  the  only  witness  to  the  transaction,  he  will 
stand  entrenched  within  the  forms  of  law,  and  impose  silence  on 
that  only  witness,  though  he  be  a  person  of  imimpcachable  char- 
acter, and  not  interested  in  the  cause."     This  he  denies  to  be 


512  EVIDENCE. 

law.  Grose,  Justice,  says:  "Let  the  plaintiff  in  this  case  resort 
to  his  indorser  to  recover  back  the  consideration  he  gave  for  the 
bill." 

Indeed,  if  a  man  sell  and  indorse  a  note  executed  by  an  infant, 
or  feme  covert,  and  void  at  common*  law,  or  void  by  statute  as 
being  usurious,  unstamped  or  a  forgery,  I  see  no  legal  defence  he 
can  set  up  against  an  action  of  assumpsit  by  the  indorser,  for  the 
money  paid  on  a  consideration  which  has  wholly  failed.  For  that 
is  not  an  action  on  the  bill  or  note,  but  rests  entirely  on  the  ground 
that  the  note  is  void  in  law.  If  such  an  action  can  be  supported, 
there  is  no  hardship  in  the  case  of  an  innocent  purchaser  ;  he 
has  his  remedy.  If  in  any  case  he  is  deprived  of  every  legal 
remedy,  no  court  can  have  a  right,  in  compassion  to  the  hard- 
ship of  his  situation,  to  assist  him  in  evading  the  law  by  ex- 
cluding such  witnesses,  or  evidence,  as  is  admissible  m  all  other 
cases. 

The  hardship  upon  the  innocent  indorsee,  which  seems  so 
strongly  to  have  influenced  the  mind  of  Lord  Mansfield,  is  indeed 
no  more  than  this  ;  by  the  statutes  to  which  he  refers,  all  bills  or 
notes,  where  the  consideration  is  money  lent  on  usury  or  for  gam- 
ing, are  declared  void  to  all  intents .  and  purposes  whatever ;  and 
consequently,  the  indorsee,  whenever  he  brings  his  suit  on  the 
note  or  bill  itself,  against  the  drawer,  promisor,  or  acceptor,  must 
fail  of  a  recovery  in  that  action.  But  he  is  not  without  remedy  ; 
for,  if  a  fair  and  bona  fide  purchaser  without  notice,  he  may  re- 
cover of  the  indorser  on  his  indorsement.  Bowyer  v.  Bampton, 
2  Stra.  1155. 

In  the  case  of  Lowe  and  others  v.  Waller,  Doug.  736,  in 
which  all  the  former  cases  are  well  considered.  Lord  Mansfield 
himself  says  :  "  It  is  better  that  the  law  should  be  as  it  is  with  re- 
spect to  bills  and  notes,  than  other  securities  ;  because  they  are 
generally  payable  in  a  short  time,  so  that  the  indorsee  has  an  early 
opportunity  of  recurring  to  the  indorser,  if  he  cannot  recover  on 
the  bill." 

I  am  therefore  of  opinion  that  the  witnesses  offered  are  ad- 
missible, notwithstanding  they  have  put  their  signature  upon 
the  bill. 

Swift,  J.  The  question  whether  a  party  to  a  negotiable  instru- 
ment, who  is  divested  of  his  interest,  is  a  competent  witness  to 


TOWNSEND    V.    BUSH.  513 

show  it  void  in  its  creation,  now  comes  for  the  first  time  before 
this  Court  for  decision.  We  arc  unshackled  by  any  precedent, 
and  are  at  liberty  to  decide  it  on  principle. 

In  the  case  of  Walton  v^.  Shelley,  the  rule  was  laid  down,  that 
no  party  who  had  signed  an  instrument  should  ever  lie  permitted 
to  give  testimony  to  iiivtilidate  it.  Though  llic  Coiirt  and  counsel 
speak  of  it  as  a  well-known  rule,  yet  it  can  be  fouii<l  in  no  prior 
case. 

Lord  Majisjield^  wiio  had  borrowed  many  valual)le  j^rinciples 
from  the  civil  law  and  incorporated  them  with  the  common  law, 
attempts  to  support  his  decision  by  what  he  says  is  a  maxim  of 
the  civil  law,  nemo  allegans  suam  turpitudinem  est  audiendus ;  but 
there  is  no  such  rule  to  be  found  in  the  civil  law  as  ai)plicable  to 
witnesses,  and  it  is  the  daily  practice  in  common-law  courts  to 
admit  witnesses  to  testify  to  facts  which  show  they  have  been  par- 
ties to  trespasses,  frauds,  and  crimes. 

The  rule,  as  laid  down  in  the  case  of  Walton  v.  Shelley,  com- 
prehends instruments  not  negotiable  as  well  as  those  which  are, 
and  docs  not  require  tiie  action  to  be  brought  on  the  instrument; 
but  if  the  consideration  be  antecedent  notes  given  up,  yet  if  the 
witness  indorsed  such  notes,  he  is  incompetent.  If  this  ])rinci})le 
should  be  carried  to  its  full  extent,  it  would  furnish  an  effectual 
shield  for  usury,  gambling,  fraud,  and  illegal  contracts.  Let  all 
who  are  concerned  in  the  transaction,  or  who  have  knowledge  of 
it,  become  parties  to  the  writings  made  use  of,  and  there  will  be 
neither  danger  nor  possibility  of  detection.  So  manifest  was  the 
mischief  of  this  rule  on  so  broad  a  basis,  that  the  Court  of  King's 
Bench,  in  the  case  of  Bent  v.  Baker,  in  order  to  avoid  it,  were 
obliged  to  restrict  it  to  negotialtle  securities,  and  in  the  case  of 
Jordaine  v.  Lashbrooke,  wholly  to  cx|)lode  it.  So  that  the  case  of 
Walton  V.  Shelley  has  been  overruled,  and  is  not  now  law  in  that 
country. 

But  as  this  rule,  as  far  as  it  relates  to  negotiable  instruments, 
has  been  adopted  by  higlily  respectable  judicial  tril)unals  in  our 
sister  States,  it  may  be  proper  to  examine  it. 

In  the  case  of  Walton  v.  Shelley,  Lord  Mansfichi  says  that 
whenever  a  man  signs  these  instruments  he  is  always  undcr.stood 
to  say  that  to  his  knowledge  there  is  no  legal  objection.  In  the 
case  of  Coleman  v.  Wise  and  others  in  the  State  of  New  York, 
the  same  principle  is  recognized.     But  there  is  not  a  precedent  or 

33 


514  EVIDENCE. 

dictum  to  warrant  tliis  position.  When  a  man  subscribes  or  in- 
dorses an  instrument,  he  contracts  certain  legal  liabilities,  and  he 
sets  his  name  to  it  for  no  other  purpose.  He  enters  fnto  no 
engagement  that  he  will  never  testify  that  the  instrument  was 
ol)tained  by  fraud  or  duress ;  or  was  given  for  a  gambling  or 
usurious  consideration  ;  or  that  he  will  never  make  such  plea. 
Every  party  to  ah  instrument  has  a  right  by  his  plea  to  show  it 
was  originally  void.  How  then  can  it  be  pretended,  that  by  sign- 
ing it  he  is  understood  to  say  that  to  his  knowledge  there  is  no  legal 
objection  to  it?  If  he  contracts  such  obligation,  the  true  principle 
would  be  not  to  permit  him  to  make  a  plea  or  defence  repugnant 
to  it.  To  allow  him  to  plead  a  fact  which  shows  the  instrument 
void  in  its  creation,  and  then  to  refuse  him  the  privilege  of  prov- 
ing it,  at  least  by  one  species  of  testimony,  is  a  palpable  absurdity. 
The  iniquity  really  consists  in  the  defence  itself,  and  not  in  the 
mode  of  proof;  for  certainly  it  would  be  as  unjust  for  the  defend- 
ant to  make  out  his  defence  by  a  witness  not  a  party  to  the  instru- 
ment as  by  one  that  is  a  party. 

In  the  case  of  Churchill  v.  Suter,  4  Mass.  156,  Chief  Justice 
Parsons  says  :  "  If  the  parties  to4he  usury  or  the  gambling,  hav- 
ing received  the  fruits  of  their  illegal  contract,  and  having  given  a 
circulation  to  the  note,  can  be  admitted  by  their  testimony  to  de- 
stroy it,  besides  the  injury  to  the  fair  purchaser,  the  negotiation  of 
paper  will  be  greatly  checked,  to  the  no  small  injury  of  the  pub- 
lic." This  supposes  that  the  indorser  combines  with  the  maker  of 
the  note  to  have  it  transferred  to  an  innocent  indorsee,  and  then 
by  his  testimony  to  avoid  it  for  usury.  All  will  acknowledge  such^ 
conduct  to  be  highly  criminal.  But  suppose  there  was  originally 
no  intent  to  defraud  an  innocent  indorsee,  and  while  the  note  is 
held  l)y  an  indorsee  having  knowledge  of  the  usury,  for  a  usurious 
consideration,  the  indorser,  by  an  act  of  bankruptcy,  becomes  dis- 
charged of  his  interest,  it  will  be  agreed  then  to  be  perfectly  right 
for  him  to  testify  to  the  usury  to  avoid  the  note.  Again,  suppose 
a  usurer  has  taken  a  most  unreasonable  advantage  of  the  distress 
and  misfortunes  of  another,  and  has  compelled  him  to  obtain 
security  by  the  indorsement  of  a  friend  whom  he  cannot  indem- 
nify ;  he  then  puts  the  note  in  suit,  and  there  is  an  indorser  who  • 
has  becone  disinterested  who  is  knowing  to  the  oppression  and 
usury ;  it  would  clearly  be  his  duty  to  come  forward  and  testify  to 
the   usury  for   the   purpose  of  destroying   the   uote.     Yet  by  the 


TOWNSEND    V.    BUSH.  515 

• 

rule  contended  for,  tlie  indorsor  in  both  these  cases  would  not  be 
permitted  to  testify. 

Hei;e  then,  for  the  purpose  of  protecting  the  possible  case  of  the 
innocent  indorsee,  ample  protection  is  furnislicd  to  the  certain  case 
of  the  usurer  and  oppressor. 

Again,  it  is  said,  "  that  persons  may  be  witnesses  against  their 
accomplices,  because  their  testimony  tends  to  prevent  fraud  and 
injustice,  but  in  this  case  it  tends  to  encourage  it,  by  enabling 
parties  to  enjoy  the  fruits  oT  it,  and  throw  the  consequence  on  an 
innocent  indorsee."  When  accomplices  are  admitted  to  testify, 
the  inquiry  is  not  made  whether  it  will  or  will  not  tend  to  encour- 
age fraud ;  for  if  it  should,  it  was  never  heard  that  this  would  be 
an  objection  to  their  testimony.  The  object  is  to  punish  crimes  ; 
and  as  in  many  cases  this  cannot  be  done  without  the  testimony  of 
accomplices,  the  law  admits  them. 

But  to  illustrate  the  subject :  suppose  a  combination  to  defraud 
an  innocent  indorsee  by  a  usurious  note  ;  the  real  usurer,  to 
accomplish  this  plan,  does  not  set  his  name  to  the  note,  and  is 
rendered  by  releases  disinterested  ;  he  would  then  be  a  competent 
witness  to  prove  the  usury  ;  yet  his  testimony  would  tend  to  en- 
courage fraud  and  injustice  as  much  as  if  his  name  had  been  set 
to  the  note.  This  clearly  shows  that  no  such  rule  as  that  above 
mentioned  exists. 

It  is  further  said,  "  Xo  man  shall  be  admitted  to  allege  his  own 
turpitude,  when  that  allegation  will  tend  to  encourage  fraud,  or 
illegality.  Nor  shall  the  defendant  in  his  defence  allege  his  own 
wrong."  This  is  no  more  than  laying  down  the  well-known  maxim 
that  no  man  shall  take  advantage  of  his  own  wrong  ;  but  this  has 
always  been  applied  to  the  parties,  and  is  now  for  the  fust  time 
attem{)tcd  to  be  applied  to  witnesses.  Though  this  rule  be  gen- 
erally true,  yet  a  statute  can  control  its  operation.  Suppose  a 
fraudulent  combination  to  cheat  an  innocent  indorsee  by  a  usurious 
note,  and  a  party  to  the  fraud  and  the  note  is  sued  thereon  ;  he 
may  plead  the  usury  to  avoid  it.  Suppose  the  plaintiff  replies  the 
fraudulent  combination,  and  that  an  indorsee  is  the  only  person 
who  has  knowledge  of  the  fact.  Unquestionably,  the  replication 
would  be  bad,  and  the  note  void.  Here,  then  the  party  is  per- 
mitted to  take  advantage  of  all  the  turpitude,  fraud,  and  wrong 
which  the  above  rule  intended  to  exclude.  Suppose  an  issue 
should  be  joined  on  the  fraudulent   combination  ;  a  }>arty  to  the 


51G  EVIDENCE. 

fraud,  if  not  a  party  to  the  note,  might,  on  the  principles  con- 
tended for  on  the  otlier  side  be  admitted  as  a  witness  :  he  would 
then  testify  to  his  own  fraud  and  turpitude.  The  truth  is,  the 
real  question  in  all  these  cases  is,  whether  the  note  was  given  for 
usury  ;  and  this  the  party  by  force  of  statute  may  always  plead, 
however  base  and  shameful  the  transaction  may  be  ;  and  may 
prove  it  by  competent  witnesses,  however  deeply  they  may  have 
been  concerned  in  it.  It  is  in  vain  to  talk  about  the  turpitude  of 
witnesses  and  the  wrong  of  the  defendant.     Ita  lex  scripta  est. 

But  public  policy  is  the  strong  argument  against  the  admission 
of  parties  to  an  instrument  to  invalidate  it  by  their  testimony.  It 
is  said,  the  makers  and  indorsers  of  negotiable  notes  may  combine 
to  defraud  innocent  indorsees,  which  would  check  and  embarrass 
their  negotiation,  and  prevent  their  circulation.  It  is  true,  such 
fraudulent  combinations  can  be  made,  and  tlie  indorser  of  the 
note  may  testify  to  the  usury  on  a  suit  against  the  maker,  and  the 
note  may  be  avoided  in  the  hands  of  an  innocent  holder.  It  is 
also  true,  that  a  similar  fraud  may  be  practised  without  the  aid  of 
an  indorser  or  party  to  the  note  for  a  witness.  Suppose  two  men 
wicked  enough  to  contrive  such  a  plan :  they  may  make  use  of 
some  friend  expressly  for  the  purpose  of  being  a  witness  to  the 
usury  ;  they  may  indorse  the  note  to  some  person  ignorant  of  it, 
and  divide  the  spoils ;  and  on  a  suit  by  the  indorsee,  such  friend 
may  be  called  as  a  witness,  and  prove  the  usury.  Here  is  pre- 
cisely the  same  inconvenience  and  fraud  as  in  the  other  case,  and 
the  same  injury  to  the  circulation  of  negotiable  notes,  yet  it  can- 
not be  denied  that  in  this  case  the  note  must  be  set  aside  ;  for 
there  is  no  legal  objection  to  the  witness,  he  has  no  interest,  his 
name  is  not  on  the  paper.  When  men  are  unprincipled  enough 
to  practise  frauds  of  this  description.^  I  think  it  is  much  more  prob- 
able that  it  will  be  done  by  the  intervention  of  some  friend  whose 
name  is  not  on  the  note  than  by  an  indorser.  Of  course,  this  rule 
would  furnish  very  inadequate  relief  if  such  a  fraudulent  scheme 
should  seriously  be  adopted. 

But  if  principles  of  public  policy  are  to  govern,  they  ought  to 
extend  to  all  cases  where  the  injury  is  the  same ;  and  the  rule 
ouglit  to  be,  that  no  defendant  should  ever  be  admitted  to  plead 
usury,  or  any  other  fact,  to  avoid  a  negotiable  instrument  in  the 
hands  of  an  innocent  holder.  This  would  do  complete  and  equal 
justice  in  all  cases.     But  how  unequal  is  this  rule.     It  will  pro- 


TOWNSEND    V.    BUSH.  517 

tect  the  innocent  holder  in  one  case,  but  not  in  another  under  the 
same  circumstances,  and  within  the  same  reason  ;  and  where  it  f»ro- 
tects  the  innocent  hohler,  it  furnishes  the  same  protection  to  the 
usurer ;  for  the  rule  in  Walton  v.  Shelley  makes  no  difference 
whether  the  holder  knew  of  the  usury  or  not;  and  in  the  case  de- 
cided in  Massachusetts  the  plaintiff  on  the  record  was  the  actual 
usurer.  A  rule  cannot  be  right  which  protects  the  very  usurer  the 
law  intended  lo  ])unisli  in  one  case,  and  in  another  subjects  the  inno- 
cent holder  to  a  loss  whicli  it  was  the  object  of  tiiis  rule  to  prevent. 
But  to  decide  on  the  policy  of  this  law  it  is  necessary  to  con- 
sider the  object  of  the  legislature  in  making  it.  It  is  manifest 
they  intended  in  the  most  effectual  manner  to  suppress  usury.  If 
they  had  admitted  the  principle,  that  usurious  notes  sliould  be 
valid  in  the  hands  of  innocent  holders,  they  would  have  furnished 
a  mode  by  which  usury  could  have  been  practised  with  safety, -and 
the  law  rendered  nugatory.  To  shut  the  door  against  all  such 
artifices,  the  law  enacts  that  usurious  securities  shall  be  absolutely 
void.  It  must  liave  been  well  understood  that  instances  would 
occur  where  innocent  indorsees  might  be  prejudiced,  and  that  par- 
ties to  instruments,  when  not  otherwise  disqualified,  might,  by  the 
general  rules  of  evidence,  be  admitted  to  invalidate,  l)y  their  testi- 
mony. It  is  not  probable  that  the  legislature  contemplated  pre- 
cisely such  a  fraud  as  it  is  suggested  may  be  practised ;  it  must 
however  have  been  known  that  notes  might  be  set  aside  in  the 
hands  of  innocent  holders,  which  would  operate  hardly,  if  not  un- 
justly, in  particular  cases  ;  but  as  a  special  provision  in  such  cases 
would  iiave  defeated  the  statute,  it  must  be  understood  that  they 
intended  to  declare  the  notes  void  in  the  hands  of  innocent  holders, 
considering  the  great  object  of  suppressing  usury  of  more  impor- 
tance than  to  promote  the  negotiation  and  circulation  of  notes  by 
protecting  innocent  holders  in  the  few  cases  where  they  might  be 
affected.  If  there  is  any  thing  wrong  in  this  business,  any  thing 
opposed  to  public  policy,  it  is  in  the  statute  which  makes  void 
usurious  notes  in  the  hands  of  innocent  holders ;  but  tills  is  a 
wrong  which  no  court  of  law  can  remedy.  It  would  l)c  strange 
indeed  for  tliem  to  say,  that  a  statute  is  not  founded  on  jirinciples 
of  public  policy,  and  then,  though  they  cannot  declare  it  void,  yet 
they  will  refuse  legal  evidence  to  carry  it  into  effect.  This  is  an 
attempt  by  indirect  means  to  rejieal  a  statute.  The  legislature 
have  decided  on  the  policy  of  the  measure ;  and  it  is  the  duty  of 
courts  to  give  it  due  operation. 


518  EVIDENCE. 

But  it  lias  been  said  by  Justice  Buller :  "  It  would  be  attended 
with  consequences  the  most  injurious  to  society  if  these  securities 
might  be  cut  down  by  the  persons  passinj^  them  ;  it  is  only  for  two 
men  to  conspire  together  to  cheat  all  the  world."  Peake's  Cases, 
118.  Chief  Justice  Parsons-  says :  "  For  any  man  by  contriving 
with  another  may  take  up  money  of  him  at  usurious  interest,  and 
give  him  a  negotiable  note  for  security.  The  promisee  may  sell  it 
for  a  valuable  consideration,  and  when  the  indorsee  attempts  to 
recover  the  money,  the  promisor  and  indorser  may  (at  least  by 
releases)  be  witnesses  for  each  other,  and  defeat  the  purchaser  of 
his  remedy,  and  quietly  enjoy  the  money  he  has  paid  for  the  note." 
4  Mass.  162. 

>.  It  might  be  inferred  from  these  observations,  that  innumerable 
frauds  would  be  practised,  if  a  party  to  a  negotiable  instrument 
could  be  a  witness  to  impeach  it,  and  that  all  confidence  in 
negotiable  paper  would  be  destroyed :  yet  the  truth  is,  no  inno- 
cent holder  of  a  note  could  ever  sustain  a  loss,  unless  by  the  bank- 
ruptcy of  his  indorser,  or  the  person  from  whom  he  received  it ; 
and  he  has  nothing  to  do,  to  guard  against  a  fraud,  but  to  require 
tlic  same  ability  in  his  indorser  as  prudent  men  ordinarily  require 
when  they  give  credit.  It  would  also  seem,  from  the  remarks 
above  quoted,  that  an  opinion  was  entertained  that  the  parties  to 
a  usurious  note  could  transfer  it  without  liability  to  the  vendee. 
Chief  Justice  Parsons  says,  that  they  may  defeat  the  party  of  his 
remedy,  and  quietly  enjoy  the  money.  It  is  true,  in  a  suit  by  the 
indorsee  against  the  maker  of  the  note,  the  indorser  might  be  a 
witness,  as  he  would  testify  against  his  interest ;  but  in  a  suit  by 
the  innocent  indorsee  against  the  indorser,  the  testimony  of  the 
promisor  would  be  of  no  avail,  unless  the  indorsement  was  void 
on  account  of  the  usury  contained  in  the  note  ;  and  that  the  in- 
dorsement was  void  must  have  been  the  opinion  of  Ciiief  Justice 
Parsons,  otherwise  he  could  not  have  said  that  the  promisor  might 
be  a  witness  for  the  indorser,  and  thereby  defeat  the  remedy  of 
the  purchaser.  But  it  is  an  unquestionable  principle,  tliat  though 
the  note  is  void  on  account  of  the  usury  so  that  no  action  can  be 
sustained  upon  it,  yet  if  the  promisee  indorse  it  to  a  bona  fide  pur- 
chaser ignorant  of  the  usury,  he  is  liable  on  his  indorsement ;  for 
this  is  a  new  contract  not  contaminated  with  usury,  and  it  is  bind- 
ing on  him,  though  the  original  note  is. void.  If  it  should  pass 
into  the  hands  of  an  innocent  purchaser  without  indorsement,  if 


TOWNSEND    V.    BUSH.  619 

the  seller  conceal  the  usury,  an  action  would  lie  for  the  fraud. 
The  consequence  then  is,  that  men  of  property  can  never  conibino 
to  practise  a  fraud  of  this  description :  for  one  or  tljc  other  would 
always  he  responsible  in  some  shape  on  the  sale  ;  and  though  they 
might  defeat  the  purchaser  of  one  remedy,  they  would  be  liable  in 
some  other  mode  ;  and  consequently  could  not  enjoy  vovf  peace- 
ably the  fruits  of  their  fraud,  or  very  successfully  cheat  all  the 
world.  Tlie  apprehension,  then,  of  danger  from  a  fraudulent 
combination  of  the  parties  to  a  negotiable  instrument,  is  founded 
on  a  mistaken  view  of  the  operation  of  the  law  respecting  their 
liabilities. 

But  what  are  the  frauds  that  can  be  practised  in  such  cases  ? 
The  only  successful  mode  must  be  by  the  instrumentality  of  in- 
dorsers,  without  ability  to  respond.  Let  us  examine  what  frauds 
can  be  practised  by  the  combination  of  a  poor  and  a  ricii  man. 
The  poor  man  must  always  be  the  indorser.  A  man  of  property 
would  never  give  his  note  to  a  bankrupt  without  consideration,  on 
the  risk  that  he  will  sell  it,  divide  with  him  the  spoils,  and  swear 
him  clear  of  the  debt.  A  poor  man  would  hardly  loan  money  or 
other  property  to  a  rich  man  on  a  usurious  security,  for  the  priv- 
ilege of  selling  it,  under  an  obligation  to  discharge  the  usurer  by 
his  testimony,  and  with  a  liability  of  going  to  jail  himself  for 
another  man's  debt.  A  man  of  property  would  have  little  induce- 
ment, unless  he  received  the  full  sum,  to  execute  a  note  and  run 
the  risk  that  the  promisee  should  swear  him  clear  of  it.  The 
promisee  could  not  be  compelled  to  testify,  as  it  would  be  against 
his  interest ;  and  he  might  die  before  the  trial.  A  man  of  prop- 
erty runs  a  further  risk  ;  if  he  should  practise  such  a  fraud  and 
avoid  the  note,  yet  he  would  be  liable  to  an  action  in  favor  of  the 
innocent  indorsee  whom  he  had  cheated  ;  and  it  would  always  be 
in  the  power  of  his  coadjutor  in  the  fraud  to  betray  and  subject 
him.  So  remote  is  the  prospect  of  deriving  any  advantage  from  a 
fraud  of  this  description,  that  I  very  much  question  whether  an 
attempt  ever  has  been,  or  ever  will  be,  made  to  practise  it.  The 
calling  on  an  indorser  or  other  party  to  testify  will  always  be  an 
after  calculation,  and  will  probably  occur  only  where  there  has 
been  some  failure  or  embarrassment. 

What  can  be  the  injury  to  the  circulation  of  negotiable  paper  to 
admit  the  parties  to  invalidate  it  by  their  testimony  ?  It  might 
prevent  prudent  men  from  taking  the  indorsements  of  bankrupts. 


520 


EVIDENCE. 


This  would  not  be  very  injurious  to  the  commercial  world.  In  the 
case  of  failure  of  the  parties  to  the  instrument  after  the  indorse- 
ment, it  might  in  some  cases  throw  the  loss  upon  a  different  party, 
but  this  would  in  reality,  be  little  more  than  the  common  risk  of 
loss  by  failures,  which  every  man  runs  in  a  commercial  country 
where  extensive  credit  is  given. 

I  apprehend,  then,  there  is  no  solidity  in  the  argument  drawn 
from  considerations  of  public  policy. 

But  let  us  consider  what  will  be  the  effect  not  to  admit  a  party 
to  negotiable  paper  to  invalidate  it  by  his  testimony.  It  will  cer- 
tainly furnish  very  ample  protection  to  usurers.  Conceal  the 
usury  from  all  who  are  not  parties,  and  there  can  be  no  proof  in 
an  action  founded  on  the  obligation.  The  only  method,  then, 
must  be  a  public  or  qui  tarn  prosecution.  The  parties  affected  by 
the  usury  will  usually  be  the  witnesses,  and  can  get  no  redress. 
They  can  rarely  calculate  on  such  advantages  from  qui  tarn  prose- 
cutions as  to  realize  any  thing  more  than  a  gratification  of  re- 
venge ;  and  if  a  usurer  has  nothing  more  to  restrain  him  than 
such  prosecutions,  the  statute  against  usury  will  be  of  little  con- 
sequence. 

In  practice  it  will  be  found  that  this  rule  has  much  oftener 
protected  the  usurer  than  innocent  indorsees.  In  the  case  of 
Walton  V.  Shelley,  Sutton,  by  whose  assignees  the  action  was 
brought,  must  have  known  the  usury.  The  bond  was  executed  in 
consideration  of  notes  given  up.  If  he  had  been  ignorant  of  the 
usury,  the  bond  would  have  been  good.  In  the  case  of  Churchill 
V.  Suter,  the  usurer  was  the  plaintiff.  In  both  cases,  the  usurers 
were  protected. 

In  the  case  before  us,  the  rule  in  Walton  v.  Shelley  wquld  have 
screened  the  party  charged  with  the  usury,  and  would  have  sub- 
jected the  defendants  to  pay  ;  but  the  rule  I  contend  for  would 
have  visited  the  consequences  of  the  usury  upon  the  usurer.  In 
the  suit  by  Derby  Bank  against  the  plaintiffs  in  New  York,  if  E. 
and  A.  Townsend  had  not  been  excluded  from  testifying  on  the 
ground  that  they  were  parties  to  tlie  bill,  then  the  plaintiffs  (ad- 
mitting the  usury  existed  as  conceded  by  the  pleadings)  would 
have  made  good  their  defence,  and  the  Derby  Bank  would  have 
had  a  complete  remedy  against  their  indorser,  who  is  stated  to  be 
the  usurer.  But  the  application  of  that  rule  has  effectually  pro- 
tected him. 


TOWNSEND    V.    BUSH.  521 

In  this  case,  tliere  would  liave  been  no  difficulty,  had  it  not  been 
for  the  failure  of  E.  and  A.  Townsend.  As  the  plaintiffs  indorsed 
and  the  defendants  accepted  as  sureties  for  them,  though  their  in- 
dorsements and  acceptance  were  void  as  they  were  made  to  secure 
the  usury  to  LeffingwcU ;  yet  if  they  had  been  subjected  to  pay, 
they  could  clearly  have  recovered  of  E.  and  A.  Townscrtd  for 
money  paid  by  them  as  sureties  ;  for  in  the  implied  promise  to 
indemnify  there  was  no  usury,  as  they  were  unacquainted  with  the 
nature  of  the  transaction  between  Leffingwell  and  them.  But  now, 
by  their  failure,  they  have  lost  their  remedy  ;  the  application  of 
different  rules  by  the  courts  in  the  State  of  New  York  and  Con- 
necticut has  subjected  the  plaintiffs  to  suffer  a  loss  by  the  bank- 
ruptcy of  E.  and  A.  Townsend,  which  the  defendant  must  have 
sustained,  if  the  bill  had  not  been  usurious.  This  loss,  however, 
is  owing  to  the  bankruptcy  of  E.  and  A.  Townsend,  and  not  to  any 
preconcerted  plan  to  cheat  them. 

As  to  the  question  respecting  the  usury ;  it  appears  from  the 
facts  stated,  that  on  a  contract  between  Leffingwell  and  E.  and  A. 
Townsend,  they  were  to  draw  a  bill  on  Bush,  in  favor  of  E.  and 
A.  Townsend,  to  be  accepted  and  indorsed  ;  and  on  this  security 
the  money  was  to  be  loaned  at  twelve  per  cent.  Here  the  drawing, 
accepting,  and  indorsing  were  to  secure  the  usury  to  Leffingwell ; 
and  though  the  acceptors  and  indorsers  were  ignorant  of  the 
usury,  yet  this  does  not  prevent  the  transaction  from  being  usuri- 
ous ;  for  it  was  manifestly  a  contrivance  to  evade  the  statute,  and 
if  allowed  of,  usury  might  be  practised  with  impunity. 

The  otlier  judges  concurred. 

New  trial  to  be  granted. 

See  preceding  and  following  cases. 


522  EVIDENCE. 


Royal  Thayer  v.  William  Grossman. 

(1  Metcalf,  416.     Supreme  Court  of  Massachusetts,  September,  1840.) 

WTien  indorser  competent  to  prove  payment.  — In  an  action  by  the  indorsee  against  the 
maker  of  a  note  indorsed  overdue,  the  indorser  is  competent  to  sliow  payment 
before  the  note  was  indorsed. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Shaw,  C.  J.  This  case  comes  before  the  Court  by  exceptions 
from  the  Court  of  Common  Pleas.  The  action  is  on  a  promissory 
note,  by  an  indorsee  against  the  promisor,  tlie  note  being  dated 
November,  1832,  payable  on  demand  to  the  promisee  or  his  order, 
and  indorsed  to  the  plaintiff.  The  defendant  offered  the  indorser 
as  a  witness,  to  prove  payment  of  the  note  before  the  indorsement ; 
but  the  presiding  judge  at  the  trial  rejected  this  testimony.  The 
ground  of  this  rejection  was,  as  we  understand  by  the  argument, 
the  rule  laid  down  in  Churchill  v.  Suter,  4  Mass.  156,  that  an 
indorser  shall  not  be  permitted  by  his  testimony  to  invalidate  a 
security,  which  he  has  put  in  circulation,  and  given  credit  to  by 
his  indorsement. 

We  do  not  think  it  necessary  now  to  consider  at  large  the  au- 
thority of  the  rule  in  question,  as  a  rule  of  law  in  this  State.  It 
was  first  formally  laid  down,  in  the  time  of  Lord  Mansfield,  in  the 
case  of  Walton  v.  Shelley,  1  T.  R.  296.  It  was  afterwards  over- 
ruled in  the  same  Court,  the  Court  of  King's  Bench,  in  the  time 
of  Lord  Kenyon,  by  three  judges  against  one ;  Mr.  Justice  Ash- 
hurst,  who  had  concurred  in  the  former  opinion,  dissenting.  Jor- 
daine  v.  Lashbrooke,  7  T.  R.  601.  Both  these  cases  were  before 
the  Court  when  the  t'ule  was  sanctioned  in  this  Commonwealth. 
Warren  v.  Merry,  3  Mass.  27  ;  Churchill  i\  Suter,  4  Mass.  156. 
It  continued  to  be  acted  on  as  a  settled  rule  here,  and  was  again 
considered  and  confirmed  in  the  case  of  Packard  v.  Richardson, 
17  Mass.  122.  It  was  adopted  in  1802,  by  a  majority  of  three  to 
two,  in  the  Supreme  Court  of  New  York  ;  Radcliff  and  Keiit,  JJ., 
dissenting.  Winton  v.  Saidler,  3  Johns.  Cas.  185.  But  it  was 
afterwards  overruled,  and  has  ceased  to  be  regarded  as  a  rule  of 
law  in  that  State.     Stafford  v.  Rice,  5  Cow.  23  ;  Williams  v.  Wal- 


THAYER    V.    GROSSMAN.  623 

bridge,  3  Wend.  415.     Ii^  Connecticut,  the  rule  has  been  rejected 
by  a  formal  decision  in  1818.     Townsend  v.  IJush,  1  Conn.  200.' 

But  supposing  the  rule  settled  for  this  Comraonwealtii,  l)y  a 
course  of  decisions  too  direct  and  uniform  to  be  now  drawn  in 
question,  still  it  becomes  necessary  to  examine  the  rule  itself,  to 
ascertain  its  extent,  limits,  and  qualifications,  in  order  to  deter- 
mine whether  the  present  case  is  within  it.  The  general  rule  is, 
that  any  person,  not  infamous,  or  interested  in  the  event  of  the 
cause,  may  be  a  witness  ;  and  it  is  manifest  that  the  rule  in  ques- 
tion, which  excludes  a  witness  on  the  grounds  of  public  policy,  is 
an  excei)tion  to  the  general  rule ;  and  an  exception  ought  not  to 
be  extended  beyond  the  limits  to  which  those  reasons  of  policy 
fairly  carry  it. 

In  Walton  v.  Shelley,  the  rule  laid  down,  as  the  rule  founded 
on  public  policy,  was,  that  no  party  who  has  signed  a  paper  or 
deed  shall  ever  be  permitted  to  give  testimony  to  invalidate  the 
instrument.  Very  shortly  after,  in  the  case  of  Bent  v.  Baker,  3 
T.  R.  27,  some  of  the  judges  in  alluding  to  Walton  v.  Shelley, 
take  care  to  confine  the  rule  to  the  case  of  negotiable  instruments, 
upon  the  ground  that  a  man  shall  not  by  putting  in  circulation  a 
negotiable  instrument,  which  any  man  may  take  and  make  himself 
a  holder  of,  and  which  passes  solely  upon  the  credit  of  the  names 
of  the  parties  appearing  upon  it,  hold  out  false  colors  to  the 
public.  And  almost  the  entire  argument  of  Mr.  Justice  Ash- 
hurst,  in  Jordaine  v.  Lashbrookc,  in  support  of  the  rule  of 
Walton  V.  Shelley,  was  founded  upon  the  policy  of  giving  security 
to  negotiable  instruments,  put  into  circulation  in  the  course  of 
business. 

In  Warren  v.  Merry,  3  Mass.  27,  the  rule  and  the  reasoning  are 
confined  to  the  case  of  negotiable  securities,  and  this  rule  is  ex- 
pressly so  limited  by  a  decision  in  Loker  v.  Haynes,  11  Mass.  498. 
In  Churchill  v.  Suter,  4  Mass.  156,  after  considering  the  author- 
ities, and  considering  them  as  leaving  the  point  unsettled,  the 
Court  proceed  to  consider  the  case  on  principle.  They  confine  the 
rule  to  the  case  of  negotiable  securities ;  and  the  whole  course  of 
the  reasoning  further  limits  this  rule  to  securities  negotiated  in 
the  course  of  business,  and  which  are  not  dishonored.  Tiie  Court 
recognize  tlic  general  rule,  that  in  order  to  give  security  to  the 
circulation  of  negotiable  paper,  in  an  action  between  indorser  and 
promisor,  the  consideration  cannot  be  inquired  into.    An  exception 

1  Ante,  607. 


524 


EVIDENCE, 


to  this  rule  arises  from  the  statutes  of  usury  and  gaming,  which 
declare  securities,  given  on  a  gaming  or  usurious  consideration, 
absolutely  void ;  and  such  defence  therefore  may  be  taken  advan- 
tage of  by  a  promisor,  in  a  suit  by  an  indorsee.  And  therefore 
the  rule  of  policy  is  mainly  confined  to  the  case  of  a  defence  on  the 
ground  of  a  gaming  or  usurious  consideration,  which  by  force  of 
the  statutes  in  question  affects  these  securities  with  a  secret  taint, 
which  cannot  be  known  to  an  indorsee. 

In  the  case  of  Fox  v.  Whitney,  16  Mass.  118,  the  rule  is  still 
further  limited  and  explained,  by  the  considerations  of  public 
policy  on  which  it  was  founded.  The  general  rule  is  recognized, 
but  it  is  held  to  apply  only  to  a  case  where  a  man  indorses  a  nego- 
tiable security,  and  by  that  act  gives  a  currency  and  credit  to  it;  and 
it  was  held  that  it  did  not  apply  to  a  case  between  original  parties, 
each  of  wliom  was  conusant  of  all  the  facts.  The  suit,  in  that  case, 
being  by  the  representative  of  the  promisee  against  the  representa- 
tive of  the  promisor ;  a  party  to  the  note,  as  co-promisor,  was  held 
to  be  a  competent  witness,  to  prove  the  note  given  on  a  usurious 
consideration,  and,  as  the  law  then  stood,  void. 

In  the  case  of  Barker  v.  Prentiss,  6  Mass.  430,  Taber,  one  of  the 
indorsers,  was  admitted  to  prove  that  theindorsement  was  intended 
to  be  limited,  and  that  the  indorsee  knew  it.  The  reasoning  of 
the  Court  obviously  confines  the  rule  in  Churchill  v.  Suter,  so  as 
to  prohibit  a  party  to  a  usurious  or  gaming  negotiable  security, 
which  is  void  in  the  hands  of  an  innocent  purchaser,  from  impeaching 
it  in  the  hands  of  such  purchaser.  And  they  held  that  a  party  to 
such  security  may  be  a  witness  to  prove  subsequent  facts,  which 
admit  the  legality  of  the  instrument  in  its  original  form.  The 
authority  of  this  case,  on  other  points,  has  been  often  called  in 
question ;  but  I  am  aware  of  no  case,  in  which  the  point  now  stated, 
has  been  doubted. 

Taking  this  case  as  thus  stated,  it  would  seem  that  a  party  is 
restrained  from  testifying  only  as  to  facts  which  render  the  security 
void  in  its  creation,  and  that  consistently  with  the  rule,  an  in- 
dorser,  if  not  interested,  might  be  called  to  prove  payment  before 
he  indorsed  the  note,  being  a  fact  subsequent  to  its  creation  and 
not  rendering  it  originally  void.  Tliis  is  opposed,  apparently,  to 
what  is  implied  at  least,  if  not  decided,'  in  Warren  v.  Merry,  3 
Mass.  27.  That  was  an  action  by  an  indorsee  against  theindorser, 
and  the  maker  was  held  admissible  to  prove  that  he  paid  the  plain- 
tiff after  the  indorsement,  and  before  the  note  was  payable.     But 


THAYER   V.   GROSSMAN.  525 

the  remarks  of  the  Court  seem  to  imply  that  a  i)ayee  would  not  be 
admitted  to  prove  payment  to  himsuli'  before  his  indorsement.  It 
may,  however,  be  remarked,  that  if  a  note  is  paid  before  it  is  due, 
and  is  afterwards  indorsed,  before  it  is  due,  to  one  who  has  no 
notice  of  the  payment,  such  payment  is  no  defence  to  a  suit  by  the 
indorsee  against  the  promisor. 

A  similar  princii)le  seems  to  have  been  adopted  in  Parker  v. 
Hanson,  7  Mass.  47U,  where  an  indorser  was  called  to  prove  that  a 
note  had  been  fraudulently  altered  in  the  date.  The  Court  say  he 
is  not  within  the  rule  ;  the  note  not  being  objected  to  as  originally 
void,  but  as  having  been  fraudulently  altered. 

Perhaps  the  case  of  Knights  v.  Putnam,  3  Pick.  184,  may  be 
considered  as  countenancing  the  rule,  that  a  note  indorsed  in  .the 
ordinary  course  of  business  cannot  be  impeached  by  the  testimony 
of  the  indorser,  for  any  cause  existing  at  the  time  of  the  indorse- 
ment. This  question  will  therefore  deserve  consideration,  when  it 
shall  expressly  arise  for  adjudication. 

In  a  review  of  the  cases,  that  of  Butler  v.  Damon,  15  Mass.  223, 
deserves  consideration.     It  implies  that  the  principle  of  Churchill 
V.  Suter  would  so  apply,  as  to  exclude  a  party  who  had  indorsed  a 
note  after  it  was  due,. as  well  as  one  who  had  indorsed  it  before  it 
was  due,  from  showing  facts  antecedent  to  the  transfer,  to  defeat  a 
holder  of  his  recovery.     The  opinion  does  not  state  this  ;  but  it  may 
be  implied  from  the  fact,  which  appears  by  a  comparison  of  the 
dates,  that  in  that  case  the  note  was  overdue,  when  indorsed.     But 
it  is  manifest  from  the  very  brief  report  of  that  case,  that  the  atten- 
tion of  the  Court  was  not  drawn  to  that  distinction  ;  nor  does  the 
remark  of  the  judge,  who  gave  the  opinion,  refer  to  it.     But  what 
is  a  more  material  observation  upon  that  case  as  an  authority  is 
this  ;  that  the  indorser  had  not  been  offered  as  a  witness,  but  the 
,  defendant  had  been  allowed  to  give  in  evidence,  not  the  testimony, 
but  the  declarations  of  the  indorser,  made,  after  the  indorsement, 
to  the  plauitiff.     This  was  obviously  inadmissible.     It  could  not  be 
received  as  an  admission,  because  made  after  his  interest  had 
ceased,  and  he  could  not  confess  away  a  title  he  had  given  by  his 
indorsement ;    nor  as  proof  of  any  fact,  because  it  was  iiearsay. 
The  point,  whether  the  indorser  could  have  been  received  as  a  wit- 
ness, having  indorsed  the  note  after  it  was  due  and  dishonored, 
was  not  before  the   Court,  and  the  cause  was  decided  on  other 
grounds.     As  an  authority,  therefore,  that  case  has  but  a  slight 
bearing  upon  the  present. 


526  EVIDENCE.  • 

From  this  view  of  the  authorities,  and  assuming  that  the  rule, 
as  laid  down  in  Churchill  v.  Huter,  is  the  true  rule  of  law  in  this 
Commonwealth,  we  think  it  will  appear  to  be  confined  to  negotiable 
bills  and  notes,  actually  indorsed  and  put  into  cii'calation  by  the 
witness,  with  a  view  to  give  them  currency  as  negotiable  securities. 
The  object,  which  the  law  has  in  view,  is  to  give  a  secure  currency 
and  circulation  to  negotiable  securities,  taken  in  the  ordinary 
course  of  business  by  an  innocent  indorsee,  without  notice  of  its 
dishonor.  But  it  is  no  object  of  the  law,  or  of  public  policy,  to 
give  currency  to  dishonored  bills ;  and  a  note  overdue  carries 
notice  of  its  own  dishonor  on  its  face.  An  indorsee  of  such  a  note 
is  presumed  by  law  to  have  notice  of  every  defect  which  may  exist, 
eitlier  in  the  original  creation  of  the  note  or  subsequently  ;  he  takes 
it,  therefore,  not  upon  the  credit  of  the  names  it  bears,  but  solely 
upon  the  faith  he  may  have  in  the  indorser.  He  takes,  in  legal 
contemplation,^  legal  title,  indeed,  that  is,  a  right  to  sue  in  his 
own  name  ;  but  he  takes  a  right  to  recover  only  as  the  indorser 
himself  could  recover,  and  of  course  he  takes  with  full  constructive 
notice  of  all  grounds,  legal  and  equitable,  which  the  defendant 
might  have,  if  the  suit  were  brought  by  the  promisee,  and  subject 
to  all  the  same  species  of  defence.  As  between  the  original  parties, 
and  to  a  note  not  negotiated  and  put  in  circulation,  we  have  seen 
the  rule  does  not  apply.  Fox  v.  Whitney,  16  Mass.  118.  By  the 
rules  of  law,  an  indorsee,  taking  a  note  overdue,  takes  it  subject  to 
every  defence ;  and  that  case,  therefore,  is  an  authority  for  the  ad- 
mission of  an  indorser,  when  the  plaintiff  can  claim  only  the  same 
rights  as  if  the  suit  were  between  the  original  parties.  The  author- 
ities are  so  numerous  and  explicit,  that  the  indorsee  of  a  dishonored 
note  takes  it  subject  to  all  defences,  that  it  is  unnecessary  to  cite 
them.     Sargent  i\  Southgate,  5  Pick.  312. 

In  applying  these  rules  to  the  present  case,  the  Court  are  of 
opinion  that  the  case  was  not  within  the  principle  of  Churchill  v. 
Suter,  because  the  note  was  overdue  and  dishonored,  when  it  was 
indorsed  to  the  plaintiff. 

In  the  first  place,  it  appears  that  this  was  a  note  payable  on  de- 
mand, and  the  evidence  is,  that  it  was  indorsed  nearly  two  years 
after  its  date.  What  is  the  shortest  time,  within  which  a  note  on 
demand  will  be  deemed  a  dishonored  note,  has  not  been  explicitly 
settled.  But  we  have  no  hesitation  in  considering  such  a  note  as 
overdue  and  dishonored  in  a  much  shorter  time  than  two  years. 


THAYER   V.    GROSSMAN.  527 

In  Spring  v.  Lovett,  11  Pick.  417,  it  was  considered  that  an 
indorser  would  be  a  competent  witness  to  prove  that  the  note  was 
indorsed  after  it  was  due.  But  there  is  no  necessity  of  relying  on 
this  point,  in  the  present  case,  because  it  appears  by  other  evidence, 
indcj)endent  of  the  testimony  of  the  indorser.  Before  coming  to 
the  (juestion,  therefore,  wlicther  the  indorser  in  this  case  was  a 
competent  witness,  it  is  proved  by  unobjectionable  evidence,  that 
the  plaii) tiff  took  the  note  by  indorsement,  as  a  dishonored  note. 
In  Pennsylvania,  where,  it  is  believed,  the  rule  of  AValton  y.  Shelley 
is  still  in  force  as  a  rule  of  evidence,  it  is  held  that  it  only  applies 
to  a  negotiable  security,  indorsed  and  put  into  circulation  in  the 
usual  course  of  business,  and  that  it  does  not  apply  to  a  note  overdue 
or  otherwise  dishonored.  Baird  v.  Cochran,  4  Serg.  &  Rawle,  397. 
This  appears  to  us  to  be  a  just  limitation  and  modification  of  the 
rule  relied  upon,  and  supported  as  well  by  authorities,  as  upon  the 
reasons  and  principles  of  public  policy,  on  which  the  rule  itself  is 
founded.  The  Court  are  tlicreforc  of  opinion,  that  Waters,  the 
indorser,  ought  to  have  been  admitted  as  a  witness,  to  prove  pay- 
ment of  the  note  before  its  indorsement ;  and  because  he  was  not 
so  admitted,  the  exceptions  must  be  sustained,  and  a  new  trial 
had. 

Heiu  trial  to  be  had  at  the  bar  of  the  Court  of  Cor)imon  Pleas. 

No  branch  of  the  law  is  in  greater  confusion  in  this  country  than  that  discussed 
in  the  three  preceding  cases.  It  is  now  too  late  to  hope  for  any  uniform  doctrine 
upon  the  subject  in  the  American  courts.  We  have  presented  three  well-consid- 
ered cases,  the  first  adopting,  the  second  rejecting,  and  the  third  substantially 
rejecting,  the  doctrine  of  Walton  v.  Shelley,  eacli  recognized  and  followed  in  dif- 
ferent States  of  the  Union,  and  each  supported  by  higlily  resjiectable  authority. 

We  cannot  expect  to  add  any  thing  to  the  learning  that  has  been  displayed 
upon  the  subject ;  and  will  merely  state  that  in  our  opinion  tlie  doctrine  of  Town- 
send  V.  Bush  and  of  Thayer  v.  Grossman  presents  the  most  just  and  sound  view 
of  tlie  law.  In  cases  of  usury,  and  between  immediate  parties,  or,  what  is  the 
same  tiling,  as  against  an  indorsee  who  is  not  a  bona  fide  holder,  in  due  course  of 
trade,  the  signer  may  invalidate  the  paper,  according  to  those  cases ;  but  this  is 
the  extent  of  the  rule  ;  and  this  is  virtually  the  present  doctrine  of  the  English 
courts,  and  has  been  ever  since  Walton  v.  Shelley  was  overruled.  See  Chitty, 
Bills,  G69.  Our  reasons  for  maintaining  this  view  are  substantially  those  advanced 
in  the  above-named  cases  of  Townsend  v.  Bush  and  Thayer  v.  Crossman,  and  need 
not  be  repeated. 

The  rule  of  exclusion  has  been  aduptcd  in  the  following  States.  In  Maine, 
Clapp  V.  Hanson,  15  Me.  (3  Shepl.)  .Uo ;  in  Iowa,  Strang  r.  AVilson,  1  Morris, 
84 ;  in  Ohio,  Treon  v.  Brown,  14  Ohio,  482 ;  in  Mississippi,  Drake  c.  Henly, 
Walker,  541. 


528  EVIDENCE. 

The  rule  has  been  rejected  in  New  York,  Stafford  i\  Rice,  5  Cow.  23 ;  in 
Kentucky,  (iorhani  v.  Carroll,  3  Litt.  221;  in  Alabama,  Todd  v.  Stafford,  1 
Stewart,  199 ;  in  Maryland,  Ringgold  v.  Tyson,  3  Harris  &  J.  172 ;  in  New 
Jersey,  Freeman  v.  Brittin,  2  Harr.  192 ;  in  Virginia,  Taylor  o.  Beck,  3  Rand. 
31G ;  in  Tennessee,  Stump  v.  Napier,  2  Yerg.  35 ;  in  New  Hampshire,  Haines 
V.  Dennett,  11  N.  Hamp.  180;  in  "Vermont,  Nichols  v.  Holgate,  2  Aiken,  138; 
but  see  Chandler  v.  Mason,  2  Vt.  193 ;  in  Missouri,  Bank  of  Missouri  v.  Hull,  7 
Mo.  273. 

But  one  Avho  signs  in  the  usual  manner  of  an  indorser  cannot  show  that  it  was 
the  intention  of  the  parties  that  he  should  merely  guarantee  the  signature  of  the 
payee  to  be  genuine.  This  would  be  to  vary  the  terms  of  a  written  contract  by 
parol.  Prescott  Bank  v.  Caverly,  7  Gray,  217.  See  Riley  v.  Gerrish,  9  Cash. 
10-1 ;  Hall  V.  Newcomb,  ante,  p.  131 ;  Bank  of  the  United  States  v.  Dunn,  ante, 
p.  503. 


The  Commercial  Bank  of  Albany  v.  George  W.  Strong. 

(28  Vermont,  316.     Supreme  Court,  Febi-uary,  185G.) 

Sufficiency  of  proof.  —  A  decision  of  the  county  Court,  as  to  the  suflBciency  of  certain 
proof,  held,  to  refer  to  its  character,  or  quality  and  competency,  and  not  merely  to 
its  quantity  or  force,  in  convincing  the  mind. 

Where  notice  should  he  sent.  —  A  notice  of  the  dishonor  of  a  bill  of  exchange,  or  promis- 
sory note,  should  be  addressed  to  an  indorser  at  the  place  of  his  residence,  unless 
he  is  shown  to  have  a  place  of  private  business  elsewliere.  The  office  of  a  corpora- 
tion, of  which  lie  is  an  officer  (in  this  case  the  i)resident),  in  a  town  difierent  from 
that  in  which  lie  resides,  will  not,  in  the  absence  of  proof  be  regarded  as  his 
private  business  place  ;  and  a  notice  addressed  to  him  there  will  not  be  sufficient. 

Number  of  Witnesses.  —  That  a  notice  to  an  indorser  was  seasonably  deposited  in  the 
post-office  need  not  be  proved  by  a  single  witness.  If  more  persons  than  one  par- 
ticipated in  the  act,  the  testimony  of  all  of  them  should  be  adduced. 

Consideration  of  the  probability  as  to  the  manner  in  which  the  notice  in  the  present 
case  was  directed  and  sent  to  the  defendant ;  and  of  the  testimony,  in  reference  to 
its  legal  sufficiency,  to  prove  that  the  notice  addressed  to  the  defendant  as  indorser, 
was  put  into  the  post-office,  seasonably  to  charge  him. 

Assumpsit  against  the  defendant  as  an  indorser  of  a  bill  of  ex- 
change, drawn  by  the  Rutland  &  Washington  Railroad  Company, 
by  George  W.  Strong,  president,  upon,  and  accepted  by  the  treas- 
urer of  that  company,  dated  at  the  office  of  the  Rut.  &  W.  R.  Co., 
West  Poultney,  and  made  payable  to  the  order  of  Eastman  and  Page, 
at  the  American  Exchange  Bank,  New  York,  indorsed  by  Eastman 
and  Page,  John  Bradley,  George  W.  Strong,  J.  W.  Baldwin,  and  M. 
Clark.  Plea,  the  general  issue ;  trial  by  the  Court,  September 
term,  1855,  —  Pierpoint,  J.,  presiding. 


COJtMERCIAL    BANK    OF    ALBANY   V.    STRONG.  529 

Tlie  drawing,  acceptance,  indorsements,  presentment,  non-pay- 
ment, and  protest  of -the  bill  were  duly  proved.  The  testimony 
tending  to  prove  notice  to  the  defendant  of  the  non-payment  and 
protest  was  as  follows  :  — 

The  notary,  by  whom  the  bill  was  protested,  deposed  that  he 
enclosed  to  the  cashier  of  the  plaintiffs  a  notice,  in  due  form,  to 
the  defendant  as  indorsor.  Attached  to  his  deposition  were  three 
notices,  produced  and  exhibited  to  him  by  the  defendant,  which 
the  notary  testified  were  filled  up  in  his  handwriting,  but  he  could 
not  testify  further  as  to  their  identity.  One  of  these  notices  was 
addressed,  on  the  inside,  to  "  George  W.  Strong,"  and  purported  to 
be  a  notice  to  him  as  indorser,  and  was  directed  on  the  outside 
to  "  George  W.  Strong,  Esq.,  West  Poultney,  Vt. ;  "  another  was 
addressed,  on  the  inside,  to  "  George  W.  Strong,  Pres't,  Rut.  & 
Wash.  R.  Co.,"  and  purported  to  be  a  notice  to  him  as  drawer, 
and  had  the  word  "■'  Rutland  "  on  the  lower  right-hand  corner,  in 
writing  different  from  that  of  the  notary  ;  and  the  other  was  ad- 
dressed on  the  inside  to  "  Geo.  W.  Strong,  Esq.,  Pres't,  <tc.,  and 
to  Geo.  W.  Strong,"  and  purported  to  be  a  notice  to  him,  both  as 
drawer  and  indorser,  and  w^as  postmarked  with  the  New  York 
city  post-office  stamp,  and  was  directed  on  the  outside  to  "  Geo.  W. 
Strong,  Esq.,  Pres't,  and  Geo.  W.  Strong,  West  Poultney,  Yt." 

William  D.  Case  testified  that  during  the  month  of  June,  1854, 
he  was  a  clerk  in  the  Commercial  Bank  of  Albany  ;  that  it  was 
his  special  duty  to  make  a  record,  in  a  book  kept  for  that  purpose, 
of  the  notices  of  protests  of  the  non-payment,  (fcc,  of  notes,  bills 
of  exchange,  <fec.,  received  at  the  bank,  and  to  send  said  notices  to 
the  different  persons,  whose  paper  had  been  protested  ;  tiiat  in  the 
forenoon  of  the  twentieth  of  June,  1854,  said  bank  received  by 
mail,  from  the  city  of  J^ew  York,  a  notice  of  the  protest  for  non- 
payment of  the  bill  of  exchange  or  draft  in  question,  and  that 
enclosed  with  said  notice  were  four  notices  in  all  respects  like  it, 
addressed  to  George  W.  Strong,  Merritt  Clark,  James  W.  Baldwin, 
and  John  Bradley  ;  that  on  the  twentieth  of  June,  1854,  in  the 
forenoon,  and  immediately  after  the  receipt  by  said  bank,  of  said 
notice  of  said  protest,  he  enclosed  one  of  said  four  notices  of  pro- 
test, which  was  addressed  to  George  W.  Strong,  in  an  envelope, 
which  was  addressed  by  him  to  "  George  W.  Strong,  Rutland,  Yer- 
mont,"  whose  place  of  residence  w'as  communicated  to  him  by  the 
cashier  of  said  bank,  on  his  inquiry  for  the  residence  of  said  Strong, 

34 


530  EVIDENCE. 

at  the  time  of  addressing  said  letter  ;  that  after  enclosing  said 
notice  in  the  envelope  addressed  to  said  Strong,  he  laid  it  on  his 
desk,  to  be  taken  and  deposited  in  the  post-office  in  Albany,  and 
afterwards,  on  that  day,  the  letter  was  gone  from  his  desk ;  that  it 
was  the  daily  and  special  duty  of  Edwin  W.  Belden,  the  youngest 
clerk,  to  take  all  letters  from  the  bank  to  the  post-office,  and  in  his 
absence  it  was  the  duty  of  James  P.  White,  the  next  oldest  clerk, 
and  in  the  absence  of  both,  he,  said  Case,  took  the  letters ;  that  it 
was  his  daily  and  uniform  practice  to  place  all  his  letters,  including 
those  enclosing  notices  of  protest,  on  his  desk  ;  that  each  clerk  had 
his  separate  desk,  and  no  person,  excepting  the  officers  of  said 
bank,  could  have  access  to  them;  that  he  did  not  know  the  residence 
of  said  Strong,  at  the  time  of  enclosing  said  notice  to  him,  but  was 
informed  and  directed  by  the  cashier  so  to  direct,  and  he  did  so 
direct  U ;  that  the  word  "  Rutland,"  at  the  lower  right-hand  corner 
of  the  notice,  addressed  to  George  W.  Strong,  Pres't  of  the  Rut. 
&  Wash.  R.  Co.,  attached  to  the  deposition  of  the  notary,  was  made 
by,  and  in  his  (the  said  Case's)  handwriting. 

Edwin  W.  Belden  deposed  that  on,  prior,  and  subsequent  to  the 
twentieth  of  June,  1854,  he  was  a  clerk  in  the  Commercial  Bank 
of  Albany,  and  that  if  he  took  a  letter  from  the  desk  of  William 
D.  Case,  on  the  said  twentieth  of  June,  1854,  or  at  any  other  time, 
for  the  purpose  of  depositing  the  same  in  the  post-office,  at  Albany, 
he  did  so  deposit  the  same,  on  the  same  day  on  which  it  was  taken 
for  deposit  in  said  office ;  that  it  was  his  duty  to  take  the  letters 
from  the  said  bank  to  the  post-office,  and  he  usually  did  so  during 
the  month  of  June,  1854  ;  that  he  generally  took  the  letters  from  the 
bank  to  the  post-office,  and  had  frequently  taken  letters  from  the 
desk  of  Case,  and  deposited  them  in  the  post-office  at  Albany  ;  and 
on  his  cross-examination  he  deposed  that  he  had  no  recollection  of 
ever  taking,  or  putting  into  the  post-office,  a  letter  addressed  to  the 
defendant. 

James  P.  White  deposed  to  substantially  the  same,  in  effect, 
with  Belden,  that  if  he  took  such  a  letter  from  the  desk  of  Case, 
to  deposit  in  the  post-office,  he  did  so  deposit  it  on  the  same  day,  &c. 

The  foregoing  was  all  the  testimony  upon  this  point,  except  that 
it  appeared  that  the  residence  of  the  defendant  was  in  Rutland, 
and  that  the  office  of  the  Rutland  &  Washington  Railroad  Company 
was  in  West  Poultney. 

The  Court  found  the  facts  proved  as  stated  in  the  foregoing 


COMMERCIAL    BANK    OF    ALBANY    V.    STRONG.  531 

testimony  of  the  witnesses,  but  upon  that  evidence  they  decided 
that  there  was  not  sufficient  proof  of  notice  to  the  defendant,  to 
charge  him  as  indorscr,  and  rendered  judgment  in  favor  of  tho 
defendant. 

Exceptions  by  the  plaintids. 

Redfield,  C.  J.  This  is  an  action  upon  a  bill  or  draft  against 
the  defendant,  *s  indorser.  The  only  question  made  in  the  case 
is  in  regard  to  the  proof  of  notice  of  dishonor  to  the  defendant. 
The  case  being  tried  in  the  Court  below,  without  the  intervention 
of  the  jury,  some  question  has  been  made  upon  the  bill  of  excep- 
tions, whether  any  question  of  the  sufficiency  of  the  evidence  of 
notice  is  properly  before  this  Court.  But  as  the  testimony  is 
detailed  very  much  at  length,  and  the  Court  say  they  "  found  the 
facts  proved,  as  stated  in  the  testimony  of  the  witnesses,"  and  also 
that,  upon  the  foregoing  evidence,  which  is  certified  to  be  all  the 
evidence  given  upon  this  point,  they  decided  that  "  there  was  not 
sufficient  proof  ol  notice  to  the  defendant,  to  charge  him  as  in- 
dorscr," we  can  only  conclude  that  they  did  refer  to  the  character 
and  competency  of  the  proof,  and  not  to  the  quantity  ;  to  the 
quality,  rather  than  the  amount  and  force  of  the  evidence  in  con- 
vincing the  mind. 

We  must,  then,  see  what  was  the  character  of  the  evidence 
given. 

I.  We  do  not  think  there  is  any  doubt  as  to  the  particular  notices 
sent,  either  from  New  York,  where  the  bill  was  made  payable,  and 
where  it  was  protested,  or  from  Albany,  where  the  bill  seems  first 
to  have  been  negotiated.  It  is  obvious  that  the  notice,  having  the 
New  York  city  post-mark  upon  it,  and  which  is  addressed  to  the 
defendant  in  the  double  capacity  of  president  of  the  Rutland  & 
Washington  Railroad,  on  whose  behalf  he  drew  the  bill,  and  also 
as  indorscr,  in  his  private  and  personal  capacity,  was  sent  by  the 
notary,  protesting  the  bill,  direct  from  New  York  to  West  Poultney, 
where  the  railroad  office  seems  to  have  been  kept.  But  as  the 
defendant,  at  the  time,  had  his  residence  in  Rutland,  we  do  not 
regard  a  notice  addressed  to  hito  at  West  Poultney  sufficient  to 
charge  him  as  indorser,  there  being  nothing  to  show  that  he  had 
any  private  business  place  at  West  Poultney.  No  case  of  that 
character  has  been  shown  to  us,  and  the  general  course  of  decision 
is  certainly,  that  notice  to  an  indorser  must  be  sent  to  the  place 


632  EVIDENCE. 

of  his  residence,  unless  lie  is  shown  to  have  his  place  of  hnsiness 
elsewhere.  There  may  be  cases  where  one  l|as  different  places  of 
business,  that  notice  addressed  to  either  is  sufficient.  But  although 
the  defendant  is  not  shown  licre  to  have  any  particular  place  of 
business  in  Rutland,  distinct  from  his  dwelling,  yet,  as  he  had 
no  place  of  private  business  out  of  Rutland,  his  dwelling  was  his 
place  of  business,  to  which  notice  should  be  addressed  to  charge 
him  as  indorser.^  ♦ 

II.  "We  think  it  is  obvious  that  the  notary,  having  sent  this 
double  notice  direct  from  New  York,  would  not  have  probably  sent 
another  addressed  to  the  defendant  at  the  same  place,  as  indorser 
only.  The  strong  probability  is,  that  he  sent  two  distinct  notices 
to  Albany  for  the  defendant,  one  as  drawer,  on  behalf  of  the  rail- 
road, and  the  other  as  indorser  only.  These  being  put  into  each 
other,  and  the  outside  one  addressed,  upon  the  back,  West  Poult- 
ney.  Case,  the  teller,  doubtless  took  them  to  the  cashier,  in  the 
manner  he  testifies,  and  learning  the  residence  of  the  defendant, 
marked  it  upon  the  inside  one,  which  happens  to  be  the  one  ad- 
dressed to  the  defendant  as  president,  &c.  But  most  undoubtedly 
both  were  sent  to  Rutland  by  Case  in  the  manner  testified,  as  there 
is  no  other  reasonable  mode  of  accounting  for  their  being  in  the 
possession  of  the  defendant,  or,  indeed,  of  their  being  made  by 
the  notary,  in  addition  to  the  double  one  already  sent.  The  teller, 
indeed,  calls  it  one  notice,  and  it  was  so,  in  some  sense,  being  to 
one  person,  but  in  two  quite  different  capacities.  The  teller  might 
not  liave  recollected  precisely  the  facts,  but  it  must  have  been  so, 
to  account  for  his  own  memorandum  upon  one  of  these  notices, 
and  also  his  entry  of  the  notice  sent  to  the  defendant,  as  indorser, 
upon  the  notice  sent  to  the  Commercial  Bank,  and  produced  upon 
the  trial,  with  the  memorandum  of  the  notice  sent  to  Strong,  as 
indorser. 

III.  The  question  is  reduced  then  to  the  narrow  point,  whether 
there  was  sufficient  evidence  that  the  notice  to  the  defendant,  as 
indorser,  which  Case  testifies  he  enclosed  in  an  envelope,  and  ad- 
dressed to  the  defendant  at  Rutland,  and  which  the  county  Court 
finds  to  be  true,  and  which  there  is  no  reason  to  question,  and 
which  he  also  says  he  laid  upon  his  desk,  and  which  was  afterwards, 
on  the  same  day,  gone  from  the  desk,  was  really  shown  to  have 
been  deposited  in  the  post-office  at  Albany,  in  season  for  the  mail 

1  See  Munn  v.  Baldwin,  ante,  376,  and  note  ;  Bowling  v.  Harrison,  ante,  378,  and 
note;  Bank  of  Columbia  v.  Lawrence,  ante,  404,  and  note. 


COMMERCIAL    BANK    OF    ALBANY    V.    STRONG.  533 

of  the  next  day.  As  it  was  gone  from  the  desk  the  same  day,  tlie 
only  question  would  ^eem  to  be,  whether  the  proof  is  sullicicnt  to 
show  that  it  went  from  the  desk  directly  into  the  post-oftice.  For 
if  so,  that  will  char<^c  the  defendant,  although  the  notice  never 
reached  him.  After  that  the  conveyance  is  at  his  own  risk.'  And 
if  it  did  not  go  direct  to  the  post-office,  there  is  no  certainty 
how  long  it  might  have  been  delayed,  or  indeed  whether  it  ever 
reached  the  de[cndant,  except  that  he  had  it  in  possession  many 
months  after. 

The  cases  are  undoubtedly  very  strict  upon  this  point,  as  they 
should  lie,  in  requiring  very  great  certainty  of  proof  of  depositing 
the  notice  in  the  post-office.  But  the  cases  certainly  do  not  require 
that  tills  should  be  proved  by  a  single  witness,  who  can  swear  posi- 
tively that  he  deposited  the  notice  in  the  proper  place.  This,  in 
practice,  in  large  commercial  cities,  where  the  vast  majority  of 
such  cases  arise,  would  seem  not  generally  to  be  the  course  of 
doing  such  things.  The  depositing  of  such  letters  in  the  post- 
office,  as  of  other  notices,  is  perhaps  more  generally  done,  in  such 
places,  by  porters  and  messengers.  But  it  would  scQm  to  be  the 
rule,  that  all  who  had  any  thing  to  do  about  the  matter  of  deposit- 
ing the  notice  should  be  called.  Is  this  shown  to  have  been  done 
in  the  present  case  ? 

It  would  seem,  from  the  testimony,  that  this  bank  had  a  cashier 
and  three  clerks  to  transact  the  business.  There  is  nothing  to 
indicate  that  any  other  persons  had  any  thing  to  do  with  sending 
notices  of  dishonor  of  bills  and  notes  generally,  or  in  this  case  in 
particular.  From  the  fact  that  Case  was  upon  the  stand,  and  that 
the  uncertainty  of  this  notice  was  made  a  leading  point  in  the 
trial,  we  may  fairly  presume,  perhaps,  that  if  there  had  l)cen 
others,  having  probable  connection  with  the  transaction,  whoso 
testimony  was  not  taken  by  the  pluintitl's,  which  would  very  much 
tend  to  increase  the  uncertainty,  we  should  have  been  apprised  of 
that  fact. 

From  the  testimony  of  Case  it  seems  that  it  was  the  special  duty 
of  Case,  the  first  clerk,  to  make  out  and  deposit  in  the  post-office, 
or  see  that  it  was  done,  all  such  notices.  The  cashier  does  not 
seem  to  have  had  any  connection  with  this  notice,  or  to  have  been 
expected,  ordinarily,  to  have  any  thing  to  do  with  such  notices, 
except  probably  to  give  directions  when  applied  to  by  Case,  as  in 
the  present  case.     It  was  the  daily  and  special  duty  of  Belden,  the 

1  See  Munn  v.  Baldwin,  ante,  376,  and  note. 


534  EVIDENCE. 

youngest  clerk,  to  take  all  letters  from  the  bank  to  the  post-office, 
and  in  his  absence  the  same  duty  devolved  ypon  White,  the  next 
older  cleric,  and  in  the  absence  of  both,  the  duty  devolved  upon 
Case.  None  but  the  officers  of  the  bank  had  access  to  Case's  desk. 
The  letter  was  deposited  in  the  proper  place  for  them  to  take  to 
the  post-office,  or  where  they  often  took  them.  They  both  testify 
that  at  this  date  it  was  their  business,  in  the  manner  and  order 
stated  by  Case  to  carry  letters  from  the  bank  to  the  post  office,  and 
that  they  often  took  letters  from  Case's  desk  for  that  purpose, 
and  that  if  they  took  any  letter  on  that  day,  or  any  other,  they 
carried  it  to  the  post-office  the  same  day.  Tiicre  is  no  pretence  of 
any  motive  in  any  officer  of  the  baiik  to  detain  the  letter,  or  that 
they  would  be  liable  to  do  so  by  mistake,  or  indeed  that  any  others 
but  those  named  had  access  at- the  time  to  the  desk  of  Case,  although 
it  is  probable  the  directors  must  have  had.  But  the  probability  of 
their  carrying  off  such  a  letter,  by  design  or  mistake,  is  quite  too' 
remote  to  be  taken  into  the  account.  It  is,  perhaps,  quite  as 
probable  that  one  of  the  clerks  might  have  lost  it  upon  the  way 
to  the  post-office,  without  being  aware  of  the  loss,  and  really 
suppose  he  delivered  it  at  the  post-office,  and  that  is  not  a  con- 
tingency which  is  ever  taken  into  the  account  of  uncertainties  in 
such  cases. 

We  may  say  here,  then,  safely,  that  all  the  persons  having  any 
connection  with  the  business  of  depositing  the  letters  of  this  bank, 
at  that  time,  in  the  post-office,  or  who  would  be  likely,  upon  any 
rational  conjecture,  either  by  design  or  mistake,  to  take  such  letter 
from  the  desk,  have  testified  explicitly  that  if  they  did  take  it 
up  from  the  desk,  they  deposited  it  in  the  post-office  the  same  day. 
In  addition  to  this,  the  notice  is  found  to  have  reached  the  defend- 
ant at  some  time.  And  we  have  before  said,  if  the  letter  had 
been  dropped  by  mistake,  or  purloined,  it  would  in  all  rational 
probability  never  have  reached  its  destination.  Can  there  be, 
then,  any  longer  any  reasonable  doubt  of  the  deposit  of  this  letter 
in  the  post-office  the  same  day  it  was  written  ?  We  think  not. 
The  evidence  rises  to  a  sufficient  degree  of  certainty  to  answer 
any  demand,  even  in  a  criminal  court,  if  it  be  of  the  proper 
quality. 

The  authorities  relied  upon  to  show  this  was  not  the  case,  do 
not  seem  to  us  to  establish  any  such  proposition. 

The  proposition  in  Mr.  Chitty's  Treatise  upon  Bills,  that  it  is 
incumbent  upon  the  holder  "  to  prove  distinctly  and  by  positive 


COMMERCIAL   BANK    OF    ALBANY    V.    STRONG.  535 

evidence  that  due  notice  was  given,  and  tliat  it  cannot  be  left  to 
inference  or  presumption,"  seems  to  be  based  altogether  upon  the 
case  of  Lawson  v.  .Sherwood,  1  Stark.  314,  a  mere  nisi  prius 
decision.  The  language  of  the  author  seems  to  be  taken  from 
the  case.  But  the  case  seems  to  justify  no  such  rule  of  proof,  as 
to  cases  generally  of  this  kind.  The  witness  there  testified  that 
he  gave  notice  in  eitlier  two  or  three  days,  three  dats  not  being  in 
time,  which  is  no  testimony  at  all  of  the  fact  of  legal  notice.  It 
leaves  the  probabilities  precisely  equal,  whether  notice  was  given 
or  not,  which  is  precisely  no  proof  at  all.  Any  one  who  knew 
nothing  about  the  case,  might  safely  testify  that  he  either  did  give 
notice,  or  did  not,  which  is  this  case  as  reported. 

And  the  next  proposition  of  the  same  author  is  e(][ually  unsup- 
ported by  the  cases  referred  to.  It  ia  that  "  the  party  who  puts  a 
letter,  giving  notice  of  the  dishonor  of  a  bill,  into  the  post-office, 
must  be  able  to  swear  to  a  certainty,  and  not  doubtfully,  that  he 
put  the  letter  in  himself,  and  not  that  he  was  doubtful  whether  he 
did  not  deliver  it  to  another  clerk  to  put  it  in."  The  case  referred 
to  is  Hawkes  v.  Salter,  4  Bing.  715.  The  difficulty  here  was,  that 
the  witness  could  not  swear  whether  he  put  the  letter  in  the  post- 
office,  or  another  clerk  did  it,  and  the  testimony  of  the  other  clerk 
was  not  taken  in  the  case  ;  so  that  there  was,  in  fact,  no  testimony 
to  connect  the  letter  with  the  office.  And  the  case  of  Toosey  v. 
Williams,  1  Moody  &  M.  129,  although  more  in  point  for  the 
defendant,  as  it  seems  to  me,  than  any  other  cited,  is  by  Lord 
Tenlerdcti  put  upon  the  ground  that,  after  the  letter  was  copied  by 
the  clerk,  it  had  to  go  into  the  defendant's  hands  to  be  sealed,  and 
there  was  nothing  in  the  case  to  show  that  he  ever  returned  it  to 
the  clerk  whose  business  it  was  to  convey  it  to  the  post-office,  and 
who  testified  very  much  as  the  two  younger  clerks  do  here.  But 
here  the  letter  is  shown,  to  a  moral  certainty,  to  have  been  taken  by 
the  clerks,  and  they  testify,  if  they  took  it,  they  deposited  it  in  the 
post-office  the  same  day.  The  case  of  the  Bank  of  Yergennes  v. 
Cameron,  7  Barb.  143,  a  note  of  which  was  read  to  us,  seems  to  be 
a  case  where  there  was  no  proof  of  notice,  except  the  notice  being 
in  the  indorser's  hands  after  the  time  for  giving  it  had  expired. 
It  could  not  from  that  be  inferred,  of  course,  that  it  was  given  in 
time.^  But,  in  the  present  case,  it  is  shown  that  if  the  notice  was 
ever  deposited  in  the  office,  it  was  done  in  time,  and  the  notice 

1  See  Smedes  i;.  Utica  Bank,  20  Johns.  372. 


53G  EVIDENCE. 

being  in  the  defendant's  hands",  is  strong  confirmation  of  the 
notice  having  reached  the  office  in  due  time. 

On  the  other  hand,  the  reasoning  of  Lord  Ellenborovgh,  in 
Hcthcrington  v.  Kemp,  4  Camp.  193,  wliose  opinions  are  always 
regarded  as  good  evidence  of  the  law,  shows  very  fully  that  the 
evidence  in  tiie  present  case  ought  to  be  regarded  as  sufficient. 
"  Had  you  called  the  porter,"  says  his  lordship,  "  and  he  liad  said 
that,  altliough  he  liad  no  recollection  of  the  letter  in  question,  he 
invariably  carried  to  the  post-office  all  the  letters  found  upon  the 
table,  this  might  have  done."  "  A  letter  was  then  put  in  from 
the  defendant,"  acknowledging  the  receipt  of  a  letter  of  the  proper 
date  from  the  plaintiff,  and  Lord  Ellenborovgh  said  he  would 
presume  this  was  the  letter  written  to  inform  him  of  the  dishonor 
of  the  bill,  although  nothing  was  said  of  that  in  the  defendant's 
letter. 

The  case  of  Miller  v.  Hackley,  5  Johns.  375,  is  a  case  where  far 
more  uncertain  evidence  than  the  present  was  held  sufficient. 

In  this  last  case,  the  witness,  being  the  notary  who  protested  the 
bill,  only  testified  that  it  was  his  usual  course  to  send  notices  by 
mail,  deposited  on  the  evening  of  the  same  day  of  protest,  and  that 
he  believed  he  did  so  in  the  present  case,  and  it  was  held  sufficient. 
We  think  there  is  no  question  the  proof  in  the  present  case  should 
have  been  held  competent  to  prove  notice  to  the  defendant  of  the 
dishonor.  Judgment  reversed^  and  case  remanded. 

See  next  case  and  note. 


The  Commercial  Bank  of  Albany  v.  Merritt  Clark. 

(28  Vermont,  325.     Supreme  Court,  February,  1856.) 

Admissions.  Notice.  —  A  written  admission  by  the  indorser  of  a  bill  or  note,  tliat  he 
received  due  notice  of  its  dishonor,  tliough  strong  evidence,  is  not  conclusive  of 
the  fact  against  him.  He  may  show  tliat  the  paper  was  signed  under  a  misappre- 
hension or  mistake  as  to  the  bill  or  note  referred  to,  and  that  no  notice  of  the  dis- 
honor was,  in  point  of  fact,  given. 

Contract.  Estoppel.  —  Sucli  a  writing,  in  the  present  case,  held  not  to  operate  either 
as  an  admission  for  the  purpose  of  a  trial,  as  a  contract,  or  as  an  estoppel  in  pais. 

Assumpsit  upon  a  bill  of  exchange  against  the  defendant  as 
indorser.  Plea,  the  general  issue  ;  trial  by  the  Court,  September 
term,  1855,  —  Pierpoint,  J.,  presiding. 


COMMERCIAL    BANK    OF    ALBANY    V.    CLARK.  1)61 

The  plaiiitUr  iiitTodiiccd  the  l)ilf  of  exchange  counted  upon,  with 
the  notarial  ccrtilicate  of  protest,  together  with  a  writing  signed 
by  the  defendant,  of  which  the  followijig  is  a  copy,  viz. :  — 

"  Commercial  Bank  of  All)any  v.  M.  Clark.  Rutland  County 
Court,  Sept.  Term.  June  G,  1855.  I,  Merritt  Clark,  defendant 
in  the  ahove  entitled  cause,  acknowledge  and  say  that  I  had  legal 
and  due  notice  by  mail  of  the  protest  of  non-payment  of  the  bill 
of  exchange  or  draft  described  in  the  above-entitled  cause,  and  on 
which  I  am  an  indorser,  with  other  indorsers  on  same  bill." 

It  appeared  that  the  foregoing  admission  of  the  defendant  was 
drawn  up  by  the  attorney  for  the  plaintiff,  and  enclosed  to  the 
defendant  in  a  letter,  of  which  the  following  is  a  copy  :  — 

"  M.  Clark,  Esq.  Dear  Sir,  —  If  the  enclosed  admission  is  signed 
by  you,  it  \\\\\  save  cost  and  trouble  of  taking  testimony  in  N.  Y., 
to  prove  notice.  If  declined,  I  am  going  to  N.  Y.  last  of  next 
week,  and  shall  issue  notice  of  the  time  and  place,  &c.,  of  taking 
the  deposition,  to  prove  notice  to  you  as  indorser.  .  .  . 

"  Respectfully  yours," 
and  that,  in  answer  to  said  letter,  the  admission  was  returned, 
signed  by  the  defendant. 

The  defendant  offered  testimony  to  show  that  said  writing  was 
signed  by  him  under  a  misapprehension  of  the  facts,  and  that  at  the 
time  he  signed  it  he  had  in  his  mind  a  different  draft  from  that 
described  in  the  writ,  and  that  no  notice  of  the  protest  or  non- 
payment was  ever  sent  to  or  received  by  him  ;  and  offered  to 
accompany  this  with  proof  that,  immediately  upon  discovering  his 
mistake,  he  informed  the  plaintiff's  attorney  thereof,  both  by  letter 
and  verbally,  and  that  he  should  not  abide  by  the  concession  or 
admission,  and  that  he  withdrew  it. 

To  this  testimony  the  plaintiff  objected,  on  the  ground  that, 
whether  true  or  not,  the  defendant  was  concluded  by  his  written 
concession,  and  could  not  thereafter  show  the  fact  to  be  differ- 
ent. This  objection  was  sustained  by  the  Court,  and  the  testi- 
mony excluded.  Judgment  for  the  plaintiffs.  Exceptions  by  the 
defendant. 

IsHAM,  J.  The  bill  of  exchange,  on  which  this  action  is  brought, 
was  duly  protested  for  non-})ayment.  The  notice  to  the  doiendant, 
as  indorser,  of  its  dishonor,  was  proved  on  the  trial  of  the  case  by 
his   written  acknowledgment,   in   which   he   admitted  that  he  did 


538  EVIDENCE. 

receive  due  and  legal  notice  of  the  protest  and  non-payment  of  the 
bill.  That  acknowledgment  was  full  and  strong  proof  that  such 
notice  was  in  fact  given  to  the  defendant,  and  it  is  not  competent 
for  him  to  avoid  or  weaken  the  effect  of  that  admission,  by  notifying 
the  plaintiffs  that  he  should  not  abide  by  that  statement,  and  that 
he  withdrew  it.  It  will  always  be  evidence  against  him  whenever 
the  question  arises  whether  he  had  notice  of  the  dishonor  of  that 
bill.  The  question  in  the  case  now  arises,  whether  that  admission 
is  conclusive  upon  the  defendant ;  or  whether  it  is  competent  for 
him,  on  the  trial  of  the  case,  to  introduce  testimony  to  show  that 
it  was  made  under  a  misapprehension  of  facts,  and  with  reference 
to  another  bill  of  a  similar  character.  That  testimony,  in  con- 
nection with  evidence  showing  that,  in  fact,  no  notice  whatever  was 
ever  given  to  the  defendant  of  the  dishonor  of  the  bill,  was  offered 
and  rejected  by  the  Court.  It  is  insisted  that  the  testimony 
offered  was  inadmissible,  as  the  written  admission  was  made  for  the 
purpose  of  a  trial,  and  that  it  is  for  that  reason  conclusive  upon 
him.  On  this  question,  it  is  sufficient  to  observe  that  the  cases  on 
that  subject  have  no  reference  to  admissions  made  out  of  Court, 
though  they  were  made  with  the  understanding  that  they  would  be 
used  as  evidence,  on  the  trial  of  a  particular  case.  Those'  admis- 
sions only  are  referred  to,  which  are  made  by  a  party,  or  his 
attorney,  during  the  progress  of  a  trial,  and  as  a  substitute  for 
legal  evidence.  Admissions  of  that  character,  as  a  general  rule, 
will  be  conclusive,  for  that  trial  at  least,  as  they  become  a  part  of 
the  record  of  the  trial.  The  same  rule  may  apply  to  admissions 
made  out  of  Court,  when  they  are  entered,  as  is  sometimes  prac- 
tised, upon  the  calendar  or  records.  2  Phil.  Evid.  by  Cowen, 
200 ;  note  192.  When  the  admissions  are  not  of  that  character, 
and  he  is  in  no  way  concluded  by  the  records  of  the  case,  they 
are  not  rendered  conclusive  upon  him,  as  being  admissions  made 
for  the  purpose  of  a  trial.  The  acknowledgment,  in  this  instance, 
is  not  of  that  character,  and  does  not  fall  within  that  class  of  cases, 
as  they  are  recognized  in  this  State. 

It  is  very  clear,  that  the  testimony  offered  by  the  defendant  is 
not  objectionable  as  contradicting  or  in  any  way  affecting  a  written 
contract  or  writing.  If  this  written  acknowledgment  contained 
any  provisions  placing  it  in  the  light  of  a  written  contract  of  the 
parties,  the  objection  would  merit  a  different  consideration.  But 
it  is  not  of  that  character.      It  has  none  of  the  elements  of  a 


COMMERCIAL    BANK    OF    ALBANY    V.    CLARK.  539 

contract,  nor  was  it  designed  for  one.  It  is  merely  an  admission  that 
notice  had  been  given,  the  same  as  a  receipt  is  an  acknowledgment 
of  a  settlement  in  full,  or  of  a  receipt  of  money  for  a  particular 
purpose  ;  or  indorsements  upon  a  note,  which  are  written  acknowl- 
edgments that  so  much  has  been  paid.  In  all  these  cases  the 
autliorities  arc  uniform,  that,  if  the  receipt  or  the  indorsement  was 
made  by  mistake,  and  under  a  misapprehension  of  facts,  though 
they  are  evidence  against  the  party,  yet  they  may  be  t^xj)lained, 
controlled,  and  contradicted  by  parol  evidence,  and  the  mistake  of 
the  party  corrected,  and  the  truth  given  in  evidence.  1  Aik.  311 ; 
2  Vt.  138  ;  0  Yt.  41 ;  5  Johns.  G8  ;  1  Greenl.  Evid.  §  305. 

There  is  nothing  in  the  case,  as  it  now  stands,  that  renders  that 
testimony  inadmissible,  on  the  ground  that  the  written  acknowl- 
edgment operates  as  an  estoppel  in  pais.  That  doctrine  aj)plies  in 
cases  of  fraud,  where  some  act  has  been  done,  or  statements  made, 
with  a  fraudulent  intent,  and  with  a  view  to  induce  a  line  of  con- 
duct which  otherwise  would  not  have  been  taken,  and  from  which 
advantages  have  been  derived.  When  the  case  is  destitute  of  those 
considerations,  there  is  no  ground  upon  which  the  application  of 
that  doctrine  can  be  made.  The  doctrine  was  so  held  in  the  case  of 
Wakefield  v.  Grossman,  25  Vt.  298,  301.  It  was  upon  that  ground 
the  case  of  Daviess  v.  Burton,  4  Car.  &  P.  166,  was  decided.  The 
party  in  that  case  agreed  to  admit  certain  facts  on  the  trial,  and 
for  that  admission  he  was  not  to  be  held  to  bail.  The  admission 
was  held  conclusive,  as  it  had  induced  a  line  of  conduct  which 
would  not  otherwise  have  been  pursued  ;  for,  upon  the  strength  of 
it,  the  right  to  insist  upon  bail  had  been  surrendered.  It  was 
not  a  mere  acknowledgment,  but  it  assumed  the  character  of  an 
agreement  or  stipulation  of  the  parties,  and  therefore  the  party 
was  concluded  by  it.  There  is  no  pretence  that  this  admission  was 
made  with  a  fraudulent  intent,  and  from  which  the  defendant  has 
received  any  advantages.  It  was  an  admission  against  his  interest, 
and  designed  for  the  accommodation  of  the  plaintiffs.  In  the  case 
of  Heane  v.  Rogers,  0  Barn.  &  C.  577,  Bnylcij,  J.,  observed,  that 
"  there  is  no  doubt  but  that  the  express  admissions  of  a  party  to 
the  suit,  or  admissions  implied  from  his  conduct,  are  evidence,  and 
strong  evidence,  against  him  ;  but  we  think  that  he  is  at  liberty  to 
prove  that  such  admissions  were  mistaken  or  untrue,  and  that  he 
is  not  estopped  or  concluded  by  them,  unless  another  person  has 
been  induced  to  alter  his  condition  by  them."     The  case  of  Jones  v. 


540  EVIDENCE. 

O'Brien,  2G  Eng.  Law  &  Eq.  283,  is  a  direct  authority  on  tin's  subject. 
The  question  in  tliat  case  was,  whetlier  notice  of  a  dishonor  of  a 
bill  had  been  given,  and  which  was  proved  by  a  written  promise 
to  pay  the  bill.  The  defendant  was  permitted  to  introdnce  evi- 
dence showing  that  no  such  notice  was  given.  He  was  not  estopped 
from  making  that  defence  by  his  promise.  It  may  be  true  that  the 
testimony  oitored  in  this  case,  as  it  was  in  that,  may  be  insufficient 
to  overcome  the  evidence  of  the  written  acknowledgment ;  but  that 
relates  to  the  credibility  of  the  testimony,  not  its  competency.  It 
is  proper  evidence  to  be  taken  into  consideration  and  weighed  by 
the  jnry.  In  Byles,  Bills,  350,  it  is  said  that  "  after  a  bill  is  due, 
a  promise  to  pay  it,  or  an  admission  of  a  liability  upon  it,  by  a 
drawer  or  indorser,  will  be  evidence  not  only  that  due  notice  of  its 
dishonor  was  given,  but  that  it  was  duly  presented."  The  same 
rule  applies,  whether  the  promise  to  pay  the  bill,  or  the  liability  on 
it,  was  by  parol  or  in  writing.  In  either  case,  it  is  strong  evidence 
of  notice  against  the  party  making  it ;  but  the  authorities  are 
decisive  upon  the  question,  that  it  is  competent  for  the  party  to 
prove  that  the  promise,  or  admission,  was  made  under  a  misappre- 
hension of  facts,  and  that  in  fact  no  notice  of  dishonor  was  ever 
given.  Story,  Bills,  §  320,  and  note  ;  Chitty,  Bills,  535-539.  In 
all  these  cases  the  party  is  not  concluded  from  introducing  that 
evidence,  on  the  ground  that  it  contradicts  any  written  stipulation, 
nor  as  a  matter  of  estoppel. 

The  judgment  of  the  County  Court  must  be  reversed,  and  the 
case  remanded. 

The  two  preceding  cases  discuss  questions  of  considerable  practical  importance 
in  regard  to  the  kind  and  degree  of  proof  admissible  or  required  in  establishing 
demand  of  payment  on  commercial  paper  and  giving  notice  of  dishonor  to  the 
parties  interested.  We  are  not  aware  that  the  rules  of  evidence  here  declared 
have  since  been  essentially  modified. 

I.  The  first  point  illustrated  by  Strong's  case  is  the  disposition  of  the  courts 
not  to  release  the  responsibility  of  the  parties  to  negotiable  paper  upon  the 
merest  trifling  irregularity,  where  the  substance  of  the  requirements  of  the  law 
has  been  complied  with.  There  was  at  one  time  a  degree  of  strictness  of  con- 
struction upon  questions  affecting  demand  of  payment  and  notice  of  dishonor  of 
negotiable  paper,  amounting  almost  to  a  denial  of  justice ;  as  if  indeed  there 
■was  something  specially  meritorious,  in  finding  some  plausible  ground  upon 
which  to  release  all  parties  collaterally  holden  for  the  payment  of  a  bill  or 
note.  That  intense  degree  of  strictness  of  construction  almost  requiring  cer- 
tainty to  a  certain  intent  in  every  particular,  which  was  at  one  time  applied 
to  numerous  questions  aifecting  matters  not  considered  the  special  favorites  of  the 


COMMERCIAL    BANK    OF   ALBANY   V.    CLARK.  541 

courts,  such  as  estoppels,  orders  of  removal  in  settlement  cases,  the  title  to 
land  derived  under  tax  sales  and  some  others,  as  well  as  that  under  considera- 
tion, has  certainly  been  relaxed.  The  question  under  consideration  is  ally  and 
judiciously  commented  upon  hy  Mr.  Justice  Easlman,  in  Manchester  Hank  v, 
Fellowes,  S  Foster,  302.  The  cases  are  here  very  largely  quoted  and  dis- 
cussed. The  case  of  Warren  v.  Oilman,  17  Me.  [.5  Shepl.]  .%0,  bears  upon  this 
question,  and  the  pinion  of  Weston,  C.  J.,  contains  many  valuable  sug- 
gestions. From  the  cases  and  the  text-writers  upon  this  subject  it  is  apparent 
tliat  all  which  is  now  required  in  regard  to  giving  notice  of  the  dishonor  of 
negotiable  p.ipcr  is  the  exercise  of  that  degree  of  diligence  which  careful  and 
prudent  men  put  forth  in  their  own  business  of  equal  importance.  Story,  Prom- 
issory Notes,  §  335,  et  seq.,  citing  Chitty  on  Bills;  Bayley  on  Bills.  But  where 
definite  rules  have  been  established  by  the  common  consent  of  commercial  men, 
either  as  to  the  time,  or  place,  or  manner  of  giving  such  notices,  or  making 
ilemaud  of  payment,  they  must  be  followed;  not  so  much,  necessarily,  because 
they  are  absolutely  the  wisest  and  best  which  could  be  supposed,  but  more 
because,  having  been  established  and  acted  upon  by  common  consent,  they  will 
be  presumptively  reasonable,  and  others  will  naturally  depend  and  act  npon  them  ; 
and  if  any  one  were  at  liberty  to  disregard  them  it  would  naturally  lead  to  dis- 
appointment with  others,  and  might  lead  the  latter  into  conduct  different  from 
wiiat  they  would  otherwise  take.  Hence  such  rules,  when  once  establi.-hed,  must 
be  followed,  unless  there  is  some  necessity  for  pursuing  a  different  course  in  the 
particular  case. 

As  to  the  degree  and  kind  of  proof  to  be  required  in  such  cases,  there  seems 
tu  be  no  reasoh  why  any  dilferent  rules  or  constructions  should  obtain,  as  to  cer- 
tainty, fiou)  those  which  are  regarded  as  salutary  and  sufficient  in  other  cases 
and  upon  ether  subjects. 

II.  Tiie  point  discussed  in  Clark's  ca«e  is  also  one  of  considerable  practical 
importance.  There  have  been  some  few  cases  holding  that  where  the  indorser  is 
once  released  by  want  of  notice  in  time,  a  mere  waiver  of  such  notice  or 
acknowledgment  of  the  same,  or  a  promise  to  pay  the  bill,  will  not  bind  him, 
unless  made  upon  some  new  consideration.  Bronsot},  J.,  in  Tebbetts  r.  Dowd, 
23  Wend.  379,  412,  contends  for  the  soundness  of  this  view,  upon  principle, 
although  he  confesses  the  weight  of  authority  is  against  the  view.  And  the  con- 
trary is  held  in  the  late  case  of  Xeal  v.  Wood,  23  Ind.  623.  But  the  law,  as 
laid  down  by  L'oncn,  J.,  in  Tebbetts  v.  Dowd,  that  a  promise  to  pay  the  note  or 
bill  after  the  time  for  demand  and  notice  has  passed,  is  presumptive  evidence 
of  such  demand  and  notice  having  been  regularly  made,  seems  clearly  estab- 
lished. But  where  it  appears  on  trial  that  the  holder  was  guilty  of  laches  in 
regard  to  making  such  demand  and  notice,  he  cannot  recover  upon  a  subsequent 
promise  of  the  indorser,  witliout  showing  that  he  knew  of  such  laches  at  the  time 
of  making  the  promise.  But  ui)on  principle  it  would  seem  that  any  admission  of 
liability  upon,  or  promise  to  pay  a  bill  or  note,  based  upon  the  belief  or  represen- 
tation that  it  had  been  dishonored  by  the  acceptor  or  maker,  which  must  be  the 
natural  inference,  where  such  admission  is  made  after  the  time  of  p.ayment  has 
elapsed,  can  only  be  regarded  in  the  nature  of  evidence  and  as  such  liable  to  be 
rebutted  or  shown  to  have  been  made  under  misapprehension,  the  same  as  any 
other  admission  which  has  not  led  the  opposite  party  into  any  different  course  of 


542  EVIDENCE. 

conduct  from  what  he  would  otherwise  have  adopted.  It  being  settled  that  such 
promise  need  not  be  made  upon  any  new  consideration,  and  that  it  must,  in 
order  to  be  binding,  be  made  with  full  knowledge  of  the  facts  in  the  case,  there 
can  be  no  reason  whatever  to  exclude  proof  of  any  matter  which  might  tend  to 
break  the  force  of  such  admission,  whatever  that  may  be.  But  it  would  scarcely 
be  useful  to  go  more  into  detail  upon  this  question,  which  when  fully  analyzed 
will  be  found  to  depend  upon  very  simple  and  familiar  pri#;iples  of  the  law  of 
evidence,  and  much  the  same  which  ajiplies  to  other  cases  of  admis.-ion  or  decla- 
ration by  a  party  against  his  interest.     See  Hazelton  v.  Colburn,  1  Rob.  La.  345. 

The  late  English  cases  are  all  in  one  direction  in  regard  to  the  cflTtct  of  a 
promise  to  pay  a  note  or  bill  by  the  party  entitled  to  notice  of  dishonor.  If  the 
promise  is  made  before  the  bill  or  note  falls  due,  that  amounts  to  waiver  of 
demand  and  notice  of  the  default  of  other  parties  ;  and  if  made  after  the  time  of 
dishonor  it  amounts  to  an  admission  of  demand  and  notice  at  the  proper  time  and 
in  proper  form.  Cordery  t'.  Colvin,  9  Jur.  n.  s.  1200;  s.  C,  14  C.  B.  N.  s. 
374,  opinion  by  Byles,  J;  Woods  v.  Dean,  3  Best  &  S.  102;  Bartholomew  v. 
Hill,  10  W.  R.  273.     See  Sigerson  v.  Matliews,  ante,  473,  and  note. 

And  it  does  not  seem  that  the  effect  of  a  promise  to  pay  the  bill  or  note  after 
the  time  of  payment  has  elapsed,  is  answered  or  in  any  way  qualified,  by  the  fact 
appearing  that  due  notice  of  dishonor  was  not  in  fact  given.  Killby  v.  Rochussen, 
18  Com.  B.  N.  s.  357 ;  Rabey  v.  Gilbert,  6  Hurl.  &  N.  536 ;  s.  c,  9  W.  R.  386. 
But  unquestionably  it  may  be  shown  that  the  admission  or  promise  was  made  under 
mistake  or  misapprehension,  and  thus  its  effect  be  defeated.  And  where  a  question 
arises  in  regard  to  the  sufficiency  of  notice  of  dishonor  by  reason  of  its  indefinite- 
ness,  it  may  be  submitted  to  the  jury  how  far  the  party  was  thereby  deceived.  So 
also  it  may  be  submitted  to  a  jury  whether  the  holder  of  a  note  or  bill  exercised 
a  reasonable  degree  of  diligence  in  finding  the  parties  and  giving  notice  of  dis- 
honor, although  not  given  within  the  ordinary  time.  Gladwell  v.  Turner,  Law 
Rep.  5  Exch.  59.  There  are  no  other  English  cases  of  recent  date  bearing 
directly  upon  these  questions ;  ard  they  all  treat  the  admissions  by  way  of  prom- 
ise or  otherwise,  of  the  party  entitled  to  notice  of  dishonor,  or  merely  in  the 
nature  of  evidence,  to  be  weighed  in  connection  with  all  the  other  evidence  in 
the  case,  with  the  ordinary  qualification  that  where  such  admissions  have  induced 
different  action  in  other  parties  from  what  would  otherwise  have  been  taken,  the 
party  making  them  will  be  estopped  from  withdrawing  or  qualifying  them.  This 
subject  is  more  fully  considered  under  Excuses  of  Presextjiext  axd  Notice, 
and  particularly  in  Berkshire  Bank  v.  Jones,  ante,  468  and  note,  and  in  Sigerson 
V.  Mathews,  ante,  473,  and  note. 

In  the  i^merican  courts  it  has  been  held  improper  to  submit  to  the  jury  the 
question  of  the  reasonableness  of  the  presentment  of  a  bill  payable  on  sight, 
where  the  same  was  not  presented  for  twenty-one  days  after  it  might  have  been 
in  the  due  course  of  communication  between  the  residence  of  the  payee  and  the 
drawee,  and  there  was  no  evidence  to  account  for  the  delay.  Phoenix  Insurance 
Co.  V.  Allen,  11  Mich.  501  ;  Same  v.  Gray,  13  id.  191 ;  Walker  v.  Stetson, 
ante,  p.  189.  Bills  of  exchange  between  the  different  American  States  are  held 
foreign  for  the  purpose  of  aduiitting  the  certificate  of  the  notary  as  prima  facie 
evidence  of  demand  and  notice.  Orono  Bank  v.  Wood,  49  Me.  26 ;  Starr  v. 
Sanford,  45  Penn.  St.  193  ;  Lee  v.  Buford,  4  Met.  (Ky.)  7.     And  where  a  bill  is 


COMMERCIAL    BANK   OF    ALBANY   V.    CLARK.  5-13 

duly  protested  for  non-acceptance,  it  need  not  be  again  presented  and  protested 
for  non-payment.  Plato  v.  Reynolds,  27  N.  Y.  o8G.  The  diligence  required  in 
giving  notice  of  the  disiionor  of  a  note  or  bill  is  such  as  men  of  business  usually 
exercise,  when  their  interests  depend  upon  obtaining  correct  information.  Palm- 
er V.  Whitney,  21  Ind.  58.  The  holder  of  a  draft,  as  between  himself  and  the 
drawer  is  not  bound  to  present  it  at  maturity.  But  if  he  do  not  he  incurs  the 
risk  of  the  insolvency  of  the  drawee.  Springfield  Ins.  Co.  v.  Tincher,  30  111.  399. 
But  a  delay  of  two  years  is  fatal.  Bridgeford  v.  Simonds,  18  La.  An.  121.  The 
mere  want  of  effects  in  the  hands  of  the  drawee  will  not  always  excuse  present- 
ment and  notice.  Saul  i'.  Jones,  1  Ellis  &  Ellis,  59.  See  Hopkirk  v.  Page,  ante, 
p.  430,  and  note. 

As  to  the  necessity  of  the  presentation  of  bills  and  notes  for  payment,  see  Gay 
V.  Haseltine,  18  N.  Ilanip.  530;  Benton  v.  Martin,  31  N.  Y.  382;  Sheldon  v. 
Chapman,  31  N.  Y.  644  ;  House  v.  Adams,  48  Penn.  St.  261,  cited  in  iull  in  note 
to  Hopkirk  v.  Page,  ante,  p.  443. 


544  DISCHARGING   INDORSER  OR  DRAWER. 


DISCHARGING  INDORSER  OR   DRAWER. 


[Having  considered  commercial  paper  in  its  regular  stages  from  inception  to  suit  inclu- 
sive, we  now  present  a  number  of  important  miscellaneous  cases  upon  branches  of  the  general 
subject,  of  every-d;iy  occurrence  in  the  courts,  not  alread}'  fully  illustrated. 

The  subject  of  presentment  and  notice  has  already  been  considered,  under  Presentment 
AND  Demand  foh  Payment,  Pkoceedings  on  Non-Payment,  and  Excuses  of  Pkesent- 
MENT  AND  NoTiCE;  and  "we  here  introduce  other  matters  relating  to  the  discharge  of  the 
indorser  or  drawer.] 


Sterling  v.  The  Marietta  and  Susquehanna  Trading 

Company. 

(11  Sergeant  &  Rawle,  179.     Supreme  Court  of  Pennsylvania,  May,  1824.) 

Additional  securiti/.  —  Taking  a  bond  from  a  third  person  for  the  money  due  upon  a 
note  is  no  discharge  of  an  indorser,  unless  it  be  so  agreed;  nor  will  proceeding  to 
judgment  on  the  bond  alter  the  case. 

Ddaijiurj  suit.  — Neither  giving  time  to  the  maker,  by  forbearing  to  proceed  to  recovery 
on  the  paper  by  legal  process ;  nor  delay  to  sue  the  indorser  for  several  years, 
within  the  period  of  limitation,  will  operate  as  a  discharge  to  the  indorser;  pro- 
vided no  time  was  given  before  the  indorser's  liability  was  fixed.. 

The  case  is  stated  in  the  opinion  of  tlic  Court. 

TiLGHMAN,  C.  J.  Tliis  is  an  action  brought  by  The  Marietta  and 
Susquehanna  Trading  Company  against  Daniel  Sterling,  the  plain- 
tiff in  error,  on  a  promissory  note  for  |1350,  dated  June  16, 1814, 
drawn  by  Wait  S.  Skinner,  payable  to  the  said  Daniel  Sterling,  or 
order,  at  Henry  Cassel's  banking-house,  one  hundred  and  seventeen 
days  after  date,  and  indorsed  by  the  said  Sterling  and  Christian 
Shirk.  This  note  was  regularly  protested  for  non-j)aymciit,  of 
which  notice  was  given  to  the  indorscrs.  On  the  twenty-fifth  of 
February,  1815,  Isaac  Osterliauk,  Charles  Otis,  and  John  Bucking- 
ham, gave  their  bond  to  Wait  S.  Skinner  (on  which  judgment  was 
afterwards  confessed  in  the  Court  of  Common  Pleas  of  Luzerne 
county),  for  the  use  of  Ucnry  Cassel's  bank,  at  Marietta,  for  -$1350, 
with  interest  to  be  paid  on  the  first  of  May,  1815.     This  bond 


STERLING    V.   THE   MARIETTA,    ETC.,    TRADING    COMPANY,  545 

was  given  expressly  as  a  collateral  security  for  the  note  on  which 
this  suit  was  brought,  and  was  assigned  by  the  obligee  to  The 
Marietta  and  Susquehanna  Trading  Company  on  the  fifteenth  of 
July,  1819.  Henry  Cassel's  bank  and  The  Marietta  and  Susque- 
hanna Trading  Company  may  l)e  considered  as  one.  In  the  month 
of  June,  1814,  Cassel's  bank  ceased  to  do  business,  and  the  business 
was  from  that  time  carried  on  in  the  name  of  the  Marietta  and  Sus- 
quehanna Trading  Company,  of  which  Cassel  was  president,  until 
November,  1817.  On  the  trial,  in  the  Court  below,  the  defendant 
(Sterling)  offered  in  evidence  the  depositions  of  Osterhauk,  Otis, 
Buckingham,  and  Skinner,  all  of  which  were  excepted  to  by  the 
plaintifT,  and  rejected  by  the  Court,  and  in  my  opinioa  very  prop- 
erly. Osterhauk,  Otis,  and  Buckingham  were  interested  in  the 
event  of  this  suit,  having  given  their  bond  and  judgment  as  a 
collateral  security ;  so  that  if  a  verdict  and  judgment  had  ])assed 
for  the  defendants,  they  would  have  been  discharged  from  the  judg- 
ment entered  on  their  bond.  Skinner  was  interested  also  as  drawer 
of  the  note.  It  was  an  accommodation  note,  and  if  the  defendant 
had  succeeded  in  this  suit.  Skinner  would  have  been  altogether 
discharged  ;  so  that  his  interest  was  immediate. 

The  defendant  next  requested  the  Court  to  charge  "  that  if  the 
plaintiff  took  a  bond  for  the  payment  of  this  note  from  any  other 
person,  before  this  suit  was  brought,  without  the  knowledge  or  con- 
sent of  the  defendant,  and  obtained  judgment  on  the  said  bond,  the 
defendant  would  be  thereby  discharged,  and  the  jury  should  find  in 
his  favor."  But  the  Court  charged  that,  in  such  case,  the  plaintiff 
would  be  entitled  to  a  verdict.  The  taking  of  a  bond  from  a  third 
person  was  no  more  than  a  collateral  security  for  the  money  due 
on  the  note,  and  would  be  no  discharge  of  the  drawer  or  indorsers, 
unless  so  agreed.  Why  should  it  ?  Wi)y  might  not  the  plaintiffs 
strengthen  themselves  by  additional  security,  without  discharging 
the  original  debtors  ?  Such  transactions  are  very  frequent.  All 
depends  on  the  intent  of  the  parties.  If  they  agree  that  the  drawer 
and  indorsers  shall  be  discharged,  they  will  be  discharged.  But 
if  it  be  not  so  agreed,  the  presumption  is  that  it  was  not  so  in- 
tended, and  they  will  still  be  held  liable.  The  proceeding  to  judg- 
ment on  the  bond  taken  as  collateral  security  would  not  alter  the 
case.  The  judgment  would  be  of  the  same  nature  as  the  bond  ; 
that  is  to  say,  it  would  be  but  collateral  security  for  the  debt  due 
on  the  note. 

35 


546  DISCHARGING   INDORSER   OR   DRAWER. 

The  last  question  put  to  the  Court  by  the  counsel  for  the  defend- 
ant was  as  follows :  "  If  the  plaintiffs  took  a  judgment  bond, 
entered  up  the  judgment,  issued  process  upon  it,  gave  time  to  the 
drawer  of  tlie  note  (Wait  S.  Skinner),  without  the  defendant's 
knowledge,  and  have  delayed  bringing  suit  against  the  defendant 
(one  of  the  indorsers  of  the  said  note)  for  several  years,  by  such 
arrangement,  proceedings,  and  delay,  the  defendant  is  discharged." 
On  these  points  also  the  opinion  of  the  Court  below  was  against 
the  defendant.  I  have  said  already  that  the  taking  of  a  bond  as  a 
collateral  security,  and  proceeding  to  judgment  on  it,  is  no  dis- 
charge of  the  original  debtor.  Neither  is  the  giving  of  time,  in 
the  manner  it  was  here  given  (that  is  to  say,  by  forbearing  to 
proceed  to  the  recovery  of  the  money  by  legal  process),  a  dis- 
charge, provided  no  time  was  given  till  after  the  note  was  protested. 
If  the  original  time  of  payment  had  been  enlarged  without  the 
consent  of  the  indorsers,  they  would  have  been  discharged.  But 
the  money  having  been  demanded,  the  note  protested,  and  notice 
given  to  the  indorsers,  they  are  fixed,  and  the  holder  of  the  note 
may  afterwards  delay  his  suit  as  long  as  he  pleases,  without  injur- 
ing his  security.  By  the  notice  to  the  indorsers,  they  are  given  to 
und'erstand  that  they  are  held  liable,  and  nothing  but  payment  will 
discharge  them.  The  holder  may  sue  all  or  any  of  them.  He 
may  pursue  one,  and  indulge  the  others,  or  he  may  indulge  them 
all,  and  proceed  at  any  time  against  any  of  them,  provided  he 
keeps  within  the  act  of  limitations. 

The  charge  of  the  Court,  therefore,  was  in  all  respects  correct. 
But,  for  the  error  in  rejecting  the  receipt  of  Henry  Cassel,  offered 
in  evidence  by  the  defendant,  the  judgment  must  be  reversed,  and 
a  venire  de  novo  awarded. 

There  is  considerable  conflict  as  to  the  first  proposition  in  this  case,  respecting 
taking  security  payable  at  a  future  day ;  and  although  the  principal  case  is  sup- 
ported by  several  cases  emanating  from  high  authority,  the  weight  of  decision  seems 
opposed  to  it,  if  the  security  taken  had  the  effect  to  suspend  the  holder's  right  of 
action.  Okie  v.  Spencer,  infra,  547.  See  also  McLemore  v.  Powell,  post,  551 ; 
Michigan  State  Bank  v.  Leavenworth,  28  Vt.  209.  Cases  which  favor  the  rule 
above  declared  are  Pring  v.  Clarkson,  1  Barn.  &  C.  14 ;  Ripley  v.  Greenleaf, 
2  Vt.  129.     See  also  Story,  Promissory  Notes,  §  416,  and  cases  cited. 

The  second  point  is  well  settled,  that  so  long  as  the  holder  remains  passive, 
after  having  fixed  the  liability  of  the  drawer  or  indorser,  he  does  not  lose  any 
rights.     McLemore  r.  Powell,  post,  551 ;  Couch  v.  Waring,  post,  563. 


OKIE    V.    SPENCER.*  547 


Okie  -y.  Spencer. 

(2  Wharton,  253.     Supreme  Court  of  Pennsylvania,  December,  1836.) 

Additional  security.  Extension  of  lime.  —  If  the  liolder  of  a  promissory  note  take  a  check 
upon  a  bank  from  tlie  maker,  dated  six  days  after  the  maturity  of  the  note, 
the  check  to  be  in  full  satisfaction  of  the  note  if  paid,  this  oi)erates  as  an  exten- 
sion of  time  to  the  maker,  and  discharges  an  indorser. 

At  the  maturity  of  the  note  in  question,  the  holder  took  from 
the  maker  a  draft  on  other  parties,  payable  six  days  afterwards, 
to  be  in  full  satisfaction  of  the  note  if  duly  paid. 

Kennedy,  J.  The  defendant  here  having  indorsed  the  note  in 
question,  for  the  accommodation  of  the  drawer,  and  therefore  being 
regarded  as  a  surety  merely,  it  is  admitted  that  if  further  time  was 
given,  when  it  fell  due,  by  the  holder  to  the  drawer,  for  the  pay- 
ment thereof,  the  defendant  is  thereby  discharged.  And  the  only 
question  to  be  decided  is,  whether  from  the  facts  set  forth  by  the 
defendant  in  his  special  plea,  to  which  the  plaintiff  has  demurred, 
the  law  will  imply  an  agreement  made  on  the  third  of  May,  the 
day  the  note  became  payable,  by  the  holder  of  it,  to  give  further 
time  until  the  sixth  of  the  same  month,  to  the  drawer  for  the  pay- 
ment thereof. 

Had  the  defendant  pleaded  the  general  issue  only,  and  under  it, 
as  he  certainly  might,  given  evidence  of  the  facts  set  forth  in  his 
special  plea,  and  the  truth  of  them  had  been  clearly  established  by 
the  evidence  or  the  admission  of  the  plaintilT,  witiioiit  more  having 
been  shown  to  the  jury,  it  would  undoubtedly  have  been  the  duty 
of  the  Court  to  have  instructed  the  jury  that  the  facts  thus 
established,  implied  an  agreement  on  the  part  of  the  holder  of 
the  note,  for  an  adequate  consideration  received  by  him,  to  give 
time  to  the  drawer  for  the  payment  of  it,  without  having  the  con- 
sent of  the  defendant ;  and  that  the  latter  was  thereby  discharged 
from  his  liability  as  indorser.  In  the  absence  of  all  proof  to  the 
contrary,  it  cannot  be  supposed  here,  that  the  drawer,  when  the 
note  had  become  payable,  could  have  had  any  otlier  motive  for 
giving  the  check  of  himself  and  his  partner,  securing  the  payment 
of  it  at  the  expiration  of  six  days,  than  that  of  procuring  indul- 
gence for  that  space  of  time  upon  his  note  from  the  holder  of  it. 


548  DISCHARt3ING    INDORSEE    OR    DRAWER. 

That  such,  too,  must  have  been  the  understanding  of  them  both 
at  the  time,  seems  to  be  the  necessary  inference '  from  the  facts 
stated,  if  our  judgments  are  to  be  guided  in  this  respect  by  what 
we  know  to  be  the  common  and  ordinary  motives  which  generally 
influence  and  produce  such  arrangements.  Marshall,  the  partner 
of  the  drawer  of  the  note,  does  not  appear  to  have  been  bound  for 
the  payment  of  it  in  any  way  before  it  fell  due,  which  tends  gen- 
erally to  strengthen,  and  in  truth  to  make  the  inference  that  the 
check  was  given  to  procure  further  time  for  the  payment  of  the 
note,  irresistible.  And  although  the  check  cannot  be  considered 
as  having  been  taken  in  satisfaction  of  the  note,  nor  as  having 
extinguished  it,  yet  the  right  of  the  holder  to  proceed  against  the 
drawer  to  enforce  the  payment  of  it,  by  suit,  was  thereby  sus- 
pended until  after  the  expiration  of  the  six  days.  It  was  in  effect 
changing,  without  the  consent  of  the  defendant,  the  terms  upon 
which  he  had  agreed  as  indorser  to  become  liable  for  the  payment 
of  the  note,  and  depriving  him  of  the  right  to  pay  the  note  at 
maturity,  if  the  drawer  failed  to  do  so,  and  then  to  sue  him  imme- 
diately for  it,  and  therefore  amounted  to  a  release  of  him  from  his 
liability.  He  had  guaranteed  by  his  indorsement,  the  payment  of 
the  note  on  the  third  of  May,  1833  ;  and  it  was  not  competent  for 
the  liolder  and  the  drawer  without  his  concurrence,  to  extend  his 
guaranty  to  the  ninth  of  that  month,  which  would  clearly  have 
been  the  effect  of  their  agreement  and  the  giving  of  the  check,  if 
the  defendant  were  still  to  be  held  liable  for  the  payment  of  the 
note.  Tiiat  the  holder,  by  accepting  the  check,  put  it  out  of  his 
power  to  proceed  on  the  note,  by  suit  against  the  drawer,  until 
after  the  six  days,  cannot,  as  it  appears  to  me,  be  controverted 
upon  any  ground  that  would  seem  to  be  consistent  with  the  nature 
of  the  transaction,  and  what  must  have  been  the  intent  of  the 
parties.  Had  the  drawer  given  his  own  check  merely,  for  the 
payment  of  the  note  at  the  expiration  of  the  six  days,  there  might 
have  been  some  color  for  saying  that  he  had  not  thereby  precluded 
himself  from  bringing  suit  on  it  during  that  period ;  because  it 
might  then  have  been  argued  with  great  plausibility,  if  not  cor- 
rectly, that  he  had  obtained  by  it  no  additional  security,  and 
consequently  no  adequate  consideration  to  make  a  promise  of 
indulgence  binding  ;  that  by  the  check  he  acquired  nothing  except 
the  personal  responsibility  of  the  drawer,  which  he  had  before  by 
virtue  of  the  note  ;  and  therefore  had  he  even  made  an  express 
promise  of  indulgence  for  the  six  days,  it  might  have  been  alleged 


OKIE   V.    SPENCER.  549 

tliat  lie  would  not  have  been  bound  by  it  for  want  of  a  sufficient 
consideration  ;  i)ut  as  the  case  is  presented  by  the  special  plea  and 
demurrer,  no  such  argument  can  be  advanced  or  pretended ;  for 
by  the  check,  the  holder  of  the  note  received  the  additional  respon- 
sibility of  Marshall,  as  a  security  for  the  payment  of  it ;  and  it 
would  therefore  seem  almost  impossible  to  imagine  any  other  rea- 
son for  giving  such  additional  security,  than  that  of  procuring  an 
extension  of  payment  for  the  six  days.  It  is  true,  that  it  may 
seem  to  have  been  but  a  short  indulgence ;  but  being  a  suspension 
of  the  right  of  the  holder  of  the  note  ta  sue  the  drawer  upon  it 
during  that  period,  it  operated  as  effectually  to  discharge  the  de- 
fendant from  his  liability,  as  if  it  had  been  six  years;  for  in  either 
case,  to  hold  the  defendant  to  be  still  bound  by  his  indorsement, 
would  be  making  him  liable  upon  terms,  and  in  short,  for  the  ful- 
filment of  a  contract,  dilTerent  from  what  he  had  agreed  to.  The 
time  of  payment  mentioned  in  a  note,  is  always  a  very  material 
part  of  it ;  and  if  it  may  be  enlarged  without  the  consent  of  the 
indorser,  and  he  notwithstanding,  be  held  liable  upon  his  indorse- 
ment, there  is  no  reason  why  the  amount  may  not  also  be  enlarged  ; 
but  it  is  obvious,  that  nothing  of  the  kind  can  be  done,  without 
operating  great  injustice  towards  him  ;  and  therefore  it  is,  if  it  be 
done,  it  shall  release  him  from  his  liability.  Every  man,  as  long 
as  he  is  a  free  agent,  must  be  permitted  to  declare  the  terms  upon 
which  he  is  willing  to  incur  an  obligation  ;  and  having  done  so,  it 
cannot  be  altered  in  any  material  point  whatever,  without  his  con- 
sent ;  nor  yet  any  thing  be  done  which  may  affect  his  rights  in 
relation  thereto. 

The  counsel  for  the  plaintiff  has  cited  in  opposition  to  this,  the 
case  of  Pring  v.  Clarkson,  1  Barn.  &  C.  14 ;  8.  c,  8  Eng.  Com. 
Law,  10,  where  a  bill  of  exchange  having  been  dishonored,  the 
acceptor  transmitted  a  new  bill  for  a  larger  amount  to  the  payee, 
without  having  had  any  communication  with  him  respecting  the 
first:  the  payee  discounted  the  second  bill  with  the  holder  of  the 
first,  which  he  received  back  as  part  of  the  amount,  and  afterwards 
for  a  valuable  consideration,  indorsed  it  to  the  plaintiff.  It  was 
held  that  the  second  bill  was  merely  a  collateral  security,  and  that 
the  receipt  of  it  by  the  payee,  did  not  amount  to  giving  time  to  the 
acceptor  of  the  first  bill,  so  as  to  exonerate  the  drawer.  Mr.  Chief 
Justice  Abbott,  in  pronouncing  the  opinion  of  the  Court,  says :  "  In 
no  case  has  it  been  said,  that  taking  a  collateral  security  from  the 


550  DISCHARGING   INDORSER   OR   DRAWER. 

acceptor,  shall  have  that  effect ; "  that  is,  of  discharging  the  other 
parties  to  the  bill :  and  concludes  by  saying,  "  lltere  the  second 
bill  was  nothing  niore  than  a  collateral  security."  Now  it  is  not 
easy  to  perceive  why  a  collateral  security  should  not  have  such  an 
effect ;  for  surely  there  is  nothing  in  the  nature  of  it  which  renders 
the  giving  or  the  taking  of  it  inconsistent  with  the  holder's  agree- 
ing to  give  time  to  the  acceptor  of  a  bill  or  the  drawer  of  a  note. 
On  the  contrary,  such  indulgence  may  be,  and  doubtless  is  in  most 
cases,  the  very  consideration  upon  which  the  collateral  security  is 
given  and  obtained  ;  and  as  I  have  endeavored  to  show,  makes  the 
case,  in  the  absence  of  proof  of  an  express  agreement  to  give  time, 
still  stronger  in  favor  of  an  implied  agreement  to  that  effect,  than 
where  there  is  nothing  more  given  than  a  bare  renewal  of  the 
promise  by  the  acceptor  of  the  original  bill,  or  the  drawer  of  the 
former  note,  to  pay  the  amount  at  a  future  date.  But  Chief  Justice 
Abbott  was  mistaken,  when  he  said,  "  in  no  case  had  it  been  said, 
that  taking  a  collateral  security  from  the  acceptor  shall  have  that 
effect ;  "  for  in  Gould  v.  Robson,  8  East,  576,  decided  some  fifteen 
years  before,  it  was  not  only  said,  but  the  case  itself  turned  upon 
the  very  point.  There  the  holder  of  the  bill  of  exchange,  who  when 
it  fell  due,  after  taking  part-payment  of  the  acceptor,  agreed  to 
take  a  new  acceptance  from  him  for  the  remainder,  payable  at  a 
future  day,  but  in  the  mean  time,  the  holder  to  keep  the  original 
bill  in  his  hands  as  security ;  and  it  was  held  that  it  amounted  to 
a  giving  of  time,  and  a  new  credit  to  the  acceptor,  and  therefore 
discharged  the  indorser.  Besides,  the  authority  of  Pring  and 
Clarkson  has  been  doubted  by  the  profession.  Mr.  Chitty  in  his 
Treatise  on  Bills,  442  (8th  Eng.  ed.),  after  repeating  the  principle 
laid  down  in  it,  adds,  "  but  it  is  submitted  that  the  mere  receiving 
further  security,  payable  at  a  future  day,  would  in  general  imply 
an  engagement  to  wait  till  it  becomes  due."  See  also  Bayley, 
Bills  (5th  ed.),  345,  note  31 :  and  Chitty,  Jr.,  Bills  (ed.  of  1834), 
100  w.  a.  note  1 ;  and  in  Kendrick  v.  Lomax,  2  C.  &  J.  405,  it 
would  seem  to  be  overruled ;  for  it  was  decided  there,  that  the 
holder',  by  taking  a  renewed  bill,  impliedly  agrees  to  give  time 
until  it  becomes  due,  and  cannot  sue  in  the  interim,  on  the  original 
bill.  '  Judgment  affirmed. 

See  to  the  same  effect  Bangs  v.  Mosher,  23  Barb.  478 ;  but  see  Sterling  v. 
Marietta,  &c.,  Trading  Co.,  ante,  544,  and  note. 


M'LEMORE  v.   POWELL.  561 


McLemore,  PlaintifF  in  Error,  v.  Powell  and  OpiERs, 
Defendants  in  Error. 

(12  Wheaton,  554.    Supreme  Court  of  the  United  States,  January,  1827.) 

Ai/reemf-nt /or  delay.  —  Mere  agreement  by  the  holder  witli  tlie  drawer  of  a  bill  of 
exchange  for  delay,  made  without  consideration,  and  not  communicated  to  the 
indorser,  does  not  discharge  the  indorser. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Story,  J.  This  is  a  writ  of  error  to  the  Circuit  Court  of  the 
United  States  for  the  District  of  West  Tennessee. 

The  original  action  was  assumpsit,  brought  by  Powell,  Fosters, 
&  Co.,  as  holders  of  a  bill  of  exchange,  drawn  by  one  Thomas 
Fletcher,  in  May,  1819,  at  Nasliville,  upon  Messrs.  McNeil,  Fisk, 
and  Rutherford,  at  New  Orleans,  payable  to  Thomas  Read,  or 
order,  for  two  thousand  dollars,  in  sixty  days  after  date,  and  by 
him  indorsed  to  the  defendant,  John  C.  McLemore,  and  by  him  to 
the  plaintiffs.  The  bill,  upon  presentment  for  acceptance,  was 
dishonored,  and  due  notice  of  the  dishonor  was  given  to  the  de- 
fendant. 

At  the   trial,  upon  the   general   issue,  Thomas  Fletcher,  the 
drawer,  was,  under  a  release  from  the  defendant,  McLemore,  ex- 
amined as  a  witness,  and  among  other  things,  testified  that,  in  the 
month  of  October  following  the  dishonor  of  the  bill,  ''  one  of  the 
plaintiffs  applied  to  him  at  Nasliville  for  the  money  on  the  bill,  and 
threatened  to  sue  immediately  if  an  arrangement  was  not  made  to 
pay  the  bill.     The  witness   then  proposed  to  the  plaintiff,  if  he 
would  indulge  him  four  or  five  weeks,  he  would  himself,  to  a  cer- 
tainty, pay  the  bill.     To  this  the  plaintiff  agreed,  and  told  the 
witness  he  was  going  to  Louisville,  Kentucky,  and  would  return 
by  Nashville,  about  the  exj)iration  of  that  time,  and  would  receive 
said  payment.     Since  said  time  the  witness  has  never  seen  said 
plaintiff."     The  witness  farther  testified,  that  the  defendant  was 
an  accommodation  indorser  for  him  on  the  bill  ;  that  the  plaintiff 
told  him  that  the  bill  would  be  left  with  a  Mr.  Washington,  at 
Nashville ;  that  lie  expected  he  would  himself  be  at  that  place  at 
the  time  agreed  on,  but  that,  if  he  did  not  come,  he  would  give 


552  DISCHARGING   INDORSER   OR   DRAWER. 

the  instructions  to  Mr.  Washington,  by  letter,  what  to  do  if  the 
witness  did  not  pay  at  the  expiration  of  the  time  agreed  on.  It 
did  not  •ppear  that  any  consideration  was  paid  or  stipulated  for 
this  delay  ;  and  no  suit  was  commenced  until  after  this  period  had 
elapsed.  The  district  judge  instructed  the  jury,  that  if  they  be- 
lieved the  conversation  above  stated  amounted  to  no  more  than  an 
agreement  that  a  suit  should  not  be  brought  for  four  or  five  weeks, 
and  that  no  premium  or  consideration  was  given  or  paid,  or  to  be 
paid  by  Fletcher,  the  indorsers  were  not  discharged,  that  an  agree- 
ment for  giving  day  must  be  an  obligatory  contract  for  a  consider- 
ation which  ties  up  the  hands  of  the  creditor,  and  disables  him 
from  suing,  thereby  affecting  the  interests  and  rights  of  the  in- 
dorser ;  that  the  indorser  has  a  right  to  require  and  demand  of 
the  creditor  to  bring  a  suit  against  the  drawer,  and  if  he  has  dis- 
abled himself  from  bringing  a  suit  by  a  contract  for  a  considera- 
tion, he  has  thereby  released  the  indorser ;  and  that  if  the  jury 
were  satisfied  from  the  testimony  that  time  was  given  for  a  valu- 
able consideration  paid  or  to  be  paid,  or  that  a  new  security  was 
taken  by  the  holder,  that  the' indorser  was  discharged  and  absolved 
from  all  the  obligations  of  the  indorsement. 

Under  this  instruction,  the  jury  found  a  verdict  for  the  plain- 
tiffs, upon  which  there  was  judgment  given  in  their  favor.  A  bill 
of  exceptions  was  taken  to  the  charge  of  the  Court ;  and  the 
present  writ  of  error  is  brought  for  the  purpose  of  ascertaining  its 
legal  correctness. 

It  is  unnecessary  to  give  any  opinion  upon  that  part  of  the 
charge  which  respects  the  right  of  an  indorser  to  require  the 
holder  to  commence  a  suit  against  the  drawer.  In  general,  the  in- 
dorser, by  paying  the  bill,  has  a  complete  power  to  reinstate 
himself  in  the  possession  and  ownership  of  the  bill,  and  thus  to 
entitle  himself  to  a  personal  remedy  on  the  instrument  against  all 
antecedent  parties.  The  same  reason,  therefore,  does  not  exist, 
as  may  in  common  cases  of  suretyship,  to  compel  the  creditor  to 
active  diligence  by  suit  against  the  principle.  Without  expressing 
any  opinion  on  this  point,  it  is  sufficient  to  say,  that  the  error,  if 
any,  was  favorable  to  the  defendant,  and,  therefore,  it  can  form  no 
subject  of  complaint  on  his  part. 

The  case  then  resolves  itself  into  this  question,  whether  a  mere 
agreement  with  the  drawers  for  delay,  without  any  consideration 
for  it,  and  without  any  communication  with  or  assent  of,  the  in- 


M'LEMORE    v.    POWELL.  553 

dorser,  is  a  discharge  of  the  latter,  after  he  lias  been  fixed  in  his 
responsibility  by  tiie  refusal  of  the  drawee,  and  due  notice  to  him- 
self. And  we  are  all  of  opinion  that  it  does  not.  We  admit  the 
doctrine,  that  although  the  indorser  has  received  due  notice  of  tiie 
dishonor  of  the  bill,  yet  if  the  holder  afterwards  enters  into  any 
new  agreement  with  the  drawer  for  delay,  in  any  manner  changing 
the  nature  of  the  original  contract,  or  afTecting  the  rights  of  the 
indorser,  or  to  the  prejudice  of  the  latter,  it  will  discharge  him. 
But,  in  order  to  produce  such  a  result,  the  agreement  must  be  one 
binding  in  law  upon  the  parties,  and  have  a  sufficient  consideration 
to  support  it.  An  agreement  without  consideration  is  utterly 
void,  and  does  not  suspend  for  a  moment  the  rights  of  any  of  the 
parties.  In  the  present  case,  the  jury  have  found  that  there  was 
no  consideration  for  the  promise  to  delay  a  suit,  and,  consequently, 
the  plaintiffs  were  at  liberty  immediately  to  have  enforced  their 
remedies  against  all  the  parties.  It  was  correctly  said  by  Lord 
Eldon,  in  English  v.  Darley,  2  Bos.  <fe  Pul.  Gl,  that  "as  long  as 
the  holder  is  passive,  all  his  remedies  remain  ;  "  and,  we  add,  that 
he  is  not  bound  to  active  diligence.  But  if  the  holder  enters  into 
a  valid  contract  for  delay,  he  thereby  suspends  his  own  remedy  on 
the  bill  for  the  stipulated  period ;  and  if  the  indorser  were  to  pay 
the  bill,  he  could  only  be  subrogated  to  the  rights  of  the  holder, 
and  the  drawer  could  or  might  have  the  same  equities  against  him 
as  against  the  holder  himself.  If,  therefore,  such  a  contract  be 
entered  into  without  his  assent,  it  is  to  his  prejudice,  and  dis- 
charges him. 

The  cases  proceed  upon  the  distinction  here  pointed  out,  and 
conclusively  settle  the  present  action.  In  Xatwyn  v.  St.  Quintin, 
1  Bos.  &  Pul.  652,  where  the  action  was  by  indorsees  against  the 
drawer  of  a  bill,  it  appeared,  that,  after  the  bill  had  become  due, 
and  been  protested  for  non-payment,  though  no  notice  had  been 
given  to  the  drawer,  he  having  no  effects  in  the  hands  of  the  ac- 
ceptor, the  plaintiffs  received  part  of  the  money  on  account  from 
the  indorser ;  and  to  an  application  from  the  acceptor,  stating, 
that  it  was  probable  he  should  be  able  to  pay  at  a  future  period, 
they  returned  for  answer,  that  they  would  not  press  him.  The 
Court  held  it  no  discharge ;  and  Lord  Chief  Justice  Ei/re^  in  deliv- 
ering the  opinion  of  the  Court,  said,  that  if  this  forbearance  to  sue 
the  acceptor  had  taken  place  before  noticing  and  protesting  for 
non-payment,  so  that  the  bill  had  not  been  demanded  when  due,  it 


554  DISCHARGING   INDORSEE   OR   DRAWER.       ' 

was  clear  the  drawer  would  have  been  discharged,  for  it  would  be 
giving  a  new  credit  to  the  acceptor.  But  that,  after  protest  for 
non-payment,  and  notice  to  the  drawer,  or  an  equivalent  to  notice, 
a  right  to  sue  the  drawer  had  attached,  and  the  holder  was  not 
bound  to  sue  the  acceptor.  He  might  forbear  to  sue  him.  The 
same  doctrine  was  held  in  Arundel  Bank  v.  Goble,  reported  in  a 
note  to  Chitty  on  Bills.  Chitty,  379,  note  c.  ed.  1821.  There 
the  acceptor  applied  for  time,  and  the  holders  assented  to  it,  but 
said  they  should  expect  interest.  It  was  contended,  that  this  was 
a  discharge  of  the  drawer ;  but  the  Court  held  otherwise,  because 
the  agreement  of  the  plaintiffs  to  wait  was  without  consideration, 
and  the  acceptor  might,  notwithstanding  the  agreement,  have  been 
sued  the  next  instant ;  and  that  the  understanding  that  interest 
should  be  paid  by  the  acceptor  made  no  difference.  So,  in  Bad- 
nail  V.  Samuel,  3  Price's  Exch.  521,  in  a  suit  by  the  holder  against 
a  prior  indorser  of  a  bill  of  exchange,  it  was  held,  that  a  treaty 
for  delay  between  the  holder  and  acceptor,  upon  terms  which  were 
not  finally  accepted,  did  not  discharge  the  defendant,  although  an 
actual  delay  had  taken  place  during  the  negotiation,  because  there 
was  no  binding  contract  which  precluded  the  plaintiffs  from  suing 
the  acceptor  at  any  time. 

Upon  authority,  therefore,  we  are  of  opinion,  that  this  writ  of 
error  cannot  be  sustained,  and  that  the  judgment  below  was  right. 
Upon  principle,  we  should  entertain  the  same  opinion,  as  we  think 
the  whole  reasoning  upon  which  the  delay  of  the  holder  to  enforce 
his  rights  against  the  drawer  is  held  to  discharge  the  indorser 
after  notice,  is  founded  upon  the  notion  that  the  stipulation  for 
delay  suspends  the  present  rights  and  remedies  of  the  holder. 

The  judgment  of  the  Court  below  is,  therefore,  affirmed  with 
costs. 

Payne  v.  Commercial  Bank  of  Natchez,  6  Sm.  &  M.  24,  is  an  important 
case  upon  this  branch  of  the  subject.  The  facts  will  appear  in  the  opinion  of  the 
Court. 

Sharkey,  C.  J.  The  plaintiffs  in  error  were  sued  as  indorsers  of  a  promissory 
note,  and  after  verdict  against  them  moved  for  a  new  trial,  which  motion  was 
overruled.  The  defence  set  up  was,  that  the  holder  of  the  note  had  discharged 
the  indorsers  by  giving  time  to  the  maker. 

The  question  depends  mainly  on  the  evidence  introduced  on  the  trial,  which 
is  to  the  effect  following :  The  maker  of  the  note  testified  that,  about  tlie  28th 
March,  18-10,  he  executed  a  note  to  the  plaintiffs  below  for  $31,593,  payable 
three  days  after  date,  the  consideration  of  which  was  sundry  notes  then  held  by 


m'lemorb»v.  powkll.  555 

the  bank,  on  which  he  was  liable  either  as  maker  or  indorser,  his  object  being  to 
concentrate  all  his  indehtedness  in  one  note.  On  bt-ing  asked  where  the  note 
given  then  was,  he  stated  that  it  was  in  judgment  in  Louisiana,  and  that  >f2'J*)<) 
had  been  paid  on  the  judgment  by  a  sale  of  bank-stock,  and  that  the  judgment 
was  also  a  lien  on  certain  i)romissory  notes  given  by  11.  C.  Ballard  to  the  witness 
for  property  sold  to  liallard,  which  notes  were  secured  by  mortgage.  He  also 
stated  that  these  notes  were  liable  to  be  sold  under  execution.  A  transcript  of 
the  judgment  in  Louisiana  was  also  introduced. 

To  rebut  this  proof  the  plaintiff  lielow  introduced  Thomas  Henderson,  the 
cashier  of  the  bank,  who  explained  the  transaction  with  Lillard,  the  maker  of  the 
note,  in  the  following  manner :  Lillard  called  on  him  and  expressed  a  wish  to 
take  up  all  his  liabilities  to  the  bank,  and  proposed  to  confess  judgment  for  the 
full  amount  due,  and  to  bind  thereby  all  of  his  property.  On  consultation  with 
one  or  two  of  the  directors,  the  witness  agreed  with  Lillard  that  when  such  a 
judgment  should  be  confessed  so  as  to  bind  all  his  property,  and  evidence  thereof 
produced  to  the  bank,  the  pajjcr  of  Lillard  should  be  given  up,  — Lillard  em- 
ploying his  own  attorney,  and  paying  all  the  expenses  incident  to  the  consumma- 
tion of  this  arrangement.  In  order  to  effect  the  arrangement,  Lillard  called  on 
the  witness  for  a  statement  of  the  amount  of  his  indebtedness,  which  was  fur- 
nished. The  agreement  was  entirely  conditional,  intended,  and  so  understood, 
to  depend  upon  the  confession  of  a  judgment  which  should  bind  all  of  Lillard's 
property  in  Louisiana ;  and  on  the  further  condition  that  this  should  be  done  at 
Lillard's  expense,  and  the  bank  notified.  After  this  understanding  took  place, 
and  before  any  confession  of  judgment,  Lillard  sold  all  of  his  property  in  Louisi- 
ana, consisting  of  land  and  negroes,  to  R.  C.  Ballard,  which  was  the  property 
intended  to  have  been  bound  by  the  judgment.  Some  time  before  this  under- 
standing took  place,  Lillard  delivered  to  witness  two  hundred  shares  of  stock  of 
the  Commercial  Bank  of  Manchester,  to  be  held  for  him  as  collateral  security  for 
all  of  his  debts  due  to  the  bank.  After  the  sale  of  the  property  to  Ballard,  the 
witness  was  informed  that  Lillard  did  confess  judgment,  and  that  an  execution 
had  issued,  under  which  the  bank-stock  was  sold  by  the  sheriff  of  Concordia  for 
$2200,  but  the  bank  had  never  received  any  of  the  money.  On  the  order  of  the 
sheriff  of  Concordia  the  bank-stock  was  delivered  to  Ballard.  The  witness 
never  gave,  nor  did  he  agree  to  give,  any  time  whatever  to  Lillard,  The  memo- 
randum was  given  at  his  request  to  enable  him  to  carry  out  his  own  arrange- 
ment. The  witness  had  no  authority,  by  resolution  of  the  board  of  directors  or 
otherwise,  to  make  this  arrangement,  but  was  in  the  habit  of  making  such 
arrangements  on  consultation  with  some  of  the  directors.  The  deposit  of  the 
bank-stock  as  collateral  security  occurred  after  the  maturity  of  all  of  Lillard's  lia- 
bilities, and  the  bank  never  relinquished  the  right  ta  sue  on  the  notes  at  any 
time. 

At  the  request  of  the  counsel  for  the  bank,  the  Court  charged  the  jury  that  the 
agent  or  cashier  had  no  authority  to  bind  the  bank  by  any  contract  that  would 
release  parties  from  their  notes.  2.  To  release  an  indorser,  the  engagement 
must  be  upon  a  good  consideration  and  binding,  and  one  that  will  suspend  the 
remedy.  3.  That  unless  the  judgment  in  Louisiana  bound  all  of  Lillard's 
property,  and  the  contract  was  ratitied  by  the  plaintilfs,  the  law  is  for  them. 
The  kind  of  contract  with  the  principal  which  will  discharge  the  surety,  is  well 


556  DISCHARGING   INDORBER   OR   DRAWER. 

defined  and  settled.  The  efTect  of  giving  time  to  the  principal  in  a  forthcoming 
bond  was  considered  by  this  Court  in  the  case  of  Newell  and  Pierce  v.  Hamer,  4 
IIow.  [Miss.]  684.  It  was  decided  that  a  mere  voluntary  engagement  to  indulge 
the  principal  debtor  would  not  discharge  the  surety.  There  must  be  a  positive  and 
binding  agreement,  based  upon  some  new  and  valuable  consideration,  which  is 
sufilcient  to  tie  up  the  creditor,  and  prevent  him  from  asserting  any  remedy  dur- 
ing the  time  for  which  the  indulgence  has  been  given.  The  same  rule  was  holden 
to  apply  to  indorsers  of  promissory  notes.  Wade  v.  Buckner,  Stanton,  &  Co.,  5 
How.  [Miss.]  Gil.  In  this  last  case  a  bill  of  exchange  had  been  taken,  payable 
at  twelve  months,  and  a  receipt  given  expressing  that  the  note  was  to  be  credited 
with  the  proceeds  of  the  bill;  and  this  was  decided  to  be  insufficient  to  discharge 
the  indorser. 

Was  there  any  such  contract  in  this  case  ?  The  evidence  seems  to  fl^ll  far 
short  of  establishing  any  contract  whatever  that  was  binding  on  the  plaintiffs  be- 
low for  one  moment,  even  assuming  that  Henderson  was  authorized  to  do  all  that 
he  did  do.  Lillard  states  that  he  executed  a  note,  but  he  does  not  state  that  he 
did  so  by  request,  or  with  the  knowledge  of  the  bank,  or  that  it  was  ever  deliv- 
ered. His  testimony  is  unsatisfactory.  He  omits  to  state  any  thing  of  the  trans- 
action which  led  to  the  making  of  the  note.  He  merely  says  that  he  made  such 
a  note,  and  that  it  was  then  in  judgment  in  Louisiana.  Henderson  states  the 
transaction  in  such  a  manner  as  to  make  it  intelligible.  It  was  a  mere  unexe- 
cuted promise  to  contract,  on  the  performance  of  certain  conditions.  There  was 
nothing  in  it  binding.  Lillard  had  promised  to  do  certain  things,  and  Hender- 
son promised  if  they  were  done  in  a  particular  manner,  he  would  deliver  up  the 
notes  of  Lillard.  Lillard  defeated  the  proposed  settlement  by  selling  his  prop- 
erty. There  was  no  consideration  for  this  agreement ;  nor  was  there  in  fact  any 
agreement  to  give  time.  Lillard  does  not  state  that  there  was,  and  Henderson 
states  positively  that  there  was  not.  Try  this  by  the  true  test.  Was  there  any 
period  of  time  at  which  the  bank  was  not  at  liberty  to  sue  ?  There  was  not. 
When  the  proposed  arrangement  was  spoken  of,  nothing  was  said  about  his  giv- 
ing a  new  note,  and  if  by  so  doing  his  indorsers  were  discharged,  then  every  in- 
dorser may  be  discharged  in  the  same  way.  Lillard  seems  to  have  been  the  only 
actor  in  the  matter.  Even  the  money  raised  by  the  execution  was  never  re- 
ceived by  the  bank. 

This  subject  is  also  discussed  in  Bank  of  Utica  v.  Ives,  17  Wend.  oOL  The 
facts  will  sufficiently  appear  in  the  opinion  of  the  Court,  delivered  by 

Nelson,  C.  J.  The  defence  to  the  action  in  this  case  is,  that  the  plaintiffs 
gave  time  to  the  principal  debtor,  IMorris  ;  the  jury  have  found  in  favor  of  it 
upon  the  facts,  under  correct  instructions  from  the  Court.  The  only  question, 
therefore,  presented  is,  whether  the  evidence  warranted  the  verdict.  Mere  in- 
dulgence at  the  tcill  of  the  creditor  extended  to  the  debtor,  in  no  way  impairs 
the  obligation  of  the  surety ;  if  it  did  it  would  be  a  most  inconvenient  and  op- 
pressive rule,  as  then  suits  must  immediatelv  follow  the  maturity  of  the  paper. 
It  is  well  settled  there  must  be  a  valid  common-law  agreement  to  give  time, 
founded  of  course  upon  a  good  consideration,  to  have  this  effect.  Was  such  an 
agreement  proved  here  ? 

Morris,  the  maker,  called  by  the  defendant,  is  the  only  witness ;  and  if  there 
was  an  agreement  he  was  a  party  to  it,  and  in  a  situation  to  place  the  fact  beyond 


M'LEMORE    v.    POWELL.  557 

controversy.  His  interest  was  balanced,  and  for  aught  that  appears,  he  is  a  man 
of  respectable  diaracter.  The  witness  was  called  \>\  the  defendant  because  he 
held  the  aflirmatlve,  and  must  establish  the  af^reement  giving  time  with  reason- 
able certainty  in  the  first  instance.  I  have  looked  through  the  case,  and  do  not 
find  that  this  witness  undertakes  to  prove  any  such  contract,  —  not  even  that  it 
was  his  purpose  to  procure  one  in  the  several  interviews  with  the  cashier  of  the 
bank  ;  and  if  he  is  not  able  to  assert  the  fact,  so  far  as  he  himself  was  concerned, 
it  cannot  be  expected  that  he  could  prove  one  on  the  part  of  the  bank.  The  ut- 
most that  he  testifies  to  is,  that  he  solicited  indtdtjence  to  arrani/e  hin  affairs,  and 
try  to  relieve  his  indorsers  ;  and  that  he  was  given  to  understand  this  would  be  ex- 
tended to  him.  No  time,  terms,  or  conditions  upon  which  it  would  be  granted 
■were  mentioned,  asked  for,  or  agreed  upon.  It  is  not  pretended  by  the  witness 
that  the  indulgence  was  assented  to  in  consideration  of  the  giving  of  the  judg- 
ment, or  the  turning  out  of  the  notes  and  ol)ligations.  These  are  the  considera- 
tions urged,  and  the  only  ones  tliat  can  be  relied  on.  If  it  was  thus  understood 
and  intended  by  the  parties,  the  witness  could  not  well  have  forgotten  the  facts  ; 
at  all  events  they  are  not  to  be  presumed  when  one  of  the  parties  is  not  willing 
to  assert  them  under  oath ;  it  would  be  presuming  against  the  recollection  of  a 
party  to  the  transaction  the  most  deeply  interested  in  it  at  the  time,  and  therefore 
the  most  likely  to  remember  it.  To  infer  a  contract  under  such  circumstances 
would  be  not  only  substituting  conjecture  for,  but  against  evidence  ;  as  the  ina- 
bility of  a  witness  to  testify  to  the  existence  of  a  contract  to  which  he  is  alleged 
to  have  been  a  party,  is  something  more  than  mere  negative  testimony.  As  the 
charge,  however,  was  correct,  assuming  the  point  to  be  put  to  the  jury,  and  there 
is  no  exception  to  the  instructions  in  this  respect,  the  new  trial  should  have  been 
granted  by  the  circuit  judge  on  payment  of  costs.  There  was  an  exception  to 
the  application  of  the  doctrine  giving  time  to  the  case,  for  reasons  given  by  the 
counsel ;  but  none  respecting  the  submission  of  the  question  of  fact  to  the  jury. 

New  trial  granted  on  payment  of  costs. 

See  also  Twopenny  i\  Young,  3  Barn.  &  C.  208 ;  Ripley  v.  Greenleaf,  2 
Vt.  129;  Oxford  Bank  v.  Lewis,  8  Pick.  458;  Michigan  State  Bank  v.  Leav- 
enworth, 28  Vt.  20y. 


558  discharging  indorser  or  drawer. 

Tiernan's  Executors  v.  James  Woodruff. 

(5  McLean,  350.     Circuit  Court  of  the  United  States  for  Michigan,  June,  1852.) 

Agreement  for  delay.  Bankruptcy.  —  A  bankrupt  maker  of  a  promissory  note  procured 
from  his  creditor  two  months'  time,  within  which  the  right  to  sue  on  the  note  was 
suspended.  Tlie  agreement  was  upon  a  valuable  consideration.  Ueld,  no  dis- 
charge to  an  indorser. 

Per  Curiam.^  This  is  an  action  on  several  promissory  notes, 
given  by'Theodore  Romeyn  to  the  plaintiff's  testator,  indorsed  by 
the  defendant.  The  plea  sets  up  in  defence  that  time  was  given 
by  the  plaintiff  to  Romeyn.  To  this  plea  the  plaintiff  replied,  that 
at  and  before  the  alleged  time  was  given,  Romeyn  was  a  discharged 
bankrupt ;  that  the  debt  was  provable  against  his  estate.  Aver- 
ments were  added  covering  all  the  exceptions  in  the  statute, 
under  which  it  is  permitted  to  go  behind  the  certificate.  To  this 
replication  the  defendant  demurred.     Joinder  in  demurrer,  <fcc. 

On  the  part  of  the  defendant  it  is  contended,  that  under  the 
authorities  the  defendant  is  discharged.  It  appears  from  one  of 
the  pleas  that  he  was  an  accommodation  indorser,  and  this  is  not 
denied  by  the  pleadings. 

It  appears  that  after  the  maturity  of  the  note,  the  plaintiffs  en- 
tered into  a  sealed  agreement  with  Romeyn,  the  maker,  without 
the  knowledge  or  consent  of  the  indorser,  and  for  a  good  consid- 
eration ;  to  wit,  a  proposal  for  settlement  made  by  Romeyn,  and 
also  of  five  dollars  paid  to  the  plaintiffs,  the  receipt  thereof  was 
acknowledged,  the  plaintiffs  would  not,  for  the  space  of  two  months 
from  the  date,  commence  any  proceeding  in  law  or  in  equity  or 
otherwise  against  the  said  Romeyn,  upon  all  or  either  of  the  four 
promissory  notes  therein  mentioned,  nor  sue  him^upon  the  same 
or  either  of  them,  <fec. 

Great  care  seems  to  have  been  taken,  in  drawing  this  agreement, 
to  cover  the  entire  ground  necessary  for  the  discharge  of  the  in- 
dorser. It  was  under  seal,  for  the  valuable  consideration  of  five 
dollars  paid,  and  suspending  suit  on  each  of  the  notes,  &c.  There 
is  certainly  no  want  of  skill  shown  in  drawing  this  agreement,  and 
no  objection  can  be  made  to  it  for  want  of  form  or  substance.  It 
would  serve  for  a  safe  precedent  in  all  such  cases. 

For  the  defendant  it  is  argued  that  the  bankruptcy  of  the  prin- 

1  McLean  and  Wilkins,  JJ. 


TIERNAN    V.    WOODRUFF.  .5o9 

cipal  cannot  afTect  the  (|Uostion  of  law.  That  althou^li  tlie  dis- 
charge takes  away  the  legal  remedy  against  the  l^ankrupt,  yet  this 
exists  only  where  he  avails  himself  of  his  right.  It  is  a  mere 
personal  privilege,  which  no  one  can  set  up  but  himself;  and  if 
not  set  up,  judgment  may  be  rendered  against  him.  Also  tiiat 
the  moral  obligation  on  tlie  debtor  to  pay  still  continues,  and  the 
cause  of  action  still  remains,  so  that  it  is  not  necessary  to  declare 
specially  on  a  new  i)romise  to  pay.  That  the  legal  effect  of  our 
bankrupt  act  is  the  same  as  the  English  act.  The  provisions  of 
both  acts  are  substantially  the  same,  and  the  English  decisions  are 
applicable  here.  A  new  promise  would  be  Ijinding  under  the 
English  act.  Chitty,  Contracts,  190, 191 ;  13  :Mees.  k  W.  34,  709  ; 
8  Mass.  128  ;  5  Barb.  369 ;  11  id.  17,  369 ;  28  Me.  550 ;  9  B.  Mon. 
45  ;  Cowp.  448. 

Tlie  theory  of  law  is,  that  the  surety  cannot  be  prejudiced  by 
such  an  agreement ;  he  may  be  benefited,  and  yet  if  time  be  given 
to  the  principal  the  surety  is  discharged.  The  case  don't  turn 
upon  the  fact  of  inconvenience  or  injury,  but  giving  time  for  a 
valuable  consideration  is  presumed  to  prejudice  the  surety.  Giving 
time  for  a  day  discharges  the  surety.  5  Peters,  Com.  728  ;  3 
Wash.  70,  76  ;  Paine,  305 ;  7  Hill,  250. 

On  the  other  side  it  is  urged,  in  the  language  of  the  Supreme 
Court  of  the  United  States,  6  How.  283  :  "  The  principle  on  which 
sureties  are  released  is  not  a  mere  shadow  without  substance.  It 
is  founded  upon  a  restriction  of  the  rights  of  the  sureties,  by  which 
they  are  supposed  to  be  injured." 

The  contract  for  delay  to  effect  the  discharge  of  the  indorser 
must  atTect  the  rights  of  the  indorser,  or  prejudice  him.  McLemore 
V.  Powell,  12  Wheat.  554.i 

In  King  v.  Baldwin,  2  Johns.  Ch.  559,  Chancellor  Kent  says  : 
"  On  paying  the  debt,  he  (the  surety)  is  entitled  to  the  creditor's 
place  by  substitution,  and  if  the  creditor,  by  agreement  with  the 
principal  debtor,  without  the  surety's  consent,  has  disabled  himself 
from  suing  when  he  would  otherwise  be  entitled  to  sue,  under  the 
original  contract,  or  has  deprived  the  surety,  on  his  paying  the 
debt,  from  having  immediate  recourse  to  his  principal,  the  contract 
is  varied  to  his  prejudice,  and  he  is  consequently  discharged." 
Bank  of  United  States  v.  Hatch,  6  Peters,  250 ;  1  McLean,  93. 

Our  bankrupt  law  is  different  from  the  bankrupt  law  of  England. 

Ante,  p.  651. 


560  DISCHARGING   INDORSEE   OR   DRAWER. 

The  latter  operates  by  way  of  persojial  exemption  from  debts 
provable.  2  Bl.  Com.  473 ;  2  Maule  &  S.  23  ;  2  Com.  Dig.  157  ; 
1  Steph.  N.  P.  689  ;  1  Barn.  &  Adol.  54  ;  Stat.  37  Eliz.  7  ;  4  &  5 
Anne,  17  ;  6  Geo.  4,  c.  16.  But  our  bankrupt  law  extinguishes 
the  debt  of  the  bankrupt  even  against  bis  indorser.  In  Mace  v. 
"Wells,  7  How.  275,  the  Supreme  Court  say  :  "  The  fourth  section 
of  the  bankrupt  law  provides  that  a  discharge  and  certificate,  when 
duly  granted,  shall,  in  all  courts  of  justice,  be  deemed  a  full  and 
complete  discharge  of  all  debts,"  &c.  And  under  the  fifth  section, 
"  All  creditors,  whose  debts  are  not  due  and  payable  until  a  future 
day,  indorsers,  &c.,  shall  be  permitted  to  come  in  and  prove  such 
debts  or  claims  under  this  act,"  <fec.  And  a  person  who  neglects  so 
to  prove  a  liability,  cannot  afterward  recover  the  amount  from  the 
bankrupt.     So  the  Court  held  in  the  above  case. 

In  the  case  before  us,  Romeyn,  the  bankrupt,  procured  from  the 
plaintiffs  a  suspension  of  their  right  to  sue  for  two  months.  This 
agreement,  being  founded  on  a  valuable  consideration,  was  a  valid 
contract.  The  indorser  within  that  period  could  not  pay  the  debt, 
and  sue  Romeyn.  This,  in  law,  prejudiced  the  rights  of  the  in- 
dorser. But  Romeyn  was  a  bankrupt ;  what  remedy  was  there  for 
the  indorser  against  the  bankrupt  ?  There  was  no  remedy  but  to 
present  his  demand  against  the  estate  of  the  bankrupt,  before  it 
was  due,  under  the  fifth  section  of  the  bankrupt  law.  He  has  no 
recourse,  at  any  time,  against  the  bankrupt,  if  the  proceedings 
were  regular  under  which  he  was  discharged,  as  alleged  in  the 
pleading,  and  not  contradicted.  The  time  given  to  Romeyn,  under 
these  circumstances,  by  no  possible  means  could  have  operated  to 
the  prejudice  of  the  defendant.  The  settled  rule  of  law,  therefore, 
as  to  the  effect  of  giving  time  to  the  principal  debtor,  does  not 
and  cannot  apply  in  tins  case.  After  the  extension  complained  of, 
as  well  as  before  it,  the  indorser  could  have  proved  the  extent  of  his 
liability  against  the  bankrupt's  estate,  and  that  was  the  only  rem- 
edy which,  under  the  circumstances,  the  law  gave  him. 

The  demurrer  to  the  replication  is  overruled,  and  judgment  for 
the  plaintiff. 

So  though  the  agreement  to  give  time  be  upon  a  valuable  consideration,  if  it 
was  made  with  a  stranger,  it  will  not  have  the  effect  to  discharge  the  drawer  or 
indorser.  '  Frazer  v.  Jordan,  8  El.  &  Bl.  303.  In  this  case  the  opinion  of  the 
Court  was  pronounced  by 

Coleridge,  J.  This  was  an  action  by  the  indorsee  against  tlie  drawer  of  a 
bill  of  exchange ;  and  the  defendant  pleaded  that  the  plaintiff,  without  the  de- 


TIERNAN    V.    WOODRUFF.  5G1 

fendant's  consent,  had  entered  into  an  af^reenient  with  Messrs.  Kerin  that  they 
would  <^ive  time  to  the  acceptor,  in  consideration  of  Messrs.  Kerin  promising 
that  they  wouhl  see  the  bill  paid. 

The  first  (juestion  for  our  consideration  on  the  special  case  stated  for  our  de- 
cision, was  whether  the  plea  was  proved.  This  was  a  question  of  fact ;  and  we 
intimated  our  opinion  during  the  argument,  that  that  plea  was  proved  by  the 
facts  stated. 

The  remaining  question  on  which  we  took  time  to  consider  was,  whether  a 
binding  agreement  for  a  good  consideration  with  a  person  who  is  no  party  to  a 
bill  of  exchange,  to  give  time  to  the  acceptor  without  the  consent  of  the  drawer, 
discharges  the  drawer. 

It  was  said,  in  support  of  the  plea,  that  the  plaintiff  had  placed  himself  in  such 
a  situation  as  that  he  could  not  sue  the  acceptor  without  rendering  himself  liable 
to  an  action  for  damages.  And  it  was  said  that  the  case  fell  within  the  doctrine 
laid  down  by  the  Court  of  Exchequer  in  the  case  of  Moss  v.  Ilall,  .">  Exch.  46, 
50,  where  Parke,  B.,  says:  "  Whenever  a  party's  hands  are  effectually  tied  up 
so  that  he  cannot  break  such  an  engagement  without  being  made  liable  for  a 
breach  of  it,  the  surety  is  discharged ;  the  rule  being  that  there  must  be  either  a 
new  security  given  to  extend  the  time,  or  a  binding  agreement  upon  a  sufhcient 
consideration  to  suspend  the  remedy."  It  was  said  that  the  case  of  Ford  v. 
Beech,  11  Q.  B.  852  [E.  C.  L.  R.  vol.  63],  had  established  that  a  contract  of 
this  nature  with  the  acceptor  to  suspend  proceeding  does  not  constitute  a  defence 
to  an  action,  but  only  gives  a  cross-action  for  breach  of  the  agreement  to  give 
time,  and  therefore  that  the  exoneration  of  the  surety  in  such  case  does  not  de- 
pend on  the  action  against  the  principal  debtor  being  barred  by  the  agreement ; 
and  that  the  real  reason  of  the  discharge  is  that  the  party  has  subjected  himself 
to  an  action  for  suing  in  breach  of  the  agreement ;  and  that  this  extends  to  the 
case  of  a  contract  with  a  stranger  as  well  as  to  one  with  the  principal  debtor,  as 
the  being  liable  to  an  action  if  he  sues  the  debtor,  will  render  the  creditor  less 
likely  to  sue  the  debtor  in  proper  time. 

There  certainly  were  authorities  from  which  it  has  been  often  supposed  that 
the  reason  of  the  discharge  of  the  surety,  by  an  agreement  with  the  princi- 
pal debtor  to  give  time  to  him,  arose  from  the  right  of  action  against  the  accept- 
or being  suspended  or  gone.  The  doctrine  so  well  established,  that  a  parol 
agreement  on  good  consideration  to  give  time  to  a  bond  debtor  does  not  discharge 
the  bond  surety  at  law,  because  a  parol  contract  cannot  afl'ect  a  contract  under 
seal,  seems  founded  on  this  notion ;  as  does  also  the  doctrine  of  its  being  neces- 
sary that  there  should  be  a  consideration  for  the  promise  to  make  it  binding  in 
point  of  law,  though  such  consideration  would  be  requisite  as  well  to  found  an 
action  for  damages  on  the  promise,  as  to  raise  a  defence  to  the  action  on  the  orig- 
inal cause  of  action.  Since  the  case  of  Ford  v.  Beech,  however,  we  must  take  it 
for  granted  that  agreements  of  this  nature  operate  only  to  give  a  cross-action, 
and  do  not  prevent  an  action  on  the  original  cause  of  action. 

However  the  doctrine  arose,  we  must  consider  it  quite  settled  that  an  agree- 
ment for  good  consideration  with  the  principal  debtor,  so  far  ties  up  tli^  hands  of 
the  creditor  who  has  entered  into  such  an  agreement,  as  that  the  surety  is  dis- 
charged ;  and  we  (luite  agree  with  the  doctrine  of  Lord  Weiislcydalc,  in  Moss  r. 
Hall,  5  Exch.  46,  that  this  remains  law,  notwithstanding  the  argument  which 

36 


562  DISCHARGING   INDORSEE   OR   DRAWER. 

appears  to  have  been  raised  in  that  case,  founded  on  Ford  v.  Beech.  The  surety 
has  a  right  at  any  time  to  go  to  the  creditor  and  say  :  "  I  suspect  the  principal 
debtor  to  be  insolvent;  I  will  pay  you,  and  I  wish  you  to  sue  him."  See  the 
observations  of  Williams,  J.,  in  Strong  v.  Foster,  17  Com.  B.  201,  219  [E.  C. 
L.  R.  vol.84].  If,  by  a  binding  agreement  with  the  principal  debtor,  the  creditor 
has  agreed  not  to  sue  him  for  a  limited  time,  it  would  be  a  breach  of  faith  of 
which  the  principal  debtor  would  have  a  right  to  complain,  if  an  action  were 
brouglit  against  him  within  the  period.  And  this  is  held  to  discharge  the  surety, 
although  it  seems  from  Ford  v.  Beech  that  he  could  still  do  so  at  tlie  risk  of  an 
action  by  the  principal  debtor,  on  the  contract  to  suspend  suing.  It  is,  however, 
a  very  different  question  whether  this  doctrine  is  to  be  extended  for  the  first  time 
to  a  case  of  a  contract  with  a  stranger,  of  which  the  debtor  is  ignorant,  to  which 
he  is  not  privy,  and  in  which  the  damages  to  the  stranger  for  breach  of  contract 
may  be  merely  nominal.  The  doctrine  contended  for  would  go  the  length  of 
establishing  that,  whenever  the  creditor  has  placed  himself  in  a  position  in 
which  it  is  against  his  interest  to  sue  the  debtor,  he  has  discharged  the  surety. 

We  think  that  the  doctrine  ought  not  to  be  extended  to  the  case  of  a  contract 
with  a  stranger.  The  principal  debtor  having  given  no  consideration  for  the 
promise,  has  no  ground  to  complain  of  the  breach  of  it,  and  cannot  say  that 
faith  has  been  broken  with  him.  There  is  no  privity  of  contract  with  him  ;  and 
we  see  nothing  on  which  any  right,  either  at  law  or  in  equity  (see  Lord  Ahinga'''s 
observations  in  Lyon  v.  Holt,  5  Mees.  &  W.  250,  253,  254),  for  him  to  insist  on 
such  a  contract  can  be  founded.  The  stranger  may  have  some  private  reason  of 
his  own  to  wish  for  some  indulgence  to  be  shown  ;  and  if  he  has  given  a  good 
consideration,  may  be  entitled  to  damages,  nominal,  or  large  or  small,  according 
to  any  legal  interest  he  may  have ;  but  surely  he  is  the  only  person  to  take  ad- 
vantage of  his  contract. 

No  such  doctrine  as  that  there  can  be  a  discharge  in  such  case  arising  from  a 
contract  with  a  stranger  has  ever  yet  been  established.  In  all  the  text-books 
which  were  cited,  the  rule  is  laid  down  as  to  a  binding  contract  xcith  the  acceptor 
or  jyrincipal  debtor.  The  case  of  Moss  v.  Hall,  5  Exch.  46,  on  which  the  princi- 
pal reliance  was  placed  by  the  defendant,  was  the  case  of  a  contract  with  the 
acceptor ;  and  it  was  to  such  a  case  that  the  observations  of  Lord  Wensleydale 
were  addressed ;  and  the  only  case  in  which  it  has  been  suggested  that  a  contract 
with  a  stranger  would  be  sufficient,  is  a  strong  authority  against  such  a  doctrine. 
That  was  the  case  of  Lyon  v.  Holt,  5  Mees.  &  W.  250,  which  was  an  action  by  the 
indorsee  of  a  bill  of  exchange,  alleged  in  the  declaration  to  have  been  drawn  by 
Hobson  on  Hynes,  and  indorsed  by  the  drawer  to  the  defendant,  and  by  him  to 
Messrs.  Woosters,  and  by  them  to  the  plaintiffs.  The  defendant  pleaded  that 
the  indorsement  by  the  defendant  was  not  directly  to  Woosters,  but  was  an  in- 
dorsement by  the  defendant  to  John  Holt  &  Co.  (persons  other  than  the  de- 
fendant), and  by  John  Holt  &  Co.  to  Woosters,  and  that  there  had  been  an 
agreement  between  the  plaintiffs  and  John  Holt  &  Co.  to  give  time  to  all  the 
parties  on  the  bills  in  question  amongst  others,  and  a  giving  of  time  in  con- 
sequence. At  the  trial,  the  agreement  between  the  plaintiff  and  John  Holt  & 
Co.  to  give  time  to  all  the  parties  on  the  bill,  and  the  giving  the  time,  was 
proved ;  but  it  was  not  proved  that  John  Holt  &  Co.  were  parties  to  the  bill.  A 
verdict  having  passed  for  the  defendants,  and  a  rule  having  been  obtained  to  en- 


COUCH   V.    WARING.  503 

ter  a  verdict  for  the  plaintiflTs,  the  question  arose  whether  it  was  a  mati-rial  alle- 
gation that  John  Holt  &  Co.,  the  [)ersons  witli  wlioin  the  agrieinent  was  made, 
were  parlies  to  the  liill ;  and  it  was  snggested  that  it  was  suflicient  to  show  a 
contract  to  give  time  to  the  acceptor,  and  that  there  was  nothing  in  the  aiitliori- 
ties  to  show  that  the  contract  must  be  U'ith  him.  Tiie  Court,  after  taking  time  to 
consider,  held  that  the  plea  was  not  proved,  and  ordered  the  verdict  to  be  entered 
for  the  plaintiffs.  This  was  a  decision  that  the  allegation  that  the  person  with 
■whom  the  agreement  to  give  time  to  prior  parties  on  the  bill  is  made  is  a  party  to 
tlie  bill,  is  a  material  part  of  the  plea.  If,  as  contended  in  the  present  case,  a 
contract  with  a  stranger  was  suflicient,  the  plea  would  have  been  proved  by 
proof  of  the  contract  witii  Holt  &  Co.,  though  they  were  strangers  to  the  bills. 

This  ia  a  distinct  authority  in  favor  of  the  plaintiffs ;  there  is  no  case  or  doc- 
trine the  other  way ;  and  the  text-writers  all  treat  the  agreement  which  is  to  dis- 
charge the  surety  as  one  made  with  the  principal  debtor. 

We  are  not  inclined  to  extend  the  rule  for  the  first  time  to  a  contract  with  a 
stranger;  but,  for  the  reasons  already  stated  we  think  that  the  plea  is  bad,  and 
therefore  that  judgment  should  Ite  entered  for  the  defendant. 

Judgment  for  the  defendant. 

See  also,  as  to  agreements  for  delay.  Bank  of  the  United  States  v.  Hatch,  6 
Peters,  2o0 ;  Lenox  r.  Prout,  3  Wheat.  520  ;  Lee  v.  Levi,  1  Car.  &  P.  553 ; 
Price  r.  Edmunds,  10  Barn.  &  C.  578;  Kennard  v.  Knott,  4  Man.  &  G.  474; 
Bray  v.  Manson,  8  Mees.  &  W.  668. 

The  last-named  case  holds  that,  where  time  was  given  to  a  prior  indorser  after 
judgment  had  been  signed  in  an  action  upon  the  same  bill  of  exchange  against  a 
subsequent  indorser,  the  Court  will  not  interfere  to  set  aside  the  judgment  on 
that  ground,  as  the  judgment  could  not  be  affected  by  such  indulgence  given 
after  it  was  signed.     See  also  Baker  v.  Flower,  5  Jur.  635. 


Couch  v.  Waring. 

(9  Connecticut,  261.     Supreme  Court,  June,  1832.) 

Judqment  and  execution  wjainst  maker.  Indorser  sued  for  balance.  —  The  holder  of  a  prom- 
issory note  sued  the  maker  thereof,  and  obtained  judgment,  which  was  satisfied  on 
execution.  He  tlien  brouglit  an  action  against  an  indorser  to  recover  a  balance 
of  interest  due  on  tiie  note,  not  included  in  tlie  judgment  and  execution.  Held, 
that  tlie  ctlect  of  the  former  proceedings  was  to  discliarge  the  maker  from  further 
liability,  and  to  preclude  the  holder  from  resorting  to  the  indorser. 

The  case  is  sufficiently  stated  in  the  head-note. 

BissKLL,  J.     It  has  been  strongly  insisted  upon,  in  the  argu- 
ment of  this  case,  that  the  judgment  and  execution  otTered  in  the 


564  DISCHARGING   INDORSER   OR  DRAWER. 

Court  below,  being  res  inter  alios  acta;,  were  admissible  only  to 
prove  a  payment  ;vro  tanto.  To  this  it  may  be  answered,  that  the 
records  offered,  are  evidence  of  the  facts  therein  contained  ;  and 
of  the  legal  consequences  which  result  from  those  facts.  If, 
therefore,  the  legal  effects  of  the  facts  disclosed  upon  these  records 
be  to  discharge  Waterbury,  the  maker  of  the  note,  it  is  idle  to 
contend,  that  the  evidence  is  not  available  for  this  purpose,  as  well 
as  to  prove  payment. 

What,  then,  is  the  legal  effect  of  the  facts,  appearing  upon  this 
record  ?     This  is  the  qviestion  now  presented  for  decision. 

Some  principles,  regarding  bills  of  exchange  and  promissory 
notes,  and  having  a  bearing  on  this  case,  are  too  well  settled  to 
admit  of  dispute  or  doubt. 

There  is,  for  instance,  no  principle  better  established,  than  that 
a  judgment  against  the  maker,  discharges  none  of  the  subsequent 
parties  to  a  promissory  note.  Nor  does  a  mere  technical  satisfac- 
tion constitute,  for  them,  any  defence  ;  as  where  the  acceptor  of 
a  bill  of  exchange  was  charged  in  execution,  and  discharged  under 
the  lords'  act.  And  where  the  maker  of  a  promissory  note,  being 
taken  in  execution,  was  discharged  under  an  insolvent  debtor's 
act,  it  was  holden,  that  the  subsequent  parties  still  remained  lia- 
ble. Chitty .  Bills,  161,  362 ;  Macdonald  v.  Bovington,  4  T.  R.  825  ; 
Nadin  v.  Battle  &  al.,  5  East,  147. 

So  also,  if  the  maker  become  a  bankrupt,  and  the  holder  prove 
his  debt  under  the  commission,  and  receive  a  dividend,  this  will 
not  prevent  him  from  resorting  to  the  subsequent  parties  to  the 
note.  Nor  will  he  be  thus  precluded,  although  he  receive  part- 
payment  from  the  maker,  or  levy  a  part  under  a  Ji.  fa.  against 
him  ;  for  this  is  for  the  benefit  of  all  parties.  Gould  v.  Robson 
&  al.,  8  East,  576  ,  580  ;  Walwyn  v.  St.  Quintin,  1  Bos.  &  Pul.  652  ; 
Ux  parte  Wilson,  11  Ves.  411  ;  Kenworthy  v.  Hopkins,  1  Johns. 
Cas.  107. 

On  the  other  hand  it  is  equally  well  settled,  that  if  the  holder 
give  time  to  the  maker,  or  take  from  him  any  new  security  pay- 
able at  a  future  day,  without  the  assent  of  the  other  parties  to  the 
note,  they  are  thereby  discharged  from  their  liability. 

So  also,  if  the  holder  enter  into  a  composition  with  the  maker, 
or  discharge  him,  or  do  any  act,  the  effect  of  which  is  to  dis- 
charge him,  (as  by  letting  him  out  of  custody  upon  a  ca.  sa.^  the 
subsequent  parties  to  the  note  are  also  discharged.     Claxtori  v. 


COUCH    V.    WARING.  5G5 

Swift,  3  Mod.  87  ;  English  v.  Darley,  2  Bos.  &  Piil.  61 ;  s.  c,  3 
Esp.  49 ;  Clark  &  al  v.  Devlin,  3  Bos.  k  Pul.  303  ;  Gould  v.  Rol)- 
8on,  8  East,  576,  580 ;  James  v.  Badger,  1  Johns.  Cas.  131. 

The  principles  involved  in  these  decisions,  are  oi)viously 
these : — 

1.  That  the  holder  of  a  promissory  note  is  entitled  to  actual 
payment  of  it.  This  right  the  mere  act  of  the  law  never  takes 
from  him,  and  so  long  as  he  remains  passive,  or  does  not  act  to 
imi)air  this  right,  he  may  enforce  such  payment  from  any  or  all 
the  parties  liable.     But 

2.  As  the  maker  of  a  note  is  previously  liable  ;  and  the  indors- 
ers  are  in  the  nature  of  sureties,  for  the  performance  of  his  act, 
and  have  a  right  to  look  to  him  for  indemnity  ;  if  the  holder  do 
any  act,  the  effect  of  which  is  to  suspend,  or  to  impair,  or  to  de- 
stroy that  right,  he  cannot  afterwards  resort  to  them. 

Within  which  of  these  principles  does  the  case  before  us  fall  ? 
It  seems  to  me  to  fall  clearly  within  the  latter  ;  and  that  the 
maker  of  this  note  is  for  ever  discharged,  1)y  the  acts  of  the  plain- 
tiff, lie  had  the  entire  dominion  of  the  note,  upon  wliicli  he 
caused  the  action  to  be  brought.  He  stated  his  own  demand, 
prayed  out  execution,  and  procured  that  execution  to  be  satisfied 
out  of  the  goods  and  estate  of  the  maker.  In  this  the  plaintiff 
has  acted  voluntarily.  No  part  of  the  proceedings  were,  as  to 
him,  in  invitum.  He  was  not  bound  to  take  judgment  for  a  less 
sum  than  was  due  on  the  note ;  nor  was  he  obliged  to  enforce  that 
judgment  even  after  it  was  obtained.  He  might  then  have  re- 
sorted to  the  indorser.  He  did  not  choose  to  do  so  ;  but  proceeded 
to  compel  the  actual  payment  of  his  judgment  against  the 
maker. 

What  is  the  effect  of  these  acts  of  the  plaintiff  ?  Is  it  not  to 
discharge  the  maker  of  the  note  from  all  liability?  That  the 
plaintiff  cannot  again  resort  to  him,  is  clear  beyond  all  doubt. 
This  would  be  to  defy  all  principle  and  all  analogy. 

The  debt  as  to  him,  is  extinguished  ;  and  as  against  him,  the 
maker  has  the  highest  discharge  known  to  the  law.  He  can  have 
no  relief  even  by  petition  for  a  new  trial.  Can  he,  then,  by  pro- 
ceeding against  the  indorser,  authorize  him  to  resort  to  the  maker  ? 
Or,  in  other  words,  may  he  do  that  indirectly,  which  he  has  pre- 
cluded himself  from  doing  directly  ?  It  has  been  gravely  con- 
tended that  he  may.     It  is  said,  this  action  is  sustainable,  because 


566  DISCHARGING   INDORSER   OR   DRAWER. 

the  defendant  may  have  his  remedy  over,  against  the  maker  of  the 
note.  « 

If  the  premises  were  true,  the  conclusion  would,  undoubtedly, 
follow.  But  they  are  denied  ;  and  if  found  to  be  false,  it  is 
admitted  that  the  conclusion  must  fail.  Now  I  very  well  know 
that  tliere  are  cases,  in  which  the  holder  of  a  note  is  precluded 
from  resorting  to  the  maker,  and  yet  may  proceed  against  the  sub- 
sequent parties  ;  and  they,  having  paid  the  note,  may  resort  to  the 
maker  for  their  indemnity.  As  where  he  is  discharged  under  the 
lords'  act,  or  under  the  insolvent  debtor's  act,  or  has  become  bank- 
rupt, and  obtained  his  certificate.,  But  in  all  these  cases,  an  act 
of  the  law  has  intervened,  and  prevented  the  holder  from  resort- 
ing to  the  drawer  of  the  note,  on  the  ground,  that  as  between 
them,  there  is  a  technical  satisfaction. 

But  these  cases  do  not  go  one  step  towards  establishing  the 
principle  here  contended  for.  Here  the  holder  has,  by  his  own 
voluntary  acts,  precluded  himself  from  resorting  to  the  maker. 
And  is  there  a  case  to  be  found,  where  this  has  been  done,  and 
the  subsequent  parties  to  the  note  have  still  been  held  liable  ?  Can 
a  debt  be  extinguished,  by  the  act  of  its  owner,  and  yet  the  surety 
for  that  debt  remain  unanswerable  ?  Upon  what  principle  is  it,  that 
where  time  is  given  to  the  maker,  the  subsequent  parties  to  the 
note  are  discharged  ?  Clearly,  upon  this  principle ;  that  if  pay- 
ment might  be  enforced  against  a  subsequent  party  he  would  have 
an  immediate  right  of  action  against  the  maker ;  and  the  law  will 
not  endure,  that  the  holder  may  do  that  indirectly,  which  he  has 
precluded  himself  from  doing  directly.  It  would  be  a  breach  of 
faith. 

But  here  the  holder  has  done  an  act  which  prevents  him  from 
resorting  to  the  maker  in  all  time.  He  has  discharged  him.  Can 
he,  then,  without  a  violation  of  all  principle,  authorize  a  subse- 
quent party  to  the  note,  to  do  that  which  he  can  never  do  ?  and 
which  he  is  prevented  from  doing,  not  by  an  act  of  the  law,  but 
by  a  course  of  proceedings  entirely  voluntary  on  his  part  ? 

But  it  has  been  urged,  that  the  undertaking  of  the  indorser  is, 
that  the  maker  shall  pay  the  entire  sum  due  on  the  note ;  and  as 
only  a  part  has  been  paid,  the  indorser  is  liable. 

If  the  preceding  observations  are  correct,  they  furnish  a  decisive 
answer  to  this  claim. 

But  why  was  not  the  whole  sum  due  on  the  note  paid  ?     The 


COUCH    V.    WARING.  507 

only  reason  assigned  is,  tliat  the  holder  saw  fit  to  take  jud^nnont 
for  a  less  sum.  And  having  enforced  payment  of  the  judgment, 
he  now  resorts  to  the  indorser  to  recover  the  balance.  And  this, 
it  is  contended,  he  has  a  legal  right  to  do  ;  that  is,  tiie  holder  of  a 
promissory  note  may  so  sever  and  divide  an  entire  contract,  as  to 
'sue  for  and  recover  distinct  portions  of  it,  of  each  of  the  parties 
lia])le.  If,  for  instance,  he  hold  a  note  of  83000  with  two 
indorsements,  he  may  sue  for  and  recover  81000  of  the  maker, 
and  SIOOO  of  each  of  the  indorsers ;  and  they,  in  their  turn, 
may  have  their  remedies  over  against  the  maker  for  the  sums 
recovered  of  them  respectively  ;  so  that  after  having  satisfied 
one  judgment,  the  maker  is  still  liable  to  two  further  judg- 
ments on  one  and  the  same  undertaking.  In  what  book  of 
authority  or  upon  what  ))rinci]jle  is  this  doctrine  sanctioned  ? 

It  has,  indeed,  been  urged,  that  this  is  nothing  more  than  what 
obtains,  almost  daily,  in  practice. 

It  is  said,  that  the  holder  of  a  note  may  proceed  against  all  the 
parties  to  it,  may  recover  judgment  against  all,  and  may  obtain  a 
partial  satisfaction  of  one  party  and  the  residue  of  another. 
All  this  is  true.  But  he  can  obtain  but  one  satisfaction  and  his 
costs.  And  I  have  yet  to  learn,  that  where  a  party  has  rightfully 
paid  a  judgment  recovered  against  him,  he  may  be  a  second  time 
subjected  upon  the  contract,  which  was  the  foundation  of  that 
judgment. 

In  Windham  v.  Wither,  1  Stra.  516,  the  plaintiff  bronglit  two 
actions  on  a  promissory  note  ;  one  against  the  maker  and  another 
against  the  indorser,  and  recovered  in  both.  And  the  principal 
in  one  judgment  and  the  costs  in  both  having  been  tendered,  it  was 
moved,  that  no  execution  might  be  taken  out,  which  was  ordered 
accordingly  ;  and  the  Court  said,  they  would  have  laid  the  plain- 
tiff by  the  heels  if  he  had  taken  out  execution  upon  both. 

I  am  of  opinion  that  this  action  cannot  be  sustained  ;  and  that 
the  rule  to  show  cause  must  be  discharged. 

Tlie  other  judges  were  of  the  same  opinion. 

New  trial  not  to  he  granted. 

See  the  preceding  cases  and  notes. 


568  discharging  indorser  or  drawer. 

Newcomb  v.  E-aynor  and  Others. 

(21  Wendell,  108.     Supreme  Court  of  New  York,  May,  1839.) 

Release  of  first  indorser.  —  If  the  holder  of  a  promissory  note  release  the  first  indorser, 
this  discharges  the  subsequent  indorsers. 

Assumpsit  against  the  maker  and  second  and  third  indorsers  of 
a  promissory.  Plea  by  the  indorsers  that  the  holder  had  given  a 
release  under  seal  to  the  first  indorser.     Demurrer  to  the  plea. 

Nelson,  C.  J.  I  am  of  opinion  the  plea  constitutes  a  good  bar 
to  the  action.  As  between  the  first  and  subsequent  indorsers,  the 
former  must  be  regarded  in  the  light  oi  principal ;  he  stands 
behind  them  upon  the  paper,  and  is  bound  to  take  it  up,  in  case  of 
default  of  the  maker.  A  discharge  of  him,  therefore,  by  the  holder 
(regarding  the  relative  position  of  the  parties),  on  general  princi- 
ples, operates  to  release  them. 

It  is  said  their  rights  are  not  prejudiced,  as  they  may  still  resort 
to  an  action  against  him  if  subjected  to  the  payment  of  the  note, 
as  the  release  leaves  the  implied  contract  existing  between  t\\Q  first 
and  subsequent  indorsers  unimpaired.  Conceding  this  to  be  so,  to 
permit  a  recovery  against  the  defendants  would  but  lead  to  an 
unnecessary  circuity  of  action.  The  plea  shows  a  discharge  for  a 
presumed  good  consideration  (as  it  is  under  seal)  of  the  first 
indorser,  and  it  cannot  be  doubted  as  the  case  stands,  that  if  the 
defendants  should  be  obliged  to  call  upon  him,  the  plaintiff  would 
be  bound  to  take  his  place.  The  case,  therefore,  comes  within  the 
familiar  rule,  that  a  release  of  the  principal  operates  to  discharge 
the  surety. 

It  is  further  said  that  Goings  may. not  have  been  legally  charged 
as  an  indorser.  If  this  were  so,  the  plaintiff  should  have  replied 
the  fact,  as  we  will  not  presume  it  in  the  face  of  the  acts  of  both 
him  and  the  plaintiff  to  the  contrary.  The  release  would  not  have 
been  necessary  on  such  a  supposition. 

'Judgment  for  defendants  on  demurrer ;  leave  to  amend  on  usual 
terms. 


PANNELL   V.    M'MECHEN.  609 

Pannell  v.  M'Mechen. 

(•i  Harris  &  Johnson,  474.     Court  of  Appeals  of  Maryland,  June,  1810.) 

Composition  ckrd.  Jiemidy  (ifjctinsi  intluisei-  resevfed.  — A  made  a  negotiable  note  payalile 
to  15,  wiio  indorsed  it  to  C,  by  wliom  it  was  indorsed  to  D.  A  and  B  made  a  com- 
position deed  witli  tlieir  creditors,  and  conveyed  all  their  estate  to  trustees,  among 
whom  was  C,  and  were  discharge<l,  with  the  proviso  "  that  the  said  release  shall 
not  operate  in  favor  of  or  be  construed  to  release  any  persons  or  person  wlio  may 
be  bound,  &c.,  for  A  and  B,  or  eitlier  of  them,  or  who  may  have  indorsed  any  note 
or  notes  drawn  or  indorsed  by  the  said  A  and  B,  or  either  of  them."  Held,  that  C, 
who  had  received  due  notice  of  dishonor,  was  liable  to  D. 

Api'h.vl  from  Baltiiuore  County  Court.  Assumpsit  on  a  promis- 
sory note  by  the  indorsee  (the  appellant),  against  the  last  indorser 
(the  appellee).  The  declaration  contained  two  counts,  one  on  the 
note,  and  one  for  money  lent  and  advanced.  The  facts  as  agreed 
upon  were  these :  The  action  is  brought  upon  a  promissory  note 
drawn  on  the  twenty-seventh  of  April,  1813,  by  John  E.  Dorsey, 
for  $3000,  payable  ninety  days  after  date  to  Walter  Dorsey,  or 
order,  by  him  indorsed  to  the  defendant,  or  order,  and  by  the  de- 
fendant indorsed  to  the  plaintiff,  or  order.  Across  the  face  of  the 
note  was  written  in  red  ink,  "  This  note,  lield  by  Edward  Pannell, 
at  the  time  of  signing  the  deed  of  trust  from  Wm.  H.  Dorsey  and 
others  to  Henry  Payson  and  others,  forms  part  of  the  lien  of  $G4,o00 
to  W.  M'Mechen,  mentioned  in  said  deed.     John  E.  Dorsey." 

All  the  signatures  to  the  note  were  admitted.  Due  and  legal 
notice  of  its  non-payment  by  the  drawer  was  given  to  the  several 
indorsers ;  and  the  plaintiff  was  the  holder  of  the  note  at  the  time 
it  became  due.  The  above-mentioned  writing  in  red  ink  was 
made  and  signed  by  John  E.  Dorsey,  and  was  so  made  and 
signed  by  him  in  pursuance  and  in  execution  of  a  power  vested 
in  him  by  the  deed  hereinafter  mentioned.  A  deed  of  trust 
was  executed  by  William  H.  Dorsey  and  others  to  Henry  Payson 
and  others,  on  the  twenty-third  of  June,  1813,  a  copy  of  which 
was  annexed,  and  admitted  to  be  a  true  and  correct  copy,  and  that 
the  signature  and  seal  of  Edward  Pannell,  the  plaintiff,  to  the  said 
deed,  was  his  signature,  and  that  he  had  duly  executed  tlie  deed 
within  the  fifty  days  prescribed  therein.  No  part  of  the  sum 
specified  in  the  note,  and  for  the  recovery  of  which  this  action  was 


570  DISCHARGING    INDORSER   OR   DRAWER. 

brought,  had  been  paid  or  satisfied  to  the  plaintiff.  The  question 
on  this  statement  of  facts  was,  wliether  or  not  the  plaintiff  was 
entitled  to  recover  ?  The  deed  referred  to  was  dated  the  twenty- 
third  of  June,  1813,  and  was  between  William  H.  Dorsey,  John  E. 
Dorsey,  and  Walter  Dorsey,  of  the  first  part,  Robert  Gilmor,  &c., 
of  the  second  part,  Henry  Payson,  William  M'Mechen,  &c.,  of  the 
third  part,  "  and  the  creditors  of  the  said  William  H.  Dorsey,  John 
E.  Dorsey,  and  Walter  Dorsey,  who  shall  sign  and  seal  these 
presents  within  fifty  days  next  ensuing  the  day  of  the  date  hereof, 
and  also  such  other  creditors  of  the  said  William  H.  Dorsey  as  are 
hereinafter  specially  provided  for  (without  their  signing  and  seal- 
ing these  presents),  of  the  fourth  or  other  part."  The  deed  then 
states  that  sundry  tracts  of  land,  &c.,  thereinafter  mentioned,  had 
been  mortgaged  to  Robert  Gilmor,  &c.  ;  that  William  H.  Dorsey, 
(fee,  were  indebted  to  sundry  persons  in  divers  sums  of  money, 
which  they  were  incapable  of  discharging  otherwise  than  in  the 
manner  thereinafter  mentioned  ;  that  "  in  order  to  discharge  the 
said  several  debts,  they  have  proposed  and  agreed  to  convey,  &c., 
unto  the  parties  of  the  third  part,  and  the  survivors,  &c.,  for  the 
benefit  of  the  parties  thereto  of  the  second  part,  and  of  such  of 
the  said  parties  of  the  third  part  as  are  creditors,  and  of  the  rest 
of  the  creditors  of  the  said  William  H.  Dorsey,  &c.,  in  the  manner 
and  under  and  subject  to  the  powers,  provisos,  and  conditions 
hereinafter  expressed  and  declared,  all  and  singular  the  real  and 
personal  estate  hereinafter  described  or  mentioned."  The  said 
William  H.  Dorsey,  &c.,  pursuant  to  the  said  agreement,  and  in 
consideration  of  the  said  sums  of  money  so  due  and  owing  from 
them,  and  in  consideration  of  the  sum  of  one  dollar,  &c.,  granted, 
(fee,  to  Henry  Payson,  &c.,  sundry  tracts  of  land,  &c.  ;  to  have 
and  to  hold  the  said  lands,  &c.,  unto  the  said  Henry  Payson,  &c., 
and  the  survivors,  &c.,  upon  certain  trusts,  <fec.  That  certain 
funds  be  applied,  in  the  first  place,  to  discharge  the  debt  due  to 
Robert  Gilmor,  &c.  In  the  second  place,  one-half,  <fcc.,  to  be  ap- 
plied to  the  payment  of  819,000  due  and  owing  by  John  E.  Dorsey 
for  borrowed  money,  and  to  extinguish  the  interest  on  864,400, 
and  any  indorsements  or  engagements  which  shall  be  admitted  by 
John  E.  Dorsey  within  fifty  days,  over  and  above  that  sum,  being 
the  admitted  lien  of  the  said  William  M'Mechen  on  the  estate  and 
property,  <fec.  After  stating  sundry  other  things  it  proceeds  as  fol- 
lows :    "  And  such  of  the  parties  hereto  of  the  third  part,  as  are 


PANNELL    V.    M'MECHEN.  571 

creditors,  and  all  the  parties  hereto^  of  the  fourth  part  whose 
names  are  hereunto  sul)scril)ed  and  seals  aflixed,  do  hereby  re- 
spectively signify  and  declare  their  assent  to  the  terms  and  con- 
ditions of  this  deed,  and  their  approbation  of  tlie  jjrovisions  hereby 
made  for  the  satisfaction  and  discharge  of  their  several  and 
respective  debts  and  claims,  and  in  consideration  thereof  they  do 
severally  and  respectively  release,  acquit,  and  by  these  presents 
for  ever  discharge,  the  said  William  H.  Dorsey,  John  E.  Dorsey, 
and  Walter  Dorsey,  their  heirs,  etc.,  and  each  and  every  of  them, 
and  from  the  payment  of  the  debts  and  sums  of  money  due  or 
owing  to  them,  the  said  creditors,  from  or  by  the  said  William  H. 
Dorsey,  John  E.  Dorsey,  and  Walter  Dorsey,  jointly,  or  from  or 
by  any  or  either  of  them  jointly  or  individually  ;  and  also  from 
all  other  claims  and  demands  whatever,  from  the  beginning  of  the 
world  to  the  date  of  these  presents.  Provided  that  the  said  release 
shall  not  operate  in  favor  of,  or  be  construed  to  release  any  persons 
or  person  who  may  Ijc  bound  for  the  said  William  H.  Dorsey,  Jolni 
E.  Dorsey,  and  Walter  Dorsey,  or  any  or  either  of  them,  or  who 
may  have  indorsed  any  notes  or  note  drawn  or  indorsed  by  the 
said  William  H.  Dorsey,  John  E.  Dorsey,  and  Walter  Dorsey,  or 
any  or  either  of  them."  This  deed  was  signed,  sealed,  and  ac- 
knowledged by  the  Dorseys  and  Gilmor,  and  by  all  the  parties 
named  therein,  and  among  others  by  the  plaintiff.  On  these  facts 
the  County  Court  gave  judgment  for  the  defendant,  and  the  plain- 
tiff appealed  to  this  Court. 

Johnson,  J.  The  present  is  an  appeal  from  a  judgment  obtained 
by  the  appellee  on  a  suit  brought  against  him  l)y  the  appellant, 
decided  on  a  case  stated.     [After  stating  the  facts  he  proceeded.] 

On  those  facts  the  plaintilT  ought  and  would  have  recovered  a 
judgment.  The  defence  relied  on  is  that  the  plaintiiT,  the  indorsee, 
and  holder  of  the  note,  released  the  drawer  and  the  first  indorser, 
and  thereby  discharged  the  last  indorser. 

In  forming  an  opinion  in  this  cause,  the  nature  of  the  release  in 
question,  and  the  manner  and  terms  on  which  it  was  obtained, 
demand  particular  attention.  The  drawer  and  the  first  indorser, 
finding  themselves  in  emliarrassed  circumstances,  unal)lc  to  meet 
their  engagements  as  they  became  due,  propose  to  compound  with 
their  creditors ;  and  on  the  twenty-third  of  June,  1813,  executed 
a  deed  of  trust  to  certain  trustees,  of  whom  the  defendant  was 


572  DISCHARGING   INDORSEE   OR   DRAWER. 

one,  of  a  large  real  and  personal  estate,  to  be  by  them  applied 
towards  the  payment  of  their  debts,  in  the  order  directed  by  the 
deed ;  thereby  securing,  or  attempting  to  secure,  to  the  defendant 
in  this  cause,  the  payment  of  the  notes  in  question,  on  the  terms 
that  such  of  their  creditors  as  should  come  in  and  assent,  by  be- 
coming parties  to  the  deed,  should  participate  and  have  an  interest 
in  the  property  so  conveyed.  The  deed  itself  contains  a  clause  by 
which  the  drawer  and  the  first  indorser  arS  released,  on  the  express 
terms  that  such  release  should  not  extend  to  any  other  person,  but 
that  such  person  should  continue  responsible  as  if  the  deed  had 
not  been  executed.  To  those  terms  the  plaintiff  and  defendant 
assented,  and  signed  their  names,  and  set  their  seals  to  the  instru- 
ment. 

It  is  on  that  release,  so  obtained,  and  on  such  express  stipulations, 
that  the  defendant,  against  the  express  terms  of  the  instrument 
itself,  relies  for  his  exoneration. 

The  first  question  which  arises  is,  ought  a  release  on  principle 
so  obtained,  with  the  consent  of  all  parties  interested,  specify- 
ing its  extent  and  object,  to  be  extended  beyond  the  stipulated 
object  ? 

The  second  is,  will  the  law,  against  the  express  agreement  of  all 
the  parties  interested,  enlarge  the  release  so  as  to  produce  a  result 
different  from  the  express  stipulations ;  in  otlier  words,  to  give  to 
the  last  indorser  the  benefit  of  the  release  against  his  express 
agreement  ? 

The  object  of  the  deed  of  trust  was  to  give  to  the  creditors  of 
the  drawer  and  first  indorser  all  the  benefit  they  could  derive  from 
the  property  so  conveyed,  as  between  them  this  arrangement  was 
of  considerable  moment  ;  without  it  the  second  indorser  would 
have  had  nothing  to  rely  on  but  the  individual  responsibility  of  the 
drawer  and  first  indorser ;  that  individual  responsibility  he  was 
willing  to  release,  on  the  substitution  of  the  property  conveyed  on 
the  terms  and  on  the  conditions  prescribed  by  the  deed. 

It  may  be  asked,  why  must  a  release,  to  which  all  persons  in- 
terested are  parties,  have  an  effect  different  from  that  they  agreed 
on  ?  Will  it  violate  any  well-known  rule  of  law,  or  is  it  incon- 
sistent with  any  principle  of  justice  or  propriety  ?  So  far  from 
the  latter  being  the  case,  the  reverse  appears  to  follow  ;  for  as  the 
original  debtors  were  bound  to  pay  the  whole,  and  as  they  could 
not,  but  were  willing  to  transfer,  on  terms  acceptable  to  all  inter- 


PANNELL    V.    M'MECHEN.  573 

ested,  what  they  had,  for  the  easement  of  those  wlio  were  bound 
for  them,  the  refusal  of  liim  then  holdnig  the  obligation  to  accede 
to  sucli  terms,  would  present  grounds  of  complaint ;  not  such,  it 
is  true,  as  would  exonerate  those  who  were  bound  for  them.  But 
although  it  would  not  free  them,  yet  it  is  evident  such  refusal,  in 
Its  result,  must  draw  more  from  the  funds  of  the  last  indorser 
than  otherwise  would  have  been  the  case.  With  tlie  assent  of  tiie 
holder  of  tiic  note,  a  part,  if  not  the  whole,  might  have  been  raised 
from  tiie  funds  of  the  drawer  and  first  indorser.  Those  funds 
could  not  be  ol)tained  except  on  their  discharge  ;  that  discharge 
the  second  indorser  was  willing  to  assent  to,  remaining  himself 
responsible.  But,  if  such  discharges  cannot  be  obtained  without 
releasing  the  last  indorser  also,  then  no  accommodation  for  his 
benefit,  requiring  the  assent  of  the  holder,  can  ever  be  ob- 
tained. 

The  question  then  is,  must  the  release  of  the  drawer  and  first 
indorser,  by  virtue  of  any  fixed  principle  of  law,  release  also 
the  next  indorser,  when  he  is  a  party  to  the  instrument  contain- 
ing the  release,  expressly  declaring  such  should  not  be  the  effect  ? 

In  a  case  of  this  description,  when  a  person  claims  tiie  benefit 
of  a  release  against  its  terms,  to  which  he  has  assented,  it  might 
be  expected  some  decisions  in  support  of  the  position  would  have 
been  produced  ;  none  such  have  been  cited. 

The  cases  relied  on  are,  that  a  release  given  to  a  joint  obligor, 
or  to  joint  and  several  obligors,  will  release  the  other,  and  that  a 
release  to  one  trespasser,  will  release  the  co-trespasser. 

As  to  tiie  case  of  the  joint  obligor  released,  discharging  the 
other,  the  principle  of  the  decision  seems  to  be,  that  unless  it  ex- 
tended to  all,  the  person  to  whom  the  release  was  given  could 
obtain  no  benefit  l)y  it  ;  and  therefore,  that  a  release  given  to  such 
an  obligor,  should  extend  to  the  co-obligor,  although  the  release 
on  its  facts  contained  a  proviso  to  the  contrary. 

The  only  case  which  has  been  produced  of  such  a  limited  or 
restricted  release  is  Everard  v.  ilerne,  in  Littleton,  100 ;  but  the 
counsel  differ  in  opinion  as  to  the  real  state  of  that  case.  The 
one  supposes  the  bond  to  have  been  joint  only,  the  other  joint  and 
several.  The  reason  why  it  is  conjectured  to  have  been  joint  and 
several  is  that  the  suit  was  brought  against  one.  There  is  noth- 
ing in  the  case  from  which  it  is  to  be  inferred  the  bond  was  several 
as  well  as  joint,  except  only  that  one  was  sued.  Nor  is  it  deemed 
of  any  importance  whether  joint,  or  joint  and  several.     But  sup- 


574  DISCHARGING   INDORSER   OR   DRAWER. 

posing  the  case  in  Littleton  to  have  been  on  a  joint  and  several 
bond,  yet  it  seems  not  to  meet  the  case  before  the  Court ;  for 
nothing  is  disclosed  by  that  case  of  the  assent  of  the  co-obligor  to 
such  release  producing  such  an  effect.  It  is  presumed  that  the 
release  in  that  case  was  on  a  joint  bond,  for  if  the  bond  was  joint 
and  several,  the  obligor  might  have  sued  one,  omitting  to  sue  him 
he  wished  to  benefit ;  a  release  therefore  was  not  necessary,  un- 
less it  was  intended,  as  between  the  obligors  themselves,  to  change 
the  co-responsibility,  and  cast  the  whole  burden  on  him  whom  the 
obligor  elected  to  remain  liable.  But  the  case  in  Littleton  is 
the  only  authority  cited  with  a  restrictive  release. 

All  the  other  cases  of  releases  are  where  the  releases  are  gen- 
eral, importing  satisfaction  ;  and  the  debt,  once  satisfied,  whether 
joint,  or  joint  and  several,  the  demand  of  the  obligee  was  at  an 
end,  and  of  course  he  could  recover  from  no  person  —  differing 
materially  from  a  release  showing  by  itself  the  claim  still  existed, 
—  differing  materially  from  a  case,  where,  by  the  facts  as  agreed  on 
by  tlie  parties,  it  is  expressly  admitted  that  no  part  of  the  money 
has  been  paid  or  satisfied. 

The  cases  most  apposite  to  the  cause  before  the  Court  are  where 
4;he  holder  of  a  note,  or  bill,  gives  time,  which  would  exonerate 
the  drawer  or  indorser  ;  but  which  fact  of  giving  time  is  deprived 
of  that  effect  in  consequence  of  the  assent  of  the  person  who  would 
have  been  bound,  if  such  time  had  not  been  given.  The  time 
given  is  the  ground  of  discharge  or  exoneration,  the  assent  de- 
prives the  time  so  given  of  such  an  operation. 

Therefore,  without  saying  that  a  release  to  a  person  bound 
jointly  ajid  severally,  with  a  proviso  attempting  to  limit  its  effect, 
can  operate  to  the  discharge  of  the  co-obligors  not  included  in  the 
release,  the  Court  are  clearly  of  the  opinion,  that  the  release  given 
in  this  case  cannot  discharge  the  defendant  from  his  responsibility 
as  indorser  of  the  note  on  which  the  suit  is  brought.  The  judg- 
ment of  the  Court  is  therefore  reversed. 

Judgment  reversed. 

Sohier  v.  Loring,  G  Cusb.  537,  was  a  similar  case,  except  that  the  indorser 
sued  was  not  a  party  to  the  composition  deed.  The  opinion  of  the  Court  was 
delivered  by 

Metcalf,  J.  The  composition  made  with  the  acceptors  would  have  discharged 
the  drawers  and  indorsers,  if  there  had  not  been  inserted  in  the  composition  deed 
a  proviso  that  it  should  not  prejudice  the  Iiohlers' remedies  against  any  other  par- 
ties besides  the  acceptors.  Bayley,  Bills  (2d  Am.  ed.),  357,  358.  The  first 
question  in  the  case  therefore  is,  what  is  the  legal  effect  of  that  proviso  ? 


PANNELL   V.    M'MECHEN.  575 

It  is  settled  in  Enj^land  that  a  disdiarge  or  giving  time  by  a  creditor  to  his 
principal  debtor  will  not  <lischarge  the  surety,  if  there  be  an  agreement  between 
the  creditor  and  the  principal  debtor  that  the  surety  shall  not  be  dischargt'd. 
And  this  rule  of  law  is  applicable  to  parties  to  bills  of  exchange  and  |)romissory 
notes,  who  are  liable  only  on  the  failure  of  i>rior  parties,  though  they  arc  not 
technically  sureties  of  those  parties.  1  Stepli.  N.  P.  9:50;  Montagu,  Composi- 
tion, 36;  Burge,  Suretyship,  210;  Chitty,  Bills  (10th  Am.  ed.),4->0;  Byles, 
Bills  (2d  Am.  ed.),  202.  See  also  Mallet  v.  Thompson,  5  Esp.  178.  The 
same  doctrine  was  advanced  by  Messrs.  Hamilton  and  Kiker  in  argument,  and 
was  recognized  by  the  Supreme  Court  of  New  York  in  Stewart  v.  Eden,  2  Caines, 
121,  very  soon  after  it  had  been  laid  down  by  Lord  Eldon,  in  Ex  parte  Giffonl, 
6  Ves.  805.  In  this  last  case  Lord  Eldon  said  sureties  would  not  be  discharged 
by  a  discharge  of  the  principal,  if  there  was  '*  a  reserve  of  the  remedy  "  against 
the  surety,  and  that  Lord  Thurlow  had  so  admitted  in  a  previous  case  not  re- 
ported. He  afterwards  laid  down  this  principle  more  authoritatively  in  Boultbee 
t?.  Stubbs,  18  Ves.  20,  and  Ex  jxDte  Carstairs,  1  Buck,  oGO.  In  Ex  j)artr  Glen- 
dinning,  1  Buck,  517,  he  said:  "If  a  man  by  deed  agree  to  give  his  principal 
debtor  time,  and  in  the  deed  expressly  sti[)ulate  for  the  reservation  of  all  his 
remedies  against  other  persons,  they  shall  still  remain  liable,  notwithstanding  the 
arrangement  between  their  principal  and  the  creditor." 

In  Nichols  v.  Norris,  3  Barn.  &  Adol.  41,  the  Court  of  King's  Bench  decided 
that  a  composition  like  that  in  the  present  case,  made  with  the  indorser  of  a  note 
given  for  his  accommodation,  did  not  discharge  the  maker.  It  was  said  by  the 
Court  that  such  composition  deeds  were  very  common,"  and  that  the  special  pro- 
viso took  the  case  out  of  tlie  common,  rule  as  to  the  discharge  of  sureties  bj^ 
giving  time  to  the  principal. 

In  18-46,  the  case  of  Kearsley  v.  Cole,  16  Mees.  &  W.  128,  came  before  the 
Court  of  Exchequer.  That  was  an  action  for  money  paid  for  the  defendant,  for 
whom  the  plaintiff  had  been  surety.  The  defence  was,  that  the  defendant  had 
made  an  assignment  to  his  creditors,  who  had  covenanted  not  to  sue  him.  But 
it  appeared  that  there  was  a  proviso  in  the  deed  of  assignment,  that  any  creditor 
might  execute  it  without  prejudice  to  any  specific  lien  or  security,  or  to  any 
claim  against  any  surety,  and  that  this  proviso  was  inserted  with  the  knowledge 
and  consent  of  the  plaintiff.  lie  was  afterwards  called  on  as  surety  of  the  de- 
fendant, and  paid  the  claim.  The  (piestion  was,  whether  this  payment  was  to 
the  use  of  the  defendant,  or  was  a  voluntary  payment  which  gave  him  no  right 
to  reimbursement.  The  Court  held  that  the  plaintiff  was  entitled  to  recover, — 
he  not  having  been  discharged  from  his  suretyship  by  the  deed  of  assignment. 
The  opinion  of  the  Court  was  given  by  Mr.  Baron  Parke,  who  fully  and  clearly 
stated  the  decisions  and  the  principles  upon  which  they  were  made  as  follows : 
"  The  question  is,  what  is  the  effect  of  a  discharge  with  reserve  of  remedies  con- 
sented to  by  the  surety  ?  "We  do  not  mean  to  intimate  any  doubt  as  to  the  effect 
of  a  reserve  of  remedies  without  such  consent;  and  the  cases  are  numerous  that 
it  prevents  the  discharge  of  a  surety,  which  would  otherwise  be  the  result  of  a 
composition  with,  or  giving  time  to,  a  debtor  by  a  binding  instrument ;  and  the 
reserve  of  remedies  has  that  effect  upon  this  principle :  first,  that  it  rebuts  the 
implication  that  the  surety  was  meant  to  be  discharged,  which  is  one  of  the  rea- 
sons why  the  surety  is  ordinarily  exoneratetl  by  such  a  transaction  ;   and,  second- 


576  DISCHARGING   INDORSER   OR.  DRAWER. 

ly,  that  it  prgvents  the  rights  of  the  surety  against  the  debtor  being  impaired,  — 
the  injury  to  such  rights  being  the  other  reason  ;  for  the  debtor  cannot  complain 
if,  the  instant  afterwards,  the  surety  enforces  those  rights  against  him ;  and  his 
consent  tliat  the  creditor  shall  have  recourse  against  the  surety  is,  impliedly,  a 
consent  that  the  surety  shall  have  recourse  against  him.  This  is  the  effect  of 
what  Lord  Eldon  says  in  Ex  jiarte  Gilford  and  Boultbee  v.  Stubbs,  as  to  the  re- 
serve of  remedies ;  and  the  general  proposition  that,  with  that  recourse,  the 
composition  or  giving  time  does  not  discharge  the  surety,  is  supported  by  those 
and  the  following  cases :  Ex  iiarte  Glendinning :  Nichols  v.  Norris  ;  Smith  v. 
Winter,  4  Mees.  &  W.  454,  and  others.  This  point  must  therefore  be  consid- 
ered as  settled.  Some  remarks  have,  indeed,  been  made  by  Lord  Denman,  in 
the  case  of  Nicholson  v.  Revill,  4  Adol.  &  Ellis,  675,  on  the  doctrine  of  Lord 
Ehlon,  in  Ex  jxaie  GifFord,  throwing  doubt  on  its  correctness,  on  the  supposition 
that  Lord  Eldon  had  held  that  a  creditor  could  release  one  joint  and  several 
debtor,  and  hold  another  liable  by  a  reserve  of  remedies ;  which  would  certainly 
be  against  the  decision  in  Cheetham  v.  Ward,  1  Bos.  &  Pul.  630,  unless  the  in- 
strument of  release  could,  by  reason  of  the  context,  be  construed  to  be  a  cove- 
nant not  to  sue,  as  it  was  in  the  case  of  Solly  v.  Forbes,  2  Brod.  &  Bing.  38. 
But  we  consider  it  clear  that  Lord  Eldon  meant  only  to  apply  the  doctrine  to  cases 
where  there  was  no  release,  but  a  composition  or  giving  time  not  amounting  to  a 
release,  which  is  the  present  case ;  and,  with  reference  to  it,  the  rule  laid  down  by 
Lord  Eldon  is  not  impeached  by  Lord  Denman\'s  remarks."  And  the  decision  of 
the  Court  was  that  the  surety's  consent  to  the  creditors'  reserve  of  their  remedy 
against  him  did  not  alter  the  law  of  the  case  in  favor  of  the  principal. 

These  doctrines  were  incidentally  recognized  by  Mr.  Justice  Wilde,  in  Ameri- 
can Bank  v.  Baker,  4  Met.  175,  and  were  adopted  and  applied  by  the  Court  of 
Appeals  of  Maryland,  in  Clagett  r.  Salmon,  5  Gill  &  J.  314. 

It  is  very  obvious  that  a  principal  debtor  may  gain  little  or  nothing  by  such 
a  composition  as  this  with  his  creditor,  inasmuch  as  he  is  left  liable  to  the  like 
proceedings  against  him  by  his  sureties,  which  his  creditor  might  have  instituted 
if  no  compositioji  had  been  made.  But  if  he  pleases  to  subject  himself  to  that 
liability  by  voluntarily  executing  an  agreement  which  has  that  effect,  there  is  no 
legal  reason  why  he  should  not  be  held  to  that  agreement. 

On  these  grounds  we  are  of  opinion  that  the  holders  of  the  bills  in  the  pres- 
ent case  were  rightly  permitted  by  the  master  to  prove  their  claims  thereon  against 
the  drawers  and  indorsers,  —  the  latter  not  having  been  discharged  by  the  com- 
position made  by  the  former  with  the  acceptors. 

See  also  Hutchins  v.  Nichols,  10  Cush.  299 ;  Gray  v.  Brown,  22  Ala.  262 ; 
Cowper  V.  Smith,  4  Mees.  &  W.  519 ;  Bruen  v.  Marquand,  17  Johns.  58. 

Though  the  acceptor  enter  into  a  composition  deed  with  his  creditors,  the 
drawer  will  not  be  discharged  by  a  release  of  the  acceptor  from  the  holder,  if  he 
(the  drawer)  retain  funds  of  the  acceptor  for  the  purpose  of  meeting  the  bill. 
Sargent  v.  Appleton,  6  Mass.  85. 

An  agreement  entered  into  between  the  holder  and  the  acceptor  of  a  bill  dis- 
honored for  non-payment,  that  the  acceptor  shall  pay  to  the  holder  the  amount 
of  the  bill  and  no  more,  discharges  the  drawer,  though  his  assignees,  he  being 
then  a  bankrupt,  are  parties  to  such  agreement.  De  La  Torre  v.  Barclay,  1 
Stark.  7. 


mayiikw  v.  boyd.  577 

William  E.  Mayiiew  c.  William  Boyd. 

(5  Maryland,  102.     Court  of  Appeals,  Deceiiibor,  1853.) 

Mortf/af/e  sinirili/  sold  without  iitdoiser's  asseut.  —  An  indorsement  of  tlirec  notes  was  made, 
in  consideration  of  tlie  execution  of  a  mortgage  at  tlie  same  time  by  tlie  maker  to 
tlie  lioider,  by  tlie  terms  of  wbich  tlie  mortg.agee  was  to  sell  the  property  only  on 
default  of  tbe  maker  to  pay  tlie  notes  at  tlieir  maturity.  Wlien  the  first  note  was 
due  it  was  dishonored,  but  by  the  assent  of  all  parties  a  new  one  was  substituted 
in  its  place.  The  mortgagee,  after  the  original,  but  before  the  new  note  or  any  of 
the  others  matured,  sold  the  property  with  the  assent  of  the  mortgagor,  but  not  of 
the  indorser,  applied  the  proceeds  to  pay  the  first  two  notes,  and  sued  the  indorser 
upon  the  third.  Ilild,  that  the  right  to  sell,  which  accrued  upon  the  dishonor  of  the 
first  note,  was  taken  from  the  mortgagee  by  the  substitution  of  the  new  one  in  its 
place,  and  the  sale  before  the  maturity  of  the  latter  was  a  violation  of  the  contract 
between  the  parties  and  discharged  the  indorser. 

General  rule.  —  Any  dealings  with  the  principal  debtor  by  the  creditor  which  amount 
to  a  departure  from  the  contract  by  which  an  indorser  is  to  be  bound,  and  which, 
by  possibility,  might  materially  vary  or  enlarge  the  latter's  liability  without  his 
assent,  discharge  the  indorser. 

Appeal  from  Baltimore  County  Court. 

Assumpsit  by  the  appellant,  as  holder,  against  the  appellee,  as 
indorser,  of  a  promissory  note  for  $900,  drawn  by  one  W.  B. 
Pyfer,  in  favor  of  one  Robert  Close,  dated  October  25,  1848,  and 
payable  in  one  year  after  date.     Plea  non-assumpsit. 

Exception.  The  making,  indorsement,  and  protest  of  the  note, 
and  due  notice  thereof  to  the  defendant  were  admitted.  Tlie  de- 
fendant tlien  offered  in  evidence  a  mortgage  executed  V»y  Pyfer, 
the  maker  of  the  note,  to  Mayhew,  the  plaintiff,  of  certain  iiouse- 
hold  furniture  in  a  hotel  in  Baltimore  city.  This  mortgage  bears 
the  same  date  as  the  note,  and  recites  Pyfer's  indebtedness  to 
Mayhew  for  §2089.23,  for  which  he  had  given  three  notes  of  the 
same  date  with  the  mortgage,  one  payable  to  Boyd  and  the  other 
two  to  Close,  and  indorsed  by  Boyd  and  Close,  one  for  §900,  at 
one  year  (being  the  one  in  suit),  another  for  §594. Gl,  at  six 
months,  and  the  other  for  8'")94.G2,  at  four  months.  The  condition 
was,  that  if  Pyfer  should  pay  to  Mayhew  the  said  sum  of  §2089.23 
"  according  to  the  tenor  and  effect  of  said  notes,"  the  mortgage 
should  be  void ;  otherwi.se,  ^layhcNV  might  sell  the  mortgaged 
property,  and  apply  the  proceeds  to  the   payment  thereof  and  the 


balance  to  the  mortgagor, 


37 


578  DISCHARGING   INDORSER   OR   DRAWER. 

When  the  note  for  1594.62,  at  four  months,  became  due  it  was 
protested,  and  due  notice  given  to  the  indorsers  ;  and  shortly  after- 
wards another  note  for  $614.39,  dated  eighth  of  March,  1849,  was 
made  by  Pyfcr,  payable  at  forty  days,  to  Close,  and  indorsed  by 
him  and  Boyd,  by  way  of  renewal  of  the  protested  note,  including 
the  principal,  interest,  and  costs  of  protest  of  the  original  note,  and 
the  interest  for  the  time  tlie  new  note  had  to  run,  which  was  de- 
livered by  Close  to  Mayhew,  who  thereupon  delivered  to  him  the 
said  original  note.  It  was  further  in  proof,  that  on  the  eighth  of 
April,  1849,  after  the  original,  but  before  the  new  note  or  either  of 
the  others  mentioned  in  the  mortgage  became  due,  by  the  consent 
of  the  mortgagor  and  the  authority  of  the  mortgagee,  the  mort- 
gaged property  was  sold  and  the  proceeds  paid  over  to  Mayhew, 
who  applied  them  to  the  notes  as  they  fell  due.  The  fund  was 
more  than  sufficient  to  pay  the  two  first  falling  due,  which  were 
not  demanded  of  Pyfer  nor  protested,  nor  any  notice  given  to  the 
indorsers  of  their  payment  or  non-payment.  The  sale  was  fairly 
made  ;  and  it  was  proved  that  Pyfer's  house  was  well  furnished  in 
the  summer  of  1849.  and  that  he  went  to  California  in  June,  1849, 
taking  with  him  property  or  merchandise  to  the  amount  of  $400  or 
•1500,  and  died  there  in  1850.  It  was  further  proved,  that  Close 
and  Boyd  indorsed  said  notes  at  the  request  of  Pyfer ;  and  when 
they  called  on  Mayhew  and  proposed  to  become  indorsers  on  said 
notes  mentioned  in  the  mortgage,  it  was  understood  and  agreed 
that  Pyfer  would  execute  said  mortgage.  Upon  the  whole  evidence 
the  plaintiff  offered  three  prayers,  in  substance  as  follows :  — 

1.  This  prayer,  after  leaving  to  the  jury  to  find  the  sale  of  the 
mortgaged  property  by  the  mutual  consent  of  Pyfer  and  Mayhew, 
and  payment  over  of  the  proceeds  to  the  latter  by  the  former  on 
account  of  the  indebtedness  mentioned  in  the  mortgage  before  the 
notes  for  $614.39  and  $594.61  became  due,  asserts  Mayhew's  right 
to  apply  the  same  to  pay  said  notes  without  any  demand  on  Pyfer 
or  giving  any  notice  to  the  indorsers  of  their  payment  or  non-pay- 
ment ;  provided  the  first  was  a  renewal  of  one  of  the  original  notes 
which  was  not  otherwise  paid,  and  that  he  was  not  bound  to  credit 
the  note  in  suit  with  any  more  of  said  proceeds  than  may  remain 
after  paying  those  two. 

2.  This  prayer  leaves  to  the  jury  to  find  the  making,  indorse- 
ment, and  protest  of  the  note  in  suit,  that  Mayhew  fairly  applied 
the  proceeds  of  sale  to  pay  the  notes  secured  by  the  mortgage,  that 


MAYHEW    V.    BOYD.  579 

the  sale  was  fair  and  with  the  consent  of  the  mortgagor,  and  such 
application  left  only  a  balance  of  the  last  note  due  (the  one  sued 
on),  and  then  asserts  that  May  hew  was  under  no  legal  obligation 
to  protest  the  two  former  notes  in  order  to  hold  Boyd  lial)le  on  the 
one  in  suit. 

3.  This  asserts  tliat  if  the  jury  find  that  no  actual  loss  or  dam- 
age was  sustained  by  Boyd  from  the  sale  of  the  mortgaged  property 
and  application  of  the  proceeds  as  above  stated,  then  the  facts  of 
the  sale  being  made  before  the  time  limited  for  it  in  the  mortgage 
and  without  the  consent  of  Boyd,  are  not  sufficient  of  themselves 
entirely  to  l)ar  the  plaintiff's  right  to  recover  in  this  action. 

The  defendant  then  asked  an  instruction,  that  if  the  jury  find 
the  maiving  and  indorsement  by  Close  and  Boyd  of  the  notes  as 
mentioned  in  tlie  mortgage  ;  that  Pyfer  executed  said  mortgage  to 
secure  their  payment ;  that  the  note  for  !r5")04.(j2  was  paid  and 
settled  by  another  for  -^614.39,  drawn  by  Pyfer  and  indorsed  by 
Close  and  Boyd  ;  that  Mayhew,  before  said  notes  or  either  of 
tliem  became  due,  sold  the  mortgaged  property  without  the  consent 
of  Close  and  Boyd  or  either  of  them  ;  tiiat  the  notes  for  §014.39 
and  •$594.61  were  not  protested  for  non-payment,  and  Close  and 
Boyd  did  not  receive,  and  Mayhew  made  no  effort  to  give  them, 
any  notice  of  their  non-payment ;  that  Pyfer,  at  the  time  the  two 
last-mentioned  notes  became  due,  was  in  such  circumstances  that 
Close  and  Boyd  could  or  might  have  recovered  their  amount  from 
him ;  that  the  proceeds  of  said  sale  amounted  to  more  than  the 
note  sued  on  with  interest  and  were  received  by  Mayhew,  then  he 
is  not  entitled  to  recover. 

The  Court  (^Frick,  C.  J.  and  Lc  Grand,  A.  J.)  rejected  the 
plaintiff's  prayers  and  granted  that  of  the  defendant.  To  this 
ruling  the  plaintiff  excepted,  and  the  verdict  and  judgment  being 
against  him  appealed. 

Mason,  J.  The  record  in  this  case  shows  that  the  indorsement 
by  the  defendant  of  Pyfer's  notes  to  the  plaintiff  was  I)ased  ujwn  the 
security  afforded  by  tiie  mortgage,  and  therefore  the  mortgage  may 
be  regarded  as  the  consideration  of  the  agreement  into  which  the 
surety  entered  when  he  consented  to  indorse  the  notes.  Tiio  terms 
of  the  mortgage,  therefore,  nuist  be  strictly  complied  with  by  the 
plaintiff  in  order  to  bind  the  defendant  as  indorser.  One  of  those 
terms  is,  there  shall  be  no  sale  of  the  mortgaged  property  until 


580  DISCHARGING   INDORSEE   OR   DRAWER. 

default  of  the  principal  debtor  to  pay  the  notes  upon  their  maturity. 
We  tiiink  this  part  of  the  contract  between  the  several  parties 
thereto  has  been  departed  from  in  the  sale  which  has  taken  place, 
under  the  circumstances  detailed  in  the  evidence.  This  sale  took 
place  before  the  maturity  and  dishonor  of  the  notes  in  question, 
and  without  the  assent,  and,  for  all  we  know,  without  the  knowl- 
edge, of  the  indorsers.  It  is  true  the  first  of  the  original  notes  had 
fallen  due  and  was  dishonored,  but  it  is  equally  true,  by  the  assent 
of  all  parties,  another  note  was  substituted  in  the  place  of  it,  which 
thereby  took  from  the  plaintiff  his  right  to  sell  under  the  mortgage 
for  the  non-payment  of  that  note :  the  effect  of  the  substitution 
of  the  one  note  for  the  other  was  to  place  the  new  note  in  the  same 
relation  to  the  mortgage  that  the  first  one  had  borne.  Before 
these  notes  became  due,  as  we  have  already  shown,  the  sale  took 
place. 

But  it  may  be  said,  that  although  this  might  have  been  a  depart- 
ure from  the  strict  letter  of  the  contract  between  the  parties,  yet 
it  cannot  be  shown  that  the  indorsers  were  prejudiced  thereby  or 
their  liability  enlarged.  Whether  this  was  or  was  not  the  result 
of  the  premature  sale,  does  not  vary  the  question.  Any  dealings 
with  the  principal  debtor  by  the  creditor  which  amounts  to  a  de- 
parture from  the  contract  by  which  a  surety  is  to  be  bound,  and 
which  by  possibility  might  materially  vary  or  enlarge  the  latter's 
liabilities  Avithout  his  assent,  operates  as  a  discharge  of  the  surety. 
In  this  case  it  is  not  improbable,  much  less  impossible,  that  if  the 
plaintiff  had  duly  protested  the  first  two  notes  as  they  fell  due  and 
were  dishonored,  the  indorsers,  or  one  of  them,  might  have  paid 
them  off,  and  by  immediately  suing  the  debtor  thereon,  might  have 
secured  the  debt  and  thereby  reserved  the  whole  of  the  mortgaged 
property  in  the  hands  of  the  plaintiff  for  the  purpose  of  meeting 
the  third  and  last  note  upon  its  maturity.  The  sale  of  the  mort- 
gaged goods,  under  the  circumstances  under  which  it  took  place, 
deprived  the  indorser  of  the  opportunity  of  pursuing  tlie  course  we 
have  pointed  out,  and  of  the  chances,  at  least,  of  relieving  himself 
from  liability  altogether. 

Believing  that  the  sale  of  the  property  under  the  circumstances 
was  a  violation  of  the  terms  of  the  contract  with  the  indorsers,  by 
which  their  rights  might  have  been  prejudiced,  they  are  thereby 
discharged. 

Judgment  affirmed. 


farmers'  and  mechanics'  bank  v.  rathhone.  581 


Farmers'  and  ^Iechanics'  Bank  v.  Henry  Uathbone. 

(26  Vcrinoiit,  li).     Supreme  Court,  ,  185-J.) 

Distinction  betiveen  bill  for  value  and  accommodation  bill.  —  If  a  bill  of  exchange  be  drawn 
and  accepted  at  a  time  wlien  the  drawer  has  an  open  account  witli  the  accept(jr,  for 
goods  which  he  is  in  the  course  of  sending  to  the  acceptor  for  sale,  and  it  appear  to 
have  been  the  understanding  of  tlie  parties,  at  the  time,  that  the  bill  was  to  be  paid 
by  the  acceptor,  and  its  amount  be  entered  in  the  general  account,  it  will  be  treated 
as  a  bill  drawn  for  value,  imposing  upon  the  acceptor  the  primary  obligation  to  pay 
it,  and  cannot  be  held  an  accommodation  bill ;  and  its  legal  character,  in  this*espect, 
will  not  be  affected  by  any  alteration  of  the  balance  of  the  account,  nor  by  the  fact, 
afterwards  ascertained,  that  the  drawer  was  indebted  to  the  acceptor  at  the  time  of 
the  acceptance. 

The  release  of  the  drawer,  in  sucli  case,  by  the  holder,  will  not  discharge  the  acceptor, 
but  will  be  treated  as  a  reUnquishment,  merely,  by  tlie  holder,  ot  so  much  secu- 
rity wiiich  he  had  for  the  payment  of  the  debt. 

Accommodation  paper.  Release  ofdraicer.  —  An  indorsee,  for  value,  of  a  bill  of  exchange, 
who  became  such  before  its  maturity,  and  in  ignorance  that  it  was  given  for  accom- 
modation, has  a  right  to  treat  all  parties  thereon  as  liable  to  him  according  to  their 
relative  positions  on  the  bill,  and  to  regard  the  acceptor  as  the  principal  debtor,  and 
the  liability  of  the  drawer  as  collateral ;  and  this  right  is  unaffected  by  any  subse- 
quently acquired  knowledge,  that  the  bill  was  given  for  accommodation.  In  such 
case  a  release  of  the  drawer,  by  the  holder,  has  no  efTect  on  the  ultimate  liability 
of  the  acceptor.     And  in  this  respect  the  rule  is  the  same  m  equity  as  at  law. 

Assumpsit  on  two  bills  of  exchange  for  $600  each.  The  declara- 
tion contained  two  counts  ;  the  first  count  was  as  follows  :  — 

"  The  defendant  is  attached  to  answer  to  the  ])laintifTs  in  a  plea 
of  the  case  for  that  one  Caleb  E.  Barton  heretofore,  to  wit,  on  the 
fifth  day  of  October,  a.d.  1844,  at  Charlotte,  in  said  county  of 
Chittenden,  according  to  the  custom  and  usage  of  merchants  from 
time  immemorial,  used  and  approved  of  within  this  State,  made 
his  certain  bill  of  exchange  in  writing,  bearing  date  the  day  and 
year  last  aforesaid,  and  directed  the  said  bill  of  exchange  to  the 
said  defendant,  at  number  thirty-five.  Water  Street,  New  York, 
and  thcrel)y,  then  and  there  requested  the  said  defendant  thirty 
days  after  the  date  thereof,  to  pay  to  the  order  of  one  Samuel  H. 
Barnes,  the  sum  of  six  hundred  dollars,  for  value  received,  and 
then  and  there  delivered  said  bill  of  exchange  to  the  said  Samuel 
H.  Barnes,  which  said  bill  of  exchange  the  said  defendant  after- 
wards, to  wit,  on  the  day  and  year  last  aforesaid,  ui)on  sight  there- 


582  DISCHARGING   INDORSER   OR   DRAWER. 

of  accepted  according  to  the  usage  and  custom  of  merchants. 
And  the  said  Barnes  to  whose  order  the  payment  of  the  said  sum 
of  money  in  said  bill  of  exchange  specified  was  to  be  made,  after 
the  making  of  said  bill  of  exchange,  and  before  the  payment  of 
said  sum  of  money,  to  wit,  on  the  day  and  year  aforesaid,  at  the 
place  last  aforesaid,  according  to  the  said  custom  and  usage  of 
merchants,  indorsed  said  bill  of  exchange,  and  then  and  there 
ordered*  and  appointed  the  said  sum  of  money  in  the  same  speci- 
fied to  be  ])aid  to  the  said  plaintiffs,  and  then  and  there  delivered 
the  said  bill  of  exchange  so  indorsed  as  aforesaid  to  the  said  plain- 
tiffs, and  the  said  plaintiffs  aver  that  afterwards  and  when  said 
bill  oS  exchange  became  due  and  payable  according  to  the  tenor 
and  effect  thereof,  to  wit,  on  the  seventh  day  of  November,  a.d. 
1844,  to  wit,  at  number  thirty-five,  Water  Street,  in  the  city  of 
New  York,  in  the  State  of  New  York,  one  of  the  United  States  of 
America,  that  is  to  say,  at  Charlotte,  aforesaid,  the  said  bill  of  ex- 
change was  duly  presented  and  shown  for  payment  thereof  to  a 
clerk  in  the  store  of  the  acceptor,  according  to  the  said  custom 
and  usage  of  merchants,  and  payment  of  the  said  sum  of  money 
in  said  bill  of  exchange  specified,  was  then  and  there  duly  re- 
quired, but  that  neitlier  the  said  defendant  nor  any  person  or 
persons  on  behalf  of  said  defendant,  did  or  would  when  the  said 
bill  of  exchange  was  so  presented  and  shown  for  payment  thereof, 
as  aforesaid,  or  at  any  time  before  or  afterwards  pay  the  said  sum 
of  money  therein  specified,  or  any  part  thereof,  but  then  and  there 
wholly  neglected  and  refused  so  to  do,  of  all  which  said  premises 
said  defendant  afterwards,  to  wit,  on  the  day  and  year  last  afore- 
said, had  notice,  by  means  whereof  according  to  said  usage  of 
merchants,  he,  the  said  defendant,  then  and  there  became  liable  to 
pay  to  said  plaintiffs  said  sum  of  money  in  said  bill  of  exchange 
mentioned,  when  he  should  be  thereunto  afterwards  requested  ; 
and  being  so  liable,  he,  the  said  defendant,  in  consideration  thereof 
afterwards,  to  wit,  on  the  day  and  year  last  aforesaid,  at  the  place 
aforesaid  undertook  and  then  and  there  faithfully  promised  the 
plaintiffs  to  pay  them  tlie  said  sum  of  money,  in  said  bill  of 
exchange  specified,  when  he  should  be  thereunto  afterwards  re- 
quested." 

The  second  count  was  for  another  bill  of  exchange  for  a  like 
sum,  of  which  the  following  is  a  copy :  — 


farmers'  and  mechanics'  bank  v.  rathbone.  583 

"  $600.  Charloti'e,  Vt.,  2otli  Oct.,  1844. 

"  Tliirty  days  after  date  please  pay  to  the  order  of  Samuel  IT. 
Barnes,  six  hundred  dollars  value  received  and  charge  to  account 
of  Yours,  (fee.  Caleb  E.  Barton, 

Charlotte,  Vt. 
"  To  Mr.  Henry  Rathbone, 

35  Water  Street,  New  York." 
And  indorsed  by  the  said  Barnes,  and  accepted  by  the  defendant. 

The  case  was  tried  March  term,  1852,  —  Pierj}oi7it,  J.,  prcRidrngr 
Plea,  the  general  issue  and  trial  by  tiie  Court. 

On  the  trial,  the  plaintiffs  proved  the  drawing  and  indorsing  of 
the  bills  declared  upon,  and  their  acceptance  by  defendants  as 
averred,  and  that  they  were  regularly  discounted  by  them  before 
their  maturity  ;  that  the  same  were  duly  protested  for  non-pay- 
ment, and  due  notice  given  to  charge  the  drawer  and  indorser. 
It  appeared  that  no  payments  had  been  made  upon  them  other 
than  what  appear  in  statement,  marked  "  B,"  which  was  as  fol- 
lows :  — 

Draft  due  Nov.  7,  1844 $600  OO 

Protest,  &c 1  75 

Interest  to  July  10,  1846 70  52 

Draft  due  Nov.  27,  1844 600  00 

Expense 1  75 

Interest  to  July  10,  1846 68  19 

$1342  21 
July  10,  1846,  Cash 612  00 

$730  21 
Interest  to  March  17,  1848 86  28 

$816  49 
March  17,  1848,  Cash 500  00 


$316  49 


It  appeared  from  the  depositions,  of  one  Ferguson,  and  Curtis 
Rathbone,  introduced  by  defendant,  that  prior,  and  up  to  the  ac- 
ceptance of  the  drafts,  Barton,  the  drawer,  being  in  Charlotte,  in 
this  State,  had  been  in  the  liabit  of  consigning  cheese  to  the  de-^ 


584  DISCHARGING   INDORSER   OR   DRAWER. 

fentlant  at  New  York,  for  sale  on  commission  and  of  drawing  on 
the  defendant  for  the  proceeds,  and  that  the  latter  was  in  the  habit 
of  accepting  the  drafts.  That  the  bills  in  suit  were  so  drawn  and 
accepted,  the  defendant  believing,  when  the  last-mentioned  bills 
were  accepted,  he  had  enough  of  Barton's  property  to  meet  them ; 
but  that  at  their  maturity  Barton  was  indebted  to  defendant  on 
account  •  apart  from  the  bills  in  suit,  and  the  latter  had  no 
property  or  funds  in  his  hands  of  the  former  wherewith  to  meet 
them. 

That  the  bills  in  suit  are  those  charged  October  11th  and  30th, 
1844,  in  the  defendant's  account  appended  to  the  deposition  of 
Ferguson,  and  were  respectively  accepted  at  those  dates,  and  were 
charged  over  to  Barton  iii  the  same  manner  in  which  the  other 
acceptances  were  in  the  said  account.  The  defendant  also  intro- 
duced in  evidence  the  following  instrument :  — 

"In  consideration  of  five  hundred  dollars,  to  the  Farmers'  and 
Mechanics'  Bank,  paid  by  Caleb  E.  Barton,  of  Charlotte,  the  said 
bank  hereby  wholly  release  and  discharge  the  said  Barton  from  all 
liability  or  indebtedness  to  said  bank,  which  said  bank  have  or 
may  claim  to  have  for,  or  on  account  of,  any  and  all  notes,  checks, 
drafts,  or  bills  of  exchange  or  acceptances  to  which  Henry  Rath- 
bone  is  in  any  wise  a  party,  either  as  maker,  drawer,  indorser,  or 
acceptor,  or  payee,  or  drawee,  and  also  from  all  liability  on  any 
paper  which  has  been  sued  against  said  Barton,  in  favor  of  said 
bank  or  any  other  paper  said  bank  may  have  against  Barton,  pre- 
vious to  the  seventeenth  of  March  instant,  which  said  Rathbone 
was  or  is  any  wise  a  party  to. 

"  In  witness  whereof  we  have  hereunto  afhxed  the  seal  of  said 
Bank,  at  Burlington,  this  thirtieth  day  of  March,  a.  d.  1848. 

(Signed)  "  Farmers'  and  Mechanics'  Bank.      [l.  s.] 

"  By  John  Peck,  Pres't  " 

The  defendant  also  proved,  that  plaintiff's  cashier  impressed 
their  seal  thereon,  and  subsequently  delivered  the  instrument  to 
Barton's  attorney,  and  that  the  plaintiffs  were  then  as  much  in  the 
habit  of  sealing  instruments  by  impressing  their  seal  upon  the 
paper,  as  by  sealing  in  any  other  way. 

That  July  10, 184G,  Barton  paid  plaintiffs  the  six  hundred  and 
twelve  dollars  entered  in  the  above  statement  ''  B,"  when  they 
discharged  a  mortgage,  which  they  held  against  him  as  drawer ; 
and  that  he  supposed  he  was  thereby  discharged  from  any  further 


farmers'    and   mechanics'   bank   v.    RATHBON'E.  585 

liability  on  the  bills  ;  but  tiiat  the  jilaintifTs  understood  that  he 
was  not.  Afterwards  plaintiffs  sued  JJarton,  as  drawer,  and  after 
suit  and  on  March  17,  1848,  rather  than  stand  trial  he  paid  five 
lunidrcd  dullars  on  the  hills,  the  same  entered  in  statement  "  B," 
with  the  understanding  that  he  was  to  be  discharged  as  drawer; 
but  there  was  no  other  agreement  to  discharge  him  than  what  ap- 
pears in  said  instrument,  which  was  executed  in  pursuance  of  such 
understanding,  and  in  consequence  of  the  last  payment,  which  sum 
last  paid  is  the  same  mentioned  in  said  instrument. 

That  on  making  said  payment,  the  suit  against  him  was  with- 
drawn. The  signature  to  the  instrument  was  admitted  to  be  that 
of  John  Peck's,  then  president  of  plaintiffs.  The  defendant  also 
introduced  the  affidavit  of  his  attorney,  Ashbel  Peck,  filed  in  the 
cause,  on  a  motion  for  continuance,  March  2o,  1847,  in  which  affi- 
davit Mr.  Peck  testified  that  he  "  made  arrangements  with  the 
defendant,  to  take  the  testimony  of  his  book-keeper  in  New  York 
(defendant's  brother),  to  show  that  the  drafts  in  suit  are  accom- 
modation drafts,  as  between  defendant  and  the  drawer,  Caleb  E. 
Barton,  and  that  defendant  had  overpaid  said  Barton,  exclusive 
of  the  drafts  in  suit,  and  that  defendant  was  to  go  to  New  York, 
and  expected  to  go  in  a  few  days,  and  write  me  the  time  and  place 
and  person  before  whom  he  would  take  the  testimony.  I  was 
then  to  give  notice  to  plaintiffs,  and  have  the  testimony  taken  in 
in  season  for  this  term,  &c."  But  there  was  no  proof,  that  the 
plaintiffs,  previous  to  the  execution  of  the  release  to  Barton,  had 
notice  of  the  contents  of  the  affidavit,  excei)t  so  far  as  it  was 
known  to  their  prosecuting  attorneys  in  this  suit,  to  whom  the 
same  was  actually  known  at  the  time  of  its  filing. 

It  appeared  that  the  plaintiffs  discounted  the  bills  to  Barton, 
under  his  representations  and  iu  the  belief  that  they  were  drawn 
on  cheese  consigned  to  the  defendant,  and  supposed  that  the  de- 
fendant had  in  his  hands  property  or  funds  of  Barton  sufficient  to 
meet  them  when  they  were  discounted  and  accepted ;  and  that 
plaintiffs  never  had  any  knowledge  to  the  contrary,  except  so  far 
as  they  were  informed  of  the  same  by  said  affidavit  and  by  the 
appearing  at  the  taking  of  said  depositions.  It  also  appeared  that 
there  was  no  evidence  tending  to  show  that  the  defendant  had  any 
knowledge  of,  or  consented  to,  the  release  of  Barton  previous  to 
its  execution. 

Tiie  plaintiffs  claimed  judgment  for  the  balance  of  said  bills 


586  DISCHARGING   INDORSER   OR   DRAWER. 

unpaid,   upon    these    facts   and   the   evidence    referred    to.     The 
County  Court  rendered  judgment  for  the  defendant. 

Exceptions  hy  plaintiffs. 

IsHAM,  J.  This  action  is  brought  on  two  bills  of  exchange, 
drawn  by  Caleb  E.  Barton  on  the  defendant,  Henry  Rathbone,  of 
the  city  of  New  York ;  both  of  which  were  duly  accepted,  and 
before  maturity,  were  discounted,  and  transferred  by  indorsement 
to  tlie  plaintiffs.  When  the  bills  matured,  they  were  dishonored, 
duly  protested,  and  notice  thereof  given  to  the  drawer. 

On  the  trial  of  the  case,  at  the  circuit,  the  defendant  insisted, 
that  the  bills  were  accommodation  bills  ;  and,  upon  the  facts  stated 
in  the  bill  of  exceptions,  he  now  insists,  that  the  bills  are  of  that 
character,  that  the  drawer  is  the  person  primarily  liable,  that  the 
acceptor  stands  as  his  surety,  and  that  the  release  of  the  drawer, 
by  the  plaintiffs,  operates  as  a  discharge  of  the  defendant,  as  ac- 
ceptor. It  is  admitted,  that  if  these  bills  are  not  accommodation 
bills,  but  are  really  bills  for  value,  the  release  will  not  affect  the 
liability  of  the  acceptor.  It  will  discharge  all  persons  interme- 
diate between  the  holders  and  drawer,  but  not  those  prior  on  the 
bills,  nor  those  on  whom  rests  a  primary  or  absolute  liability 
to  pay  them.  English  v.  Derby,  2  B.  &  P.  61;  Bailey,  J.,  in  Cla- 
ridge  v.  Dalton,  4  Moore  &  S.  226 .  Chitty,  Bills,  451. 

We  are  not  satisfied  that  these  bills  are  to  be  treated  as  accom- 
modation papers.  It  is  true  the  fact  is  found  in  the  case,  "  that  at 
the  maturity  of  the  bills,  the  drawer  was  indebted  to  the  acceptor 
on  account,  apart  from  the  bills  in  suit,  and  that  the  latter  had  no 
funds  in  his  hands  of  the  former,  wherewith  to  meet  them."  But, 
in  connection  with  this  statement,  it  equally  appears  from  the  ex- 
ceptions, that  during  the  season  of  1844,  the  drawer,  at  different 
times,  consigned  to  the  defendant  as  commission  merchant,  for  sale 
on  his  account,  a  quantity  of  cheese,  the  gross  proceeds  of  which 
amounted  to  $7848.78  ;  and  from  the  statement  in  the  account  of 
sales,  we  perceive  that  a  much  larger  amount  than  the  sum  of 
these  bills  was  realized  therefrom,  after  these  acceptances  were 
given.  The  account  arising  from  the  sale  of  this  property,  com- 
menced in  July,  1844,  and  closed  in  November  of  that  year. 
There  has  been  no  statement  of  that  account  rendered,  or  balance 
ascertained  by  the  parties.  As  between  them,  tlie  whole  account 
remains  open  and  subject  to  their  future  liquidation.     While  this 


farmers'    and   MECFIANICS'    bank    v.    RATIIBONE.  587 

account  was  accruiii<r,  these  bills  were  drawn  and  accepted,  oljvi- 
oiisly  and  with  the  understanding  that  they  w6re  to  be  paid  by  the 
defendant,  and  the  amount  so  paid  be  entered  into  their  general 
account. 

During  that  period,  they  doul)tless  anticipated,  that  the  balance 
would  be  sufficient  to  pay  these  bills,  and  have  been  respectively 
disappointed  in  the  amount  finally  realized  therefrom  ;  so  that 
there  is  now  a  balance  due  the  acceptor,  as  stated  in  the  account 
of  sales.  But  as  these  l)ills,  at  first,  were  drawn  upon  projjcrty 
consigned  to  the  accej)tor,  and  he  accepted  them  with  the  same 
means  of  knowledge  whicii  the  drawer  had,  and  thereby  assumed 
the  primary  obligation  to  pay  them,  there  is  no  propriety  in  treat- 
ing the  bills  otherwise  than  as  creating  obligations  of  that  char- 
acter, after  they  have  passed,  in  due  course  of  business,  into  the 
hands  of  an  indorsee.  In  so  treating  them,  we  are  manifestly 
carrying  into  eflfect  the  mutual  intention  of  the  parties  when  the 
bills  were  drawn  and  accepted  ;  for  it  is  distinctly  stated  in  the  case 
that  both  the  drawer  and  the  drawee  supposed  and  believed  that 
there  were  funds  sufificient  in  the  hands  of  the  drawee  to  pay  them 
at  maturity,  and  under  that  belief  the  drawer  made  such  represent- 
ations to  the  i)laintiffs,  at  the  time  of  their  indorsement  and 
discount. 

The  legal  effect  and  cliaracter  of  bills  of  exchange,  so  drawn- 
and  accepted,  is  not  changed,  or  affected,  by  any  alteration  of  the 
balance  of  the  account,  nor  even  by  the  fact  if  it  should  be  after- 
wards ascertained,  that  there  was  an  indebtedness,  at  the  time  of 
the  acceptance,  from  the  drawer  to  the  acce])tor.  This  principle  is 
fully  illustrated  by  the  case  of  Bagnall  v.  Andrews,  7  Bing.  217. 
Indeed,  the  facts  in  that  case,  and  the  principles  there  established, 
have  such  a  direct  application  to  this  case,  that  we  cannot  consider 
these  bills  otherwise  than  as  bills  for  value,  without  entirely  disre- 
garding the  authority  and  principles  of  that  decision.  In  that  case 
when  the  bill  was  drawn,  the  drawer  had  an  open  account  with  the 
acceptor,  for  goods  which  he  was  in  the  course  of  sending  to  him 
for  sale  ;  neither  of  them  at  that  time  knew  the  state  of  the  ac- 
count ;  "  and  it  afterwards  turned  out,  that  the  drawer  was,  at 
the  time  of  the  acceptance,  indebted  to  the  acceptor,  instead  of 
the  acceptor  being  indebted  to  the  drawer."  Before  the  bill  be- 
came due,  tiie  drawer  became  bankrupt,  and  indorsed  the  bill  to 
the  plaintiff,  who  was  ignorant  that  an  act  of  bankruptcy  had  been 


588  DISCHARGING    INDORSEE   OR   DRAWER. 

committed.  The  drawer  being  called  as  a  witness,  was  objected  to 
as  being  interested,  on  the  ground  that  this  was  an  accommodation 
bill,  and  that  if  the  plaintiff  recovered,  he  would  be  responsible  to 
the  defendant,  not  only  for  the  amount  of  the  bill,  but  for  the  costs 
of  that  suit.  Tindal,  C.  J.,  after  remarking  that  such  conse- 
quences would  follow,  if  this  was  an  accommodation  bill,  and  that 
the  witness  would  be  incompetent,  observed,  that  "  we  think,  upon 
the  facts  in  the  case,  the  bill  was  not  an  accommodation  bill.  At  the 
time  it  was  drawn,  the  drawer  had  an  open  account  with  the  de- 
fendant for  goods  sent,  and  which  he  was  then  in  the  course  of 
sending  to  him  for  sale.  The  drawer  might,  at  that  time,  reason- 
ably expect,  that  the  acceptor  would  pay  the  bill  out  of  funds  that 
might  be  in  his  hands,  when  the  bill  arrived  at  maturity  ;  for  the 
evidence  is  express,  that,  at  the  time  the  bill  was  drawn,  neither 
the  drawer  or  acceptor  knew  the  state  of  the  account.  A  bill  so 
drawn  and  accepted  cannot  be  treated  as  an  accommodation  bill, 
nor,  consequently,  is  there  any  implied  obligation,  on  the  part  of 
the  drawer,  to  indemnify  tlie  acceptor  against  the  costs  of  any 
action  which  may  be  brought  against  him."  1  Phil.  Evid.  61 ;  9 
Serg.  &  Rawle,  237. 

If  that  case  is  to  be  treated  as  sound  in  principle,  it  makes  a 
final  disposition  of  the  case  under  consideration  ;  for  under  that 
authority,  these  bills  cannot  be  considered  as  accommodation  bills, 
but  must  be  treated  as  bills  for  value  ;  the  acceptor  being  the  party 
primarily  liable,  and  the  drawer  considered  only  as  his  surety,  or 
guarantor.  In  such  case  it  was  properly  remarked,  that  the  re- 
lease of  the  drawer  was  a  relinquishment  merely  of  so  much 
security,  which  the  plaintiffs  had  for  the  payment  of  the  debt,  and 
which  in  no  event  can  affect  the  liability  of  the  acceptor. 

It  is  very  evident,  also,  that  the  plaintiffs  could  have  sustained 
no  action  against  the  drawer  of  these  bills,  unless  they  had  been 
duly  protested  and  notice  given.  This  principle  is  founded  on  the 
consideration,  that  a  primary  liability  for  their  payment  rests  only 
upon  the  acceptor ;  while  that  of  the  drawer  is  contingent  and 
collateral,  and  arises  upon  the  default  of  the  acceptor.  The  neces- 
sity of  protest  and  notice,  in  such  cases,  is  not  avoided  by  a  fluc- 
tuating balance  in  their  accounts,  nor  even  by  the  fact,  where  there 
exists  an  open  account,  that  there  is  an  indebtedness  from  the 
drawer  to  the  acceptor.  Orr  v.  Magenuis,  7  East,  359  ;  Blackhaw 
V.  Doren,  2  Camp.  503  ;  In  re  Brown,  2  Story's  C.  C.  502,  521 ; 


farmers'  and  mechanics'  bank  v.  rathrone.  589 

Story,  Bills,  §  811  ;  2  Smith's  Lead.  Cas.  20  ;  Smith's  Merc.  Law, 
31o;  ];■>  Fetors,  303. 

But  if  these  bills  are  to  be  regarded  strictly  as  accommodation 
bills,  the  same  result,  we  think,  must  follow.  In  such  case,  it  is 
insisted,  that  the  drawer  is  the  person  primarily  liable ;  that  the 
acceptor  is  to  be  treated  as  his  surety,  and  that  the  holder  of  the 
bills  is  bound  so  to  regard  and  deal  with  them,  notwithstanding 
the  terms  of  the  bill,  whenever  he  has  notice,  tliat  the  acceptance 
was  for  accommodation  ;  whether  that  notice  was  received  at  the 
time  he  took  the  bills,  or  at  any  subsequent  period. 

It  is  jiroper  to  ol)servc,  that  this  question  does  not  now  arise  be- 
tween the  drawer  and  acceptor  ;  as  between  tlicm  the  consideration 
may  be  inquired  into  and  the  true  relation  of  the  parties  shown  ; 
but  the  question  is  presented  in  a  case  between  the  acceptor  and 
an  indorsee  for  value,  without  notice,  that  the  bill  was  for  accom- 
modation at  the  time  he  became  the  holder.  When  these  bills 
were  received  by  the  plaintiffs,  they  were  invested  with  those  legal 
rights,  and  became  subject  only  to  those  duties  that  arose  from 
what  appeared  on  the  face  of  the  bills.  Their  legal  effect  and  the 
relative  liability  of  the  drawer  and  acceptor  could  not  be  changed 
or  altered  by  any  fact  not  then  appearing. 

These  principles  have  a  peculiar  application  to  bills  of  exchange, 
as  they  are  designed  for  commercial  purposes  ;  and  their  applica- 
tion is  required  to  impart  to  them  that  credit  and  currency  which 
is  necessary  to  insure  the  purposes  for  which  they  were  intended. 
At  the  time  the  plaintiffs  became  indorsees  they  had  the  right,  on 
the  one  hand,  and  were  bound,  on  the  other,  both  at  law  and  in 
equity,  to  regard  the  acceptor  as  primarily  liable,  and  the  drawer 
as  his  surety ;  they  could  have  released,  compounded  with,  or 
given  time  to  the  drawer,  without  in  any  way  affecting  their  right 
to  hold  the  ultimate  liability  of  the  acceptor.  Story,  Bills,  ^  420, 
430  ;  15  Peters,  303 ;  1  Mees.  &  W.  374.  Such  being  their  right 
at  the  time  they  became  the  holders  of  the  bills,  there  is  no  pro- 
priety or  authority  in  saying,  that  that  right  can  be  subsequently 
changed,  or  affected,  by  a  mere  notice  from  the  acceptor  to  the 
holder,  that  the  drawer  had  neglected  to  provide  funds  for  the  pay- 
ment of  the  bills  ;  or  by  any  act  of  the  drawer  and  acceptor,  to 
which  the  plaintiffs  were  not  a  party,  and  to  which  they  have  never 
given  their  assent.     Theob.  on  Pr.  <k  Sur.  216. 

The  plaintiffs,  as  holders  of  these  bills,  were  not  subject  to  any 


590  DISCHARGING   INDORSEE   OR   DRAWER. 

of  the  equities  existing  between  the  original  parties,  and  without 
their  assent  those  equities  cannot  be  imposed  upon  them.  The 
case  of  Mallet  v.  Thompson,  5  Esp.  178,  was  an  action  by  an  in- 
dorsee against  the  maker  of  an  accommodation  note  for  the  payee. 
The  holder  received  part-payment,  under  a  composition,  from  the 
payee,  and  covenanted  not  to  sue  him,  which  is  a  virtual  release, 
knowing  wlien  he  received  the  bill,  that  it  was  given  for  accommo- 
dation. Lord  Ellenborough  ruled,  that  the  maker  was  liable,  not- 
withstanding the  payment  and  release  ;  for  his  liability  on  the  face 
of  the  note  was  primary  and  principal,  and  that  of  the  indorsers 
was  collateral  and  secondary  ;  and  whatever  may  be  their  liabilities 
between  themselves,  such  was  their  liability  to  the  holder.  It 
was  also  held  that  the  release  would  have  no  effect  between  the 
maker  and  payee ;  for  whatever  the  maker  was  compelled  to  pay 
he  might  call  upon  the  payee  to  repay ;  the  release  in  no  way  dis- 
turbed their  relations.  On  the  application  of  the  same  rule  to 
this  case,  whatever  the  acceptor  may  be  compelled  to  pay,  he  can 
call  upon  the  drawer  to  repay,  notwithstanding  the  release ;  for 
their  relations  are  not  disturbed  by  its  execution.  It  is  evident, 
also,  in  this  case,  from  the  release  itself,  that  a  discharge  of  the 
bill  was  not  intended  by  the  parties,  but  simply  a  release  of  the 
drawer,  by  the  holders,  from  any  farther  claim  which  they  had 
personally  on  him,  leaving  the  holders  to  pursue  their  remedy 
against  the  acceptor,  as  the  party  primarily  liable.  Story,  Prom- 
issory Notes,  §  423. 

In  the  case  of  Laxtou  v.  Peat,  2  Camp.  185,  and  CoUott  v. 
Haigh,  3  Camp.  281,  a  different  doctrine  was  applied  to  accom- 
modation bills,  where  the  holder,  at  the  time  he  received  the  bills, 
knew  that  they  were  for  the  accommodation  of  the  drawer.  Lord 
Ellenborough  remarked,  "  that  as  it  was  an  accommodation  bill,  of 
which  all  parties  had  notice,  the  acceptor  can  only  be  considered 
as  a  surety  for  the  drawer ; "  and  the  acceptor  was  discharged  by 
time  being  given  tlie  drawer.  If  these  cases  can  be  sustained  on 
principle,  they  have  no  application  to  this  case ;  for  it  may  be 
said  with  more  propriety,  that  if  one  take  a  bill  of  excliange, 
knowing  at  the  time  that  it  was  for  accommodation,  he  thereby 
assents  to  receive  and  hold  it  subject  to  that  equity  of  the  parties ; 
while  no  sucli  suggestions  can  be  made  in  this  case,  as  tliese 
plaintiffs  had  no  such  notice,  when  the  bills  were  received  and 
discounted. 


farmers'  and  mechanics'  bank  v.  rathbone.  591 

The  doctrine  of  those  two  cases  was,  liowever,  sul)scquently 
shaken  by  Justice  Gibbs,  in  Kcrrisoa  v.  Cooke,  3  Camp.  ot;2,  and 
was  afterwards  overruled  in  the  Common  Pleas,  in  the  case  of 
Fentuni  v.  Pocock,  o  Taunt.   192,  in  which  Mansjie/d,  C.  J.,  ob- 
served "  that  the  case  of  Laxton  v.  Peat  was  the  first,  in  which  it 
was  held,  that  the  acceptor  was  not  the  first  and  last  person  com- 
pelled to  pay  the  bill  to  the  holder;  and  that  they  were  compelled 
to  differ,  and  hold,  that  it  is  impossible  to  consider  the  acceptor  of 
an  accommodation  bill  in  the  light  of  a  surety  for  the  drawer ;  and 
that  if  the  holder  had  known,  in  the  clearest  manner,  that  at  the 
time  of  giving  the  bill,  it  was  for  accommodation,  it  would  make 
no  manner  of  dillerence."     With  this  view  of  the  case,  Heath,  J., 
and  Chamhre,  J.,  agreed.     It  will  be  at  once  perceived,  that  in  this 
case,  the  acceptor  was  held  as  the  principal  and  primary  debtor 
on  an  accommodation  bill,  known  to  be  such  l)y  the  holder,  when 
he  received  it ;  and  that  act  of  the  holder,  which  would  have  dis- 
charged a  sCirety,  was  held  not  to  affect  his  liability.     We  are  not 
called  upon,  in  this  case,  to  approve  or  disapprove  of  the  doctrine 
of  that  case,  to  the  extent  to  which  it  was  carried ;  but  it  is  a  de- 
cided authority  for  saying,  that  an  indorsee  for  value,  of  a  bill  of 
exchange,  who  became  such  before  its  maturity,  and  in  ignorance 
that  it  was  given  for  accommodation,  has  a  right  to  treat  all  par- 
ties thereon  as  liable  to  him  according  to  their  relative  positions 
on  the  bill,  and  to  regard  the  acceptor  as  the  principal  debtor,  and 
the  lialjility  of  the  drawer  as  collateral ;  and  that  tiiis  right  is  un- 
affected by  any  subsequently  acquired  knowledge,  that  the  bill  was 
given  for  accommodation.     In  such  cases  it  is  regarded  as  a  mere 
truism  to  say,  that  a  release  of  the  drawer,  by  the  holder,  has  no 
effect  on  the  ultimate  liability  of  the  acceptor. 

The  case  of  Fentum  v.  Pocock,  has  been  sustained  and  approved 
by  the  subsequent  cases  in  England;  Price  v.  Edmonds,  10  Barn. 
&  C.  578,  584 ;  Nichols  v.  Norris,  3  Barn.  &  Adol.  41 ;  Harrison 
V.  Courtauld,  ib.  36  ;  Rolfe  v.  Wyatt,  5  Car.  &  P.  181 ;  1  Moody 
&  M.  14  ;  Yallop  v.  Ebers,  1  Barn.  &  Adol.  098,  703.  It  is  to  be 
observed,  also,  that  the  same  view  of  the  subject  is  entertained  by 
the  different  elementary  authors.  Chitty,  Bills,  344 ;  Smith's 
Merc.  Law,  332 ;  3  Kent's  Com.  104  ;  Bayley,  Bills,  304 ;  Story, 
Promissory  Notes,  §§  418,  423. 

This  subject  has  arisen  before  many  of  the  courts  in  this  coun- 
try, and  the  rule  is  generally  sustained,  "  that  the  parties  to  a  bill, 


592  DISCHARGING    INDORSER   OR   DRAWER. 

or  note,  are  bound  by  the  character  which  they  assume  upon'  the 
face  of  the  bill ;  if  by  that  they  are  liable  as  primary  debtors,  or 
as  principal,  then,  as  to  the  liolders,  they  are  bound  as  such ;  and 
his  knowledge,  at  the  time  when  he  takes  the  bill,  that  they  or 
either  of  them  are  accommodation  parties,  will  not  vary  the  case." 
Montgomery  Bank  v.  Walker,  9  Serg.  &  Rawle,  229;  s.  c,  12 
Serg.  &  Rawle,  382;  White  v.  Hopkins,  3  Watts  &  Serg.  99; 
Lewis  V.  Hanchman,  2  Barr,  416  ;  Commercial  Bank  v.  Cunning- 
ham, 24  Pick.  270,  275  ;  Church  v.  Barlow,  9  Pick.  547, 551 ;  In  re 
Babcock,  8  Story's  C.  C.  393';  Sanford  v.  Lambert,  2  Blackf.  137  ; 
Clopper,  Adm'r  v.  Union  Bank  of  Maryland,  7  Har.  &  J.  92. 

In  the  case  of  Claremont  Bank  v.  Wood,  10  Vt.  582,  where 
several,  some  of  whom  were  sureties,  signed  a  note,  "  each  as 
principals,"  and  promised  to  pay,  it  was  held,  that  as  to  the  hold- 
ers, they  were  to  be  regarded  as  principals,  and  not  as  sureties ; 
and  yet  the  primary  liability  of  the  acceptor,  and  the  secondary 
liability  of  the  drawer,  is  as  expressly  set  forth  on  these  bills,  as  if 
it  were  written  out  in  full  over  their  respective  signatures.  In 
either  case,  to  vary  their  respective  liabilities,  as  they  have  as- 
sumed them  on  the  face  of  the  bills  and  note,  would  be  to  vary 
and  control  their  intended  operation,  and,  in  effect,  to  enforce  a 
contract,  which  the  parties  never  made. 

On  this  subject  it  is  important  to  observe  a  material  distinction 
between  joint  and  several  promissory  notes,  or  obligations,  and 
bills  of  exchange,  or  notes,  on  which  the  parties  have  assumed 
only  successive  liabilities.  In  the  former  case,  as  between  the 
makers  and  tiie  holders,  who  at  the  time  received  the  note  with 
notice  of  the  circumstances,  under  which  it  was  given,  the  strict 
relation  of  principal  and  surety  may  exist,  and  evidence  of  that 
fact  is  not  considered  as  contradicting  its. specific  provisions,  but 
as  consistent  with  its  terms  ;  and  the  right  of  contribution,  arising 
out  of  that  relation,  exists  between  them.  2  Am.  Lead.  Cas.  289, 
303,  in  notes.  But  the  drawer,  and  acceptor,  and  indorsers,  of  a 
bill  or  note,  have  not  assumed  a  joint  and  several  liability  ;  neither 
are  they  strictly  sureties  ;  but  are  liable  to  each  other,  in  the  order 
of  their  becoming  parties  ;  and  when  the  action  is  on  the  bill,  or 
instrument,  creating  such  successive  liabilities,  by  an  indorsee  for 
value,  without  notice  that  the  bill  was  given  for  accommodation, 
such  testimony  is  inadmissible  for  the  purpose  of  converting  their 
successive  liabilities  into  a  joint  and  several  obligation,  or  placing 


farmers'  and  mechanics'  bank  v.  rathbone,  593 

therrt  in  the  relation  of  principal  and  surety.  The  testimony 
clearly  contradicts  the  express  provision  of  the  bill,  and  materially 
changes  its  legal  effect.  Unquestionably  those  liabilities  may  be 
changed,  as  between  the  parties,  by  an  express  contract  to  that 
effect,  which  may  be  enforced  between  them.  But  this  in  no  way 
affects  the  rights  of  a  holder,  who,  at  least,  became  such  in  igno- 
rance of  that  arrangement.  Under  such  circumstances,  the  holder 
has  only  to  look  to  the  bill  itself  and  the  genuineness  of  the  sig- 
natures, to  ascertain  the  nature  and  extent  of  the  liability  of  the 
parties  thereon ;  and  they  are  liable  to  him  in  the  successive  order 
in  which  their  names  appear  upon  the  face  of  the  bill.  McDonald 
V.  Magruder,  3  Peters,  471 ;  Flint  v.  Day,  9  Vt.  345  ;  Brown  v. 
Mott,  7  Johns.  361. 

This  doctrine  is  sustained  in  Story's  Treatise  on  Promissory 
Notes,  in  which,  §  418,  he  observes,  that  "  the  strong  tendency  of 
the  more  recent  authorities,  is  to  hold  that,  in  all  cases,  the  holder 
has  a  right  to  treat  all  the  parties  to  a  bill  as  liable  to  him  exactly 
to  the  same  extent  and  in  the  same  manner,  whether  he  knows,  or 
not,  the  note  to  be  an  accommodation  note ;  for,  as  to  him,  all  the 
parties  agree  to  hold  themselves  primarily,  or  secondarily,  liable,  as 
they  stand  on  the  note  ;  and  that  they  are  not  at  liberty,  as  to  him, 
to  treat  their  liability  as  at  all  affected  by  any  accommodation  be- 
tween themselves."  And  in  §  483,  he  farther  says:  "Nor  would 
it  make  any  difference  in  the  case,  that  the  released  party  was,  in 
point  of  fact,  the  party  ultimately  bound  to  pay  the  note,  and  that 
the  other  party  was  a  mere  accommodation  maker,  payee,  or  indors- 
er,  for  his  benefit;  or  at  least,  it  would  not  make  any  difference, 
unless  the  fact  of  its  being  such  accommodation  note  were,  at  the 
time  of  receiving  the  note,  and  not  merely  at  the  time  of  the  re- 
lease, known  to  the  holder."  Story,  Bills,  §§  291,  368,  432,  434. 
Chancellor  Kent,  3  Kent's  Com.  104,  also  observes,  that  "  the 
acceptor  of  a  bill  is  the  principal  debtor,  and  the  drawer  the 
surety,  and  nothing  will  discharge  the  acceptor,  but  payment  or  a 
release.  Accommodation  paper  is  now  governed  by  the  same  rules 
as  other  paper.  This  is  the  latest  and  the  best  doctrine,  both  in 
England  and  this  country." 

As  these  bills  were  received  and  discounted  by  the  plaintiffs  l>e- 
fore  their  maturity,  witiiout  notice  that  they  were  for  accommoda- 
tion, we  are  satisfied,  from  the  authorities,  that  they  had  a  right  to 
treat  the  acceptor  as  the  principal  debtor,  and  the  drawer  as  liable 

38 


594  DISCHARGING   INDORSER   OR   DRAWER. 

only  on  his  default.  In  such  cases  there  is  no  difference  between 
accommodation  bills  and  bills  for  value ;  in  either  case,  a  release 
of  the  drawer  from  any  farther  liability  to  the  holder  will  have  no 
effect,  as  a  discharge  of  the  acceptor  from  his  primary  liability  on 
the  bill ;  and  this  right,  so  to  treat  the  parties  on  the  bill,  remains 
unaffected  by  any  notice  subsequently  given,  that  the  bill  was  for 
accommodation. 

It  is  insisted,  however,  that  the  release  of  the  drawer  will  in 
equity  discharge  the  acceptor,  and  that  the  principles  which  pre- 
vail in  that  Court,  are  now  equally  available  at  law.  From  an 
examination  of  the  cases  in  chancery,  we  entertain  a  decided  con- 
viction that  the  same  principles,  on  this  subject,  prevail  in  equity 
as  at  law.  If  any  diversity  of  opinion  exists  in  that  Court  on 
this  question,  it  has  arisen  more  from  a  misapprehension  of  the 
rule  at  law,  and  a  desire  to  conform  to  the  principles  there  estab- 
lislied,  than  from  any  rules  prevailing  in  equity,  at  variance  with 
them.  There  is  much  propriety  in  this ;  for  the  principles  regu- 
lating bills  of  exchange  have  their  origin  in  mercantile  usage,  and 
have  been  adopted  to  meet  the  exigencies  and  wants  of  com- 
mercial transactions ;  it  is  therefore  equally  the  policy  of  courts  of 
equity,  as  of  courts  of  law,  to  make  the  application  of,  and  en- 
force those  principles,  in  relation  to  these  securities,  which 
experience  has  found  necessary,  to  preserve  their  negotiability  and 
credit. 

In  the  case  of  the  Bank  of  Ireland  v.  Beresford,  6  Dow,  233, 
Lord  Eldon  expressed  his  opinion  of  the  case  of  Fentum  v,  Pocock, 
and  observed,  that,  "  if  it  went  on  the  principle,  that  inquiry  is 
not  to  be  made  into  the  knowledge  of  the  party,  but  that  all  shall 
be  taken  as  appearing  on  the  face  of  the  bill,  I  think  it  a  most 
wholesome  doctrine."  The  case  is  important  only,  as  showing 
the  individual  opinion  of  Lord  Eldon  on  that  question,  and  as 
showing  that  no  different  rule  had  then  prevailed  in  chancery.  In 
the  case  of  Glendinning,  ex  parte,  1  Buck,  517,  Lord  Eldon  re- 
fused to  adopt  the  principle  of  the  decision  of  Fentum  v.  Pocock, 
and  recognized  the  general  doctrine,  as  held  in  Laxton  v.  Peat. 
That  was  the  case  of  an  accommodation  acceptance,  and  known  to 
be  such,  by  the  holder,  when  he  received  the  bill.  We  are,  there- 
fore, not  called  upon  to  approve  or  disapprove  of  the  doctrine  of 
that  case,  for  in  this  case,  the  plaintiffs  had  no  notice,  when  the 
bills  were  received  and  discounted,  that  they  were  for  accommo- 
dation. 


farmers'  and  mechanics'  bank  v.  rathbone.  595 

If  the  plaintiffs  in  this  case  had  received  the  bills  with  knowl- 
edge that  they  wore  given  for  accommodation,  we  do  not  say  but 
that  the  defence  would  l)e  available  >  for  when  one  takes  a  bill, 
even  before  maturity,  with  notice  of  a  given  fact,  it  is  not  unrea- 
sonaV)le  that  ho  should  be  charged  with  the  consequences  that 
result  therefrom,  as  if  the  bill  had  been  received  overdue.  But 
that  principle  does  not  apply,  when  the  bill  is  taken  before  matu- 
rity, without  notice,  and  for  value ;  for  the  bill  is  then  held  inde- 
pendent of  all  equities  existing  between  the  original  parties ;  and 
Lord  Eldon,  in  that  case,  nowhere  intimates  that  the  principle 
would  have  such  an  application.  It  is  only  to  the  case  of  an 
accommodation  1)111,  and  known  to  be  such  by  the  holder  when  he 
received  the  bill,  that  he  made  the  application  of  that  rule. 

The  case,  however,  which  should  and  does  exert  a  controlling 
influence  in  our  decision  of  this  case,  is  that  of  Harrison  v.  Court- 
auld,  8  Barn.  &  Adol.  36.  That  case,  it  will  be  perceived,  was  sent 
from  chancery  by  the  Master  of  the  Rolls,  for  the  opinion  of  the 
Court  of  King's  Bench.  This  circumstance  alone  creates  the 
inference,  that  in  relation  to  bills  of  exchange,  on  which  the  par- 
ties have  assumed  successive  liabilities,  the  principles  of  equity 
are  the  same  as  at  law,  and  that,  if  the  acceptor  of  these  bills  is 
not  discharged  at  law  he  would  not  be  in  equity ;  for  it  would 
be  an  idle  proceeding  for  chancery  to  send  a  case  to  a  court  of  law 
to  ascertain  the  principles  prevailing  there,  unless  those  principles 
have  equal  application  in  chancery.  In  that  case,  as  we  have 
assumed  in  this,  the  bill  was  accepted  for  the  accommodation  of 
the  drawer,  and  was  indorsed  for  value  before  its  maturity.  In 
that  case,  as  in  this,  the  holder  was  ignorant,  at  tlie  time  he  re- 
ceived the  bill,  that  it  was  given  for  accommodation,  but  was  after- 
wards informed  of  that  fact,  before  the  act  was  done,  which  the 
acceptor  claimed  operated  as  his  discharge.  It  will  at  once  be 
perceived,  how  very  similar  are  the  two  cases,  in  every  important 
particular.  On  the  hearing  of  that  case,  the  decisions  at  law  and 
in  equity  were  considered  ;  and  all  the  judges,  C.  J.  Tentcrden,  and 
Parks,  Taunton,  and  Patterson,  JJ.,  certified  to  the  Court  of 
Chancery  that  the  acceptor  was  liable  on  the  bill,  the  same  as  on 
a  bill  for  value. 

Whether,  therefore,  we  apply  to  this  case  the  princijiles  jirevail- 
ing  in  equity,  or  at  law,  the  result  is  the  same.  The  plaintiffs 
having  no  notice    at  the  time  they  received  the  bills,  that  they 


596  DISCHARGING   INDORSER   OR   DRAWER. 

were  given  for  accommodation,  had  a  right  to  treat  the  drawer  as 
collaterally  liable  thereon,  and  the  acceptor  as  the  principal  and 
primary  debtor ;  and  this  right  of  tiie  holder  remains  unaffected 
by  any  subsequent  knowledge  which  he  may  have,  that  they  were 
for  the  accommodation  of  the  drawer.  Under  such  circumstances, 
the  release  of  the  drawer  in  no  way  affects  the  "liability  of  the  de- 
fendant as  acceptor.  This  view  of  the  case  renders  it  unnecessary 
to  pass  upon  other  questions  which  were  urged  in  the  argument 
of  the  case. 

The  result  is,  that  the  judgment  of  the  County  Court  must  be 
reversed,  and  the  case  remanded. 

Bank  of  Montgomery  Co.  v.  Walker,  9  Serg.  &Rawle,  229,  was  a  similar  case, 
except  that  the  holder  knew  that  the  note  was  accommodation  paper.  It  was 
held  that  ihe  maker  was  not  discharged;  the  Court  approving  the  language  of 
Lord  Mansfield  in  Fentum  v.  Pocock,  5  Taunt.  192,  quoted  In  the  principal  case. 
To  the  same  effect  are  Murray  v.  Judah,  6  Cow.  484 ;  Cloppers  v.  Union  Bank, 
7  Harris  &  J.  92 ;  Cronlse  v.  Kellogg,  20  111.  11 ;  Lambert  v.  Sanford,  2  Blackf. 
137  ;  Hansbrough  v.  Gray,  3  Grat.  356.  In  all  of  these  cases  the  holder  knew 
that  the  bill  or  note  was  accommodation  paper ;  and  yet  the  acceptor  or  maker 
was  held  liable.  A  different  rule  probably  prevails  in  New  Hampshire  and 
Louisiana.  See  Parks  v.  Ingram,  2  Foster,  283 ;  Adle  v.  Metoyer,  1  La.  An. 
254. 

But  notwithstanding  that  the  weight  of  American  authority  seems  in  favor  of 
the  rigorous  doctrine  laid  down  by  Lord  Mansfield  in  Fenton  v.  Pocock,  we  still 
think  that  in  sound  reason  due  payment  by  or  release  of  the  party  for  whose 
accommodation  a  note  or  bill  was  made  or  accepted,  should  discharge  the  paper 
in  the  hands  of  one  who  has  notice  that  it  was  given  for  accommodation.  In 
addition  to  Glendinning,  ex  parte,  1  Buck,  517,  per  Lord  Eldon,  cited  in  the 
principal  case,  Lazarus  v.  Cowie,  3  Q.  B.  459,  per  Lord  Denman,  in  1842,  Is  an 
authority  directly  holding  this  view.     See  note  to  Eastman  v.  Plumer,  ante,  345. 


KEITH    V.    GOODWIN.  597 


SURETYSHIP. 


RoswELL  R.  Keith  v.  Major  L.   Goodwin. 

(31  Vermont,  268.     Supreme  Court,  November,  1858.) 

When  stircti/  hoUhn  as  principal,  as  to  guarantors.  — Wlien  a  person  signs  a  note  as  surety 
for  tlie  makers  and  intrusts  it  to  them,  for  tlie  purpose  of  obtaining  tlie  money 
upon  it,  and  they  subsequently  obtain  furtlier  guarantors,  upon  tlie  credit  of  all 
the  signers,  under  the  belief  that  they  are  joint  principals,  and  in  order  to  procure 
the  money  upon  the  note,  such  surety  will  be  holden  as  a  principal  to  indemnify  the 
guarantors,  if  they  are  compelled  to  pay  the  note. 

Contribution.  Stipulation  for  full  indemnity.  —  One  who  signs  a  note  as  guarantor  or 
surety,  others  having  before  signed  the  same  as  sureties,  may  stipulate  for  full 
indemnity  of  each  and  all  the  former  signers,  or  make  that  the  condition  of  his 
own  undertaking ;  and  in  that  case  he  will  not  be  liable  to  contribute  with  the 
other  sureties  to  the  payment  of  the  note.  And  the  facts  and  circumstances  attend- 
ing the  signing  or  the  guaranty  of  payment  of  a  note,  may  be  sufficient  to  indi- 
cate as  clearly  as  an  express  stipulation  or  condition,  the  terms  of  the  undertaking. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Redfield,  C.  J.  The  note  in  question  was  executed  by  the  mem- 
bers of  a  partnership  or  joint-stock  company,  and  by  this  defendant 
as  surety  for  them,  by  their  procurement.  One  of  the  principals 
then  procured  the  plaintiff  and  others  to  guaranty  the  payment 
of  the  note.  The  fact  that  the  defendant  was  surety  did  not 
appear  upon  the  face  of  the  note,  nor  was  it  known  to  the  plaintiff 
at  the  time  he  made  the  guaranty.  Tlie  note  was  made  payable 
to  the  Vermont  Bank,  and  was  procured  to  be  executed,  and  the 
guaranty  to  be  made,  for  the  purpose  of  raising  money  upon  it  at 
that  bank,  it  would  seem.  John  A.  Page,  the  cashier  of  that  bank, 
on  his  own  account  discounted  the  note  while  it  was  still  current, 
and  subsequently,  but  before  it  became  due,  sold  and  indorsed  it, 
in  the  name  of  the  bank,  to  one  Uubbard,  who,  after  it  fell  due. 
called  upon  the  plaintiff  for  payment,  and  he  paid  it,  taking  Hub- 
bard's indorsement  upon  the  note. 


598  SURETYSHIP. 

The  plaintiff  now  seeks  to  recover  the  whole  amount  of  the  note 
of  the  defendant,  as  a  joint  maker  or  principal  in  tlie  note,  and  if 
not  in  that  capacity,  then  as  co-surety,  to  recover  of  him  his  pro- 
portion of  the  amount  paid.  The  defendant  had  no  knowledge 
that  any  one  was  expected  to  guaranty,  or  that  any  one  did 
guaranty  the  payment  of  the  note,  or  that  tke  note  was  put  in 
circulation,  or  if  so,  that  it  had  not  been  paid,  until  called  upon 
by  the  plaintiff  to  pay  it. 

I.  It  is  objected  that  the  note  was  never  discounted  in  the  man- 
ner contemplated  at  the  time  of  its  execution,  and  that  therefore 
the  defendant  never  became  liable  upon  the  note. 

We  think  the  fact  that  this  note  was  discounted  by  the  cashier 
of  the  bank  where  it  was  made  payable,  and  by  him  indorsed  as  the 
cashier,  in  the  name  of  the  bank,  must  be  regarded  as  a  sufficient 
recognition  or  adoption  of  the  note  by  the  bank,  to  render  it  bind- 
ing upon  all  the  parties  to  the  contract,  within  the  decisions  in  this 
State.  This  very  point  is,  in  effect,  decided  in  Bank  of  Burlington 
V.  Beach,  1  Aik.  62.  The  doctrine  of  this  case  has  been  repeatedly 
recognized  in  this  Court,  and  never  questioned.  The  same  rule 
prevails  in  the  State  of  New  York.  Bank  of  Chenango  v.  Hyde, 
4  Cow.  567  ;  Bank  of  Rutland  v.  Buck,  5  Wend.  66.  This  last  case 
is  where  the  note  was  procured,  and  made  payable  to  the  Bank  of 
Rutland,  for  the  purpose  of  raising  money  to  pay  upon  an  execu- 
tion. The  bank  refusing  to  make  the  discount,  the  note  was 
received  substantially  in  payment  upon  the  execution,  and  by 
consent  of  the  bank  was  sued  in  their  name  for  the  benefit  of  the 
officer.  And  precisely  the  same  point  was  decided  by  this  Court, 
not  many  years  since,  in  the  county  of  Orleans.  We  cannot  think, 
therefore,  that  the  present  case  can  be  regarded  as  carrying  the 
rule  beyond  where  it  has  already  been  carried.  And  there  is  noth- 
ing in  the  principle  of  these  decisions  which  does  not  commend 
itself  to  our  sense  of  justice  and  propriety. 

We  are  aware  that  a  different  rule,  to  some  extent,  prevails  in 
the  States  of  Massachusetts,  Maine,  and  Ohio,  as  the  cases  referred 
to  in  the  argument  show.  But  we  think  the  rule  adopted  in  this 
State,  Bank  of  Burlington  v.  Beach,  supra,  and  which  has  been 
so  long  acted  upon  here,  far  better  calculated  to  subserve  the  ends 
of  justice  and  fair  dealing,  than  that  which  denies  the  recovery 
upon  that  ground. 

When  a  note  is  executed  for  the  purpose  of  raising  money  in  the 


KEITH    V.    GOODWIN.  599 

inai'kct,  althougli  made  payable  to  a  particular  bank  or  firm,  it  is 
well  understood  that  this  is  generally  regarded  by  Ijusiness  men 
as  rather  a  formal  than  a  substantial  part  of  the  note.  If  the 
note  were  made  payable  at  a  particular  bank,  to  the  order  of  the 
makers,  it  would  be  much  tlie  same  thing.  So,  too,  if  made  pay- 
able to  bearer  gen.erally.  The  name  of  the  person  to  whom  the 
note  is  payable  is  mere  form.  It  is  undcrstoojl  that  it  is  going 
into  the  market  as  money,  and  in  exchange  for  money,  to  any  party 
who  will  make  the  discount.  If  negotiated  at  the  bank,  it  may 
pass  into  other  hands  the  next  hour.  And  there  is  no  claim  that 
this  will  have  any  tendency  to  release  the  sureties.  "NVe  think  there 
is  no  dilhculty  with  the  case  upon  this  point. 

II.  In  regard  to  the  right  of  the  plaintiff  as  against  the  defendant, 
upon  the  note,  we  think  the  law  is  settled  l^eyond  all  question,  that 
he  is,  at  all  events,  to  be  treated  as  a  co-surety  with  the  defendant, 
if  not  also  as  a  surety  for  the  defendant  as  a  joint  maker  and  prin- 
cipal in  the  note,  so  far  as  he  is  concerned. 

As  to  the  objection  founded  upon  the  case  of  Gardner  i\  Walsh, 
32  Eng.  L.  <fe  Eq.  162,  that  the  guaranty  was  such  an  alteration 
of  the  note,  being  done  without  the  consent  of  the  defendant,  as 
will  avoid  the  note,  we  cannot  regard  this  as  coming  fairly  within 
the  principle  of  that  case.  That  case  is  not  parallel  with  the 
present.  There  the  decision  goes  upon  the  ground  that  after  a 
note  becomes  effectual  as  a  contract  by  delivery,  it  is  not  compe- 
tent for  the  holder,  without  the  consent  of  tlie  makers,  to  procure 
an  additional  signer  ;  that  this  is  a  material  alteration  and  avoids 
the  contract,  whether  it  operates  favorably  or  unfavorably  to  the 
other  signers.  Whether  the  decision  to  this  extent  is  sound  or 
not  (and  we  do  not  intend  to  question  that  case),  we  think  the 
rule  thus  laid  down  could  have  no  application  to  a  case  like  the 
present.  Here  the  note  was  signed  by  the  defendant,  as  a  joint 
principal,  and  intrusted  to  his  associates,  and  if  he  had  signed  as 
surety  upon  the  face  of  the  note,  and  intrusted  it  to  his  principals, 
the  rule  would  have  been  the  same.  He  thereby  gives  those  to 
whom  he  intrusts  the  note  an  implied  authority  to  obtain  cither 
additional  sureties,  as  joint  makers,  or  guarantors,  indefinitely, 
until  the  note  is  fairly  launched  in  the  market  as  a  security, 
having  two  distinct  parties,  licfore  that  it  is  merely  inchoate,  and 
it  is  clear  that  the  procuring  of  additional  signers,  guarantors,  or 
indorsers,  comes  fairly  within  the  implication  of  authority  giveu 


600  SURETYSHIP. 

the  party  to  whom  the  defendant's  signature  is  intrusted,  and 
which  at  that  time,  so  far  as  additional  signers  are  concerned,  is 
to  be  regarded  as  merely  blank,  or,  in  one  sense,  as  an  authority  to 
use  the  credit  of  the  party,  either  alone  or  with  others,  in  the 
form  in  which  he  has  signed.  But  the  idea  that  no  other  indorse- 
ment or  guaranty  is  to  be  procured,  and  that  if  the  note  will  not 
go  in  that  form*  it  is  not  to  be  used  unless  all  the  parties  consent 
to  the  introduction  of  other  parties,  is  certainly  contrary  to  the 
understanding  of  commercial  men,  which  is  the  law  of  such  cases, 
and  the  only  just  basis  of  the  implied  contract  resulting  from  the 
facts. 

It  being  now  well  settled  by  the  case  of  Deering  v.  The  Earl  of 
Winchelsea,  2  Bos.  &  Pul.  270,  that  a  surety,  although  signing 
another  instrument  guarantying  the  same  debt,  must  be  regarded 
as  a  co-surety  with  all  the  sureties  to  the  original  contract,  there 
w^ould  seem  to  be  no  question  of  the  right  of  the  plaintiff  to  claim 
a  remedy  to  that  extent  against  the  defendant,  even  if  he  had,  at 
the  time  of  making  the  guaranty,  known  the  defendant  to  have 
been  a  mere  surety.  This  point  was  decided  by  this  Court  in 
Flint  V.  Day,  9  Vt.  345.  See  also  Norton  v.  Coons,  3  Denio,  130  ; 
Barry  v.  Ransom,  2  Kern.  462 ;  Tobias  v.  Rogers,  3  id.  59  ;  Cray- 
thorne  v.  Swinburne,  14  Yes.  160  ;  Bering  v.  Earl  of  Winchelsea, 
1  White  &  Tudor's  Lead.  Cas.  in  Eq.  85,  and  notes,  English  and 
American,  where  the  subject  is  elaborately  examined,  and  the  cases 
fully  presented  and  accurately  digested. 

III.  But  it  seems  to  a  majority  of  the  Court  that  the  plaintiff  is 
equitably  entitled  to  treat  the  defendant  as  he  held  himself  out  upon 
the  contract ;  i.  e.,  as  principal.  There  was  nothing  to  ultimate 
that  the  signers  were  any  thing  but  joint  principals.  And  the 
defendant  having  so  signed  the  note  and  intrusted  to  the  others, 
with  authority  to  obtain  additional  signers,  or  guarantors,  it  was 
giving  them  authority  to  represent  the  defendant  as  a  co-principal ; 
and  by  presenting  the  note  merely,  and  asking  a  guaranty  of  the 
plaintiff,  a  virtual  representation  was  made  that  the  defendant 
stood  as  joint  principal.  The  case  may  well  be  supposed  of  the 
defendant  being  the  only  responsible  signer,  and  the  guaranty 
being  made  wholly  upon  his  credit.  If  he  could  afterwards  be 
allowed  to  falsify  this  representation,  thus  held  out  upon  the 
face  of  the  paper,  it  might  certainly  work  great  injustice  to  the 
guarantor. 


KEITH    V.    GOODWIN.  601 

But  this  is  a  question  depending  mainly  npon  authority,  we  are 
aware,  and  should  be  decided  upon  the  settled  principles  deducible 
from  the  adjudged  cases. 

It  is  admitted  by  all  the  writers  upon  this  subject,  and  in  all  the 
cases  where  the  question  has  arisen,  and  l)y  all  the  judges,  without 
exception,  who  have  had  occasion  to  speak  of  the  point  incident- 
ally, that  any  one  who  is  not  in  fact  a  joint  or  sole  principal  in  a 
contract,  but  who  binds  himself  for  its  fulfilment  as  a  surety 
merely,  may  so  stipulate  at  the  time  of  entering  into  the  obligation, 
as  not  to  be  liable  to  contribution  with  the  other  sureties  who  have 
signed  before  him.  And  the  form  of  doing  this  is  not  important. 
Nor  is  it  important  that  this  should  appear  upon  the  contract. 
And  where  one  signs  as  surety,  after  other  sureties  have  signed, 
and  without  privity  with  them,  it  is  not  important  that  they  should 
be  made  aware  of  the  terms  upon  which  subsequent  sureties  become 
holden.  If  the  subsequent  sureties  become  bound  for  the  perform- 
ance of  the  very  same  thing  as  the  former  ones,  and  especially  by 
the  same  contract,  the  right  of  contribution  is  created  in  favor  of 
the  former  sureties,  unless  there  is  some  stipulation  to  the  con-, 
trary.  It  is  upon  this  ground  that  the  action  for  contribution  was 
maintained  in  Flint  v.  Day,  supra,  against  Mr.  Day,  who  stood 
much  in  the  relation  of  the  plaintiff  here,  the  note  being  paid 
by  the  prior  sureties,  and  the  suit  brought  to  compel  contribution 
of  the  last  surety  signing,  but  who  signed  on  the  back  of  the 
note  in  blank ;  and  the  Court  held  that  he  thereby  became  a  joint 
maker,  and  liable  to  contribution  with  the  other  sureties.  But 
even  that  case,  upon  its  facts,  is  more  doubtful  than  it  was  then 
regarded  by  the  Court.     The  later  cases  do  not  fully  suj)port  it. 

But  where  there  is  any  thing  in  the  form  of  the  contract  or  the 
nature  of  the  transaction,  to  show  that  the  subsequent  sureties  did 
not  expect  to  be  holden  as  co-sureties  with  the  others,  but  to  stand 
merely  as  sureties  for  all  the  former  signers,  they  are  entitled  to 
full  indemnity  from  each  of  the  others,  or  all  jointly.  As  if  the 
surety  sign  expressly  as  surety  for  all  the  above  signers,  or  when 
he  signs,  saying  he  is  willing  to  be  responsible  for  all  of  them. 
In  such  case  he  is  not  liable  lo  contribution.  1  Story,  Eq.  Jur, 
§  498  ;  Chitty,  Contracts,  598  ;  Lead.  Cas.  in  Eq.  GS^  and  notes ; 
Pendlcbury  v.  Walker,  4  Younge  &  C.  424  ;  Moore  r.  Isley,  2 
Dev.  &  B.  Eq.  372. 

This  very  point  is  expressly  decided  in  Craythorne  v.  Swinburne, 
14  Ves.  160. 


602  SURETYSHIP. 

The  facts  of  this  last  case  seem  to  us  very  analogous  to  those  of 
the  present  case,  so  far  as  the  liability  of  the  plaintiff  to  share  the 
burden  of  paying  this  note,  with  the  defendant,  is  concerned.  lu 
that  case,  as  well  as  in  this,  the  undertaking  of  the  last  surety  was 
without  the  knowledge,  expectation,  or  privity  of  the  former  ones ; 
it  was  done,  too,  in  both  cases,  to  induce  the  advance  of  money 
upon  the  first  contract,  and  because  it  could  not  be  obtained  with- 
out such  additional  indemnity  or  guaranty.  And  in  the  case  of 
Craythorne  v.  Swinburne,  it  was  clearly  held  that  there  was  no 
duty  of  contribution  among  the  two  classes  of  sureties.  It  is  held 
that  in  the  case  of  Craythorne  v.  Swinburne  the  indemnity  was  by 
a  separate  instrument,  and  here  it  is  upon  the  same  paper,  but 
by  a  distinct  contract,  referring  to  the  other  for  brevity,  as  written 
above.  We  cannot  suppose  it  could  have  made  any  difference  in 
the  present  case  if  the  plaintiff  had  given  his  guaranty  upon  a 
separate  piece  of  paper,  writing  the  note  or  describing  it,  instead 
of  referring  to  it  as  written  above.  In  the  case  of  Craythorne  v. 
Swinburne,  the  question  was  determined  upon  the  circumstances 
and  oral  evidence  in  the  case  as  matter  of  fact,  and  made  depend- 
ent upon  the  intention  of  the  last  surety.  The  same  question 
might  here  very  properly  have  been  submitted  to  the  jury,  if  there 
really  is  any  conflict  in  the  evidence,  or  if  there  should  be  here- 
after, it  might  be  proper  to  have  the  finding  of  the  jury  upon  this 
point. 

But  so  far  as  the  testimony  is  developed  in  the  bill  of  exceptions, 
it  seems  to  be  all  in  one  direction. 

1.  The  form  of  the  plaintiff's  guaranty  shows  that  he  merely 
undertook  for  the  solvency  of  all  the  primary  signers  of  the 
note. 

2.  The  manner  of  executing  the  note,  the  purpose  of  obtaining 
the  guaranty,  as  well  as  the  form  of  it,  all  look  in  the  same  direc- 
tion. And  unless  the  defendant  can  satisfy  the  jury  that  at  the 
time  the  plaintiff  signed  the  guaranty,  he  really  expected  to  stand 
merely  as  a  general  surety,  we  think  he  is  bound  to  indemnify  him, 
as  much  so  as  if  he  had  signed  at  his  request,  and  upon  his  express 
assurance  that  he  would  see  him  harmless.  As  matter  of  fact,  or 
implication  from  facts,  we  cannot  but  regard  the  consideration 
that  the  plaintiff's  contract  was  in  the  form  of  a  guaranty,  as  of 
some  significance.  The  word  guaranty  in  strictness  may  not 
import  more  than  a  promise  or  undertaking.     But  in  commercial 


KEITH    V.    G'OODWIN.  G03 

circles,  and  among  business  men  generally,  the  term  is  understood 
in  a  more  8])eciric  sense.  A  guarantor  is  not  a  maker  or  indorscr, 
but  one  who  is  understood  to  assume  more  the  oljligation  of  an 
indorser  than  of  a  maker.  JJoth  the  indorscr  and  guarantor  are 
understood  to  undertake  for  tiie  maker,  and  as  an  aid  to  his 
undertaking.  And  originally  the  guaranty  was  understood  to  be 
operative  only  upon  condition  of  the  failure  of  the  maker  to  per- 
form the  contract.  And  that  is  the  present  import  of  all  guaranties 
which  are  conditional  or  doi)endent  upon  some  prior  act  to  be 
performed  l)y  some  other  party,  as  that  the  note  or  contract  is 
collectible  ;  /.  e.,  may  be  enl'orccd  by  due  process  of  law.  And 
even  absolute  guaranties,  like  the  present,  are  understood  differ- 
ently, and  therefore  entitled  to  a  different  construction,  from  au 
absolute  promise  to  pay  a  note. 

If  that  had  been  the  purpose  of  the  plaintiff,  and  those  who 
signed  with  him  in  this  case,  they  would  have  merely  underwritten 
the  other  signers  of  this  note.  The  very  fact  that  they  made  a 
separate  contract,  and  that  in  the  form  of  a  guaranty,  shows  very 
fully  that  they  did  not  intend  a  mere  joint  undertaking  with  the 
makers.  We  think  the  only  fair  construction  of  the  plaintiff's 
undertaking,  as  between  himself  and  the  makers  of  the  note,  is, 
that  he  bound  himself  to  whomsoever  should  be  the  holder  of  the 
note  that  the  signers  were  responsible,  and  would  pay  the  amount 
at  maturity.  And  although,  as  between  himself  and  the  holder, 
this  l)ound  him  absolutely  to  the  payment  of  the  note,  if  not  paid 
by  the  makers,  without  notice  of  the  default  on  the  part  of  the 
makers,  tiiat  being  a  fact  of  which  he  was  bound  to  take  notice, 
yet,  as  between  him  and  them,  his  undertaking  was  for  them  jointly, 
and  not  jointly  with  them. 

Judgment  reversed.,  and  case  remanded. 

The  questions  in  regard  to  the  responsibility  of  sureties  upon  notes  or  bills, 
or,  what  is  the  same  thing  in  other  terms,  the  obligations  of  acconnnodation 
makers  and  acceptors,  both  among  tliemselves  and  in  regard  to  other  parties, 
are  of  paramount  interest  to  the  profession.  AVe  will  here,  in  a  brief  way,  refer 
to  some  few  of  the  more  recent  decisions  uj)on  these  questions. 

There  has  been,  first  and  last,  considerable  controversy  how  far  one  who  is 
induced  to  sign  a  note  or  bill  by  fraudulent  representation,  is  legally  bound  by  it ; 
as  where  one  or  more  of  the  former  signatures  upon  the  credit  of  which  one  sub- 
scribes or  indorses  the  paper  is  in  fact  forged  or  obtained  by  duress  or  fraud,  or 
for  any  other  reason  not  binding  upon  tiie  party.  In  the  case  of  Seely  r.  The  Peo- 
ple, 2  Am.  Law  Reg.  x.  s.  3-14;  s.  c,  27  ill.  17.!,  the  plaintilf  in  error  signed  a 


604  SURETYSHIP. 

bond  as  surety  after  others  had  executed  it;  but  one  of  the  names  appearing  upon 
the  bond  as  surety  was  shown  to  have  been  forged.  The  (Jourt  held  the  fraud  such 
as  to  avoid  the  instrument  as  to  sureties  signing  under  such  mistake.  And  it  has 
been  often  held  that  where  one  signs  an  instrument  not  negotiable,  on  condition 
that  some  other  name  or  names  shall  be  procured  to  it  before  the  same  is  delivered, 
and  this  condition  is  not  complied  with,  and  the  instrument  delivered  without  it, 
the  party  cannot  be  holden.  Pawling  v.  The  United  States,  4(h-anch,  219  ;  Fletcher 
V.  Austin,  11  Vt.  447.  So  if  it  be  agreed  that  a  composition  deed  shall  not  be  de- 
livered until  all  the  creditors  sign,  that  condition  must  be  observed  in  order  to 
render  the  instrument  binding  upon  any  one  who  signed  under  that  at^surance. 
Johnson  v.  Baker,  4  Barn.  &  Aid.  440.  And  in  Pidcock  v.  Bishop,  3  Barn.  & 
C.  605,  it  seems  to  be  held  that  any  departure  from  the  contract  of  surety- 
ship will  exonerate  the  surety.  Awde  v.  Dixon,  5  Eng.  L.  &  Eq.  512  ;  Lloyd  v. 
Howard,  1  id.  227  ;  Palmer  v.  Richards,  ib.  529  ;  Leaf  v.  Gibbs,  4  Car.  &  P.  466. 
And  this  seems  to  be  the  English  rule  upon  the  subject.  The  creditor  must  see 
to  it  that  he  obtains  a  valid  obligation  against  all  upon  whom  he  relies  for  its  per- 
formance. And  he  cannot  excuse  himself  from  responsibility  for  the  fraud  of 
the  principal  debtor  on  the  ground  that  the  surety  signed  upon  his  assurance, 
and  must  look  to  him  exclusively  for  its  performance,  as  has  been  held  in  some 
American  cases.  York  County  Mat.  Fire  Ins.  Co.  v.  Brooks,  3  Am.  Law  Reg. 
N.  s.  399  ;  s.  c,  51  Maine,  506,  where  it  was  held  that  a  surety  who  signed  a  bond 
at  the  request  of  the  principal,  and  upon  the  assurance  that  he  would  also  procure 
two  others  named  and  known  to  him  to  be  responsible  also  to  sign  it  before  he 
delivered  it,  but  failed  to  do  so,  this  being  wholly  unknown  to  the  obligee  who 
accepted  the  bond,  is  still  responsible.  There  is  undoubtedly  great  plausibility 
in  the  argument  that,  in  such  cases,  where  the  surety  intrusts  the  bond  to  the 
principal  in  perfect  form  and  with  nothing  to  indicate  that  other  signatures  are 
required  to  complete  the  contract,  as  will  be  the  case  where  other  names  appear 
in  the  body  of  the  instrument,  that  he  thereby  puts  it  in  his  power  to  impose  upon 
the  obligee,  and  should  therefore  be  held  responsible  for  his  conduct  in  that  di- 
rection. But  where  the  paper  is  not  negotiable,  the  obligee  is  bound  to  see  that 
all  parties  execute  the  same  understandingly,  and  free  from  fraud  or  force.  And  in 
the  precise  case  stated  above,  in  the  English  Court  of  Exchequer  Chamber,  Swan 
V.  The  North  British  Australian  Company,  10  Jur.  N.  s.  102  (1864)  ;  s.  c,  8 
Jur.  N.  s.  940 ;  s.  p.  7  Jur.  n.  s.  400,  it  was  held  that  the  surety  was  not  hold- 
en.  We  cannot  but  feel  that  the  English  rule  is  the  more  salutary  one  in  com- 
pelling caution  in  those  who  accept  paper,  as  well  as  in  those  who  execute  it. 
The  opposite  rule  unquestionably  has  too  much  the  appearance  of  attempting  to 
drag  in  every  one  where  it  can  possibly  be  done,  and  turning  them  over  to  some 
other  remedy  or  redress  to  which  they  never  expected  to  look  for  indemnity. 
The  whole  subject  is  reviewed  with  great  learning  and  ability  by  ]\Ir.  Justice  Hay, 
in  Deardorft'  v.  Foresman,  5  Am.  Law  Reg.  n.  s.  539,  which  is  here  adopted  as 
the  best  review  of  the  authorities  we  could  give. 

Ray,  J.  Action  by  the  appellee  upon  a  promissory  note,  against  Deeds, 
DeardorfF,  and  Lehman.  Deeds  suffered  a  default.  The  other  defendants  an- 
swered in  two  paragraphs.  First,  that  at  the  date  of  the  note  in  suit.  Deeds, 
who  was  insolvent,  applied  to  them  to  execute  the  note  Avith  him,  as  his  sureties, 
to  the  plaintiff,  which  they  refused  to  do  ;  that  he  fraudulently  represented  to 


KEITH    V.    GOODWIN.  605 

thorn  that  if  they  woiihl  sign  the  note  he  could  procure  as  co-sureties  with  them 
eU;ven  other  respoiisihle  men,  who  are  named,  and  tliat  lie  wouhl  not  dtdiver  the 
note  to  the  phiintiff  until  such  sifjnatures  were  procured;  that  he  faih'd  to  [iro- 
cure  the  names  he  liad  promised,  but  delivered  the  note  to  the  plaintiff.  The 
note  was  made  payable  to  the  order  of  the  plaintiff.  The  second  paragra[)h  of 
the  answer  averred  the  same  facts,  and  was  sworn  to.  The  Court  below  sus- 
tained a  dcmiirier  to  both  [)araj;raphs.     Tills  is  here  assigned  as  error. 

Tiie  appellants  insist  that  the  ruling  in  the  ease  of  Pepper  i'.  The  State,  22 
Ind.  o99,  recjuires  that  the  decision  of  the  Court  below  in  this  case  should  be  re- 
versed. We  will  consider  the  ease  cited  only  so  far  as  may  be  necessary  to  de- 
termine its  effect  upon  the  question  now  before  us.  That  case  holds  that,  in  an 
action  upon  an  oflitial  bond  given  to  the  State,  the  sureties  may  defend,  either 
upon  the  ground  that  the  names  of  persons  aj)pearing  to  be  signed  to  such  bond 
were  forged,  and  that  they  executed  the  bond  upon  the  faith  that  such  signatures 
were  genuine,  or  that  they  were  induced  to  execute  and  deliver  the  bond  to  the 
principal  obligor  upon  the  condition,  or  upon  the  consideration,  or  upon  the 
promise,  that  certain  other  persons  would  sign  it.  It  is,  however,  expressly  said 
by  the  judge  who  delivered  the  opinion,  in  overruling  the  petition  for  a  rehear- 
ing, that  "  we  do  not  say  that  the  same  rule  that  applies  to  bonds  taken  pursuant, 
to  a  statute,  would  apply  in  private  transactions."  We  are  not  disposed  to  ex- 
tend the  effect  of  that  decision  to  instruments  negotiable  either  by  statute  or  by 
the  law  merchant,  unless  required  to  do  so  upon  authority  or  principle.  And  as 
the  case  cited  is  put  rather  upon  authority  than  principle,  we  will  consider  how 
far  the  decisions  require  us  to  extend  the  ruling.  Indeed,  the  opinion  given 
upon  overruling  the  petition  for  a  rehearing  rests,  except  so  far  as  it  is  based 
upon  the  construction  of  the  statute,  which  constru(;tion  we  are  not  called  upon 
to  review,  upon  the  case  of  Bibb  i'.  Reid  ct  al.,  3  Ala.  88,  which,  it  is  stated  in 
the  opinion,  "  is  directly  in  point,  and  after  much  rellection  we  are  prepared  to 
say  is,  in  our  judgment,  good  law."  That  case  cites  the  law  as  stated  thus,  in 
Sheppard's  Touchstone,  59  :  "  So  it  must  be  delivered  to  a  stranger  ;  for  if  I  seal 
my  deed  and  deliver  it  to  the  party  himself  as  an  escrow,  upon  certain  condi- 
tions, &c.,  in  this  case,  let  the  form  of  words  be  what  it  will,  the  delivery  is  ab- 
solute, and  the  deed  shall  take  effect  as  his  deed  presently,  and  (in  reference  to 
the  legal  operation  of  the  deed),  he  is  not  bound  to  perforin  the  condition." 

The  opinion  proceeds  :  "  The  rule  as  above  stated  in  the  Touchstone,  has 
been  recognized  in  the  United  States  in  the  cases  cited  from  5  Cranch,  351,  8 
Mass.  2i?0,  and  2  Sumner,  487;  but  it  does  not  appear  to  obtain  at  this  day  in 
England,  as  appears  by  the  case  of  Johnson  el  al.  v.  Baker,  4  Barn.  &  Aid.  440, 
where  a  composition  deed  was  delivered  by  a  surety  who  had  signed  the  deed  to 
a  creditor,  not  to  be  operative  unless  all  the  other  creditors  executed  it.  It  was 
held  that  the  deed  ■was  delivered  as  an  escrow,  and  that  all  the  creditors  not  hav- 
ing executed  it,  the  surety  was  not  bound.  To  the  same  effect  are  the  ca^es 
cited  from  3  Wend.  380;  11  Vt.  448;  4  Cranch,  219;  2  Harrington,  396;  11 
Peters,  86."  The  Court  seem  evidently  to  have  misconceived  the  effect  of  the 
decision  in  the  ease  of  Johnson  et  al.  v.  Baker.  The  creditors  were  all  parties 
to  the  deed  of  composition,  and  when  the  debtor  alone  had  executed  it  ''  the 
deed  was  then  delivered  to  one  of  the  creditors,  in  order  that  he  might  get  it 
executed  by  the  rest  of  the  creditors."     It  does  not  very  clearly  appear  that  be- 


60b' 


SURETYSHIP. 


cause  an  instrument,  after  being  executed  by  one  party  may  be  delivered  to 
anotlier  party  to  be  executed  by  him,  and  presented  by  him  to  otl)ers  who  are 
parties  to  the  deed  for  their  execution,  and  still  not  become  a  deed  fill  executed 
by  all  parties,  that  therefore  a  deed,  perfect  in  form  and  execution,  may  be 
delivered  by  the  grantor  to  the  grantee  as  an  escrow.  Nor  is  the  citation  of  the 
ruling  in  Pawling  et  cil.  v.  United  States,  4  Cranch,  as  conflicting  with  the  later 
case  of  Moss  r.  Riddle,  fj  Cranch,  satisfactory,  especially  as  the  later  case 
is  in  conllict  with  the  doctrine  asserted  by  the  Alabama  Court.  But  we  will  ex- 
amine that  case  more  carefully  in  the  course  of  this  opinion,  only  remarking  in 
passing  that,  whatever  the  case  in  4  Cranch  does  decide,  which  we  will  endeavor 
to  determine  in  the  subsequent  review  of  the  case,  it  certainly  does  not  hold  that 
a  delivery  may  be  made  by  the  obligor  of  the  bond  to  the  obligee,  as  an  escrow. 
Nor  does  the  case  of  the  United  States  v.  Leffler,  11  Peters,  examined  hereafter, 
establish  any  such  doctrine.  The  case  in  3  Wend.  380,  was  where  a  bond  had 
been  executed  by  nine  persons  as  obligors,  "  and  sent  to  New  York  to  be  deliv- 
ered to  the  plaintiff  on  certain  terms  and  conditions,  by  which  the  obligors  in- 
tended to  be  indemnified  for  having  become  bound  for  the  payment  of  the  money. 
The  plaintiff's  refused  to  receive  the  hand  on  the  terms  and  conditions  proposed. 
Subsequently,  on  the  29th  October,  1824,  five  of  the  obligors,  but  not  those 
sued  in  the  action,  without  the  knowledge  or  consent  of  the  defendants  in  this 
action,  having  made  a  new  and  different  arrangement  with  the  plaintiffs  by  which 
the  security  relied  on  by  the  defendants  for  their  indemnity  was  yielded  up,  de- 
livered the  bond  to  the  plaintiffs."  It  was  held  that  the  bond  was  not  obligatory 
upon  the  four  who  never  entered  into  the  new  arrangement  with  the  plaintiffs. 
The  bond  was  dated  Sept.  21,  1824,  and  the  plaintiffs  had  then  notice  of  the 
terms  upon  which  the  delivery  was  authorized ;  they  refused  to  receive  it  upon 
those  terms,  but,  on  the  29th  October,  made  other  terms  with  five  of  the  parties 
to  the  bond.  The  plaintiffs  knew  the  terms  on  which  the  delivery  was  author- 
ized, and  refused  to  accept  upon  those  terms  ;  and  the  case  simply  decides  that, 
where  the  extent  of  the  agent's  authority  is  known  to  the  person  who  deals  with 
him,  the  principal  cannot  be  bound  outside  of  that  authority.  The  case  is  good 
law,  but  not  specially  relevant  to  the  text. 

The  case  cited  from  11  Vt.  was  where  the  names  of  seven  sureties  appeared 
upon  the  face  of  the  bond,  and  only  two  of  the  sureties  ever  executed  the  same. 
The  instrument  was  plainly  incomplete  until  executed  by  all  those  whose  names 
appeared  as  parties. 

The  decision  in  Herdman  v.  Bratten,  2  Har.  supra,  was  that  the  deed  could 
not  be  delivered  to  the  party  as  an  escrow.  This  is  an  express  denial  of  the  doc- 
trine it  is  cited  to  sustain.  So  also  the  case  of  The  State  v  Chrisman  et  al., 
2  Ind.  126,  decides  that  "  a  bond  cannot  be  delivered  as  an  escrow  to  the 
obligee." 

In  the  case  of  The  Madison.  &c..  Plank  Road  Co.  v.  Stevens,  10  Ind.  1,  Mr. 
Justice  PcrJfciTw  states  the  decision  thus:  "One  co-obligor  may  perhaps  deliver 
a  bond  to  another  co-obligor  as  an  escrow ;  but  an  instrument  cannot  be  so  de- 
livered to  the  obligee  or  payee,  or  the  agent  of  either.  Such  delivery  is  in  law 
absolute.  Peters,  U.  S.  Dig.  tit.  Escrow;  Foley  v.  Cowgill,  5  Blackf.  18;  The 
State  V.  Crisman,  2  Ind.  126;  Wright  v.  The  Shelby,  &c.,  Co.,  16  B.  Mon.  4. 
See  7  Ind.  600 ;  6  id.  183  ;  9  id.  25.     And  parol  evidence   cannot  be  given  to 


KEITH    V.    GOODWIN.  607 

vary  the  legal  efTect  of  such  di'liverv,  or  the  terms  of  the  instrument  delivered. 
This  has  been  too  often  decided  to  recjuire  a  citation  of  authorities  to  evidence 
it.     Hiatt  et  al.  v.  Simpson,  8  Ind.  2.56." 

The  case  of  Foley  v.  Cow;,'ill  was  for  a  failure  to  deliver  hof^s  at  a  ct-rtain 
time  and  place,  accordinj^  to  a  written  agreement.  The  defendant  answered  that 
the  agreement  mentioned  "  was  delivered  to  tlie  plaintifr  as  nn  escrow,  setting 
out  the  contingency  on  which  it  was  to  become  l)iiiding  on  tiie  defendant,  wliich, 
it  is  averred,  had  never  happened."  The  Court  ruled  that  if  the  instrument  "  be 
delivered  to  the  obligee  on  such  contingency,  the  condition  is  a  nullity,  and  the 
delivery  absolute." 

And  yet,  witiiout  attempting  to  overrule  or  question  these  cases  in  our  own 
State,  the  Court,  in  overruling  the  petition  (or  a  rehearing,  rests  the  decision  of 
the  case  of  Pepper  v.  Tlie  State,  supra,  except  so  far  as  a  construction  is  given 
to  the  statute,  upon  an  Alabama  case  in  direct  conflict  with  these  repeated  rul- 
ings of  our  own  Court.  If  the  doctrine  upon  whix;h  the  Alabama  case  proceeds 
be  the  law,  that  a  deed  or  other  written  instrument  may  be  delivered  to  the 
grantee  or  obligee  as  an  escrow,  it  of  course  follows  that  a  surety  may  make 
such  a  delivery  to  his  principal.  But,  in  our  opinion,  such  a  position  is  not  only 
without  support,  but  is  in  conflict  with  all  authority.  In  the  case  of  Worrall  v. 
Munn,  1  Seld.  229,  the  instrument,  an  agreement  to  execute  a  conveyance,  was 
delivered  conditionally  to  the  agent  of  the  party  to  whom  the  deed  was  afterward 
to  be  executed.  The  Court  declares  that  the  law  puts  the  question  at  rest ;  that 
the  delivery  to  the  agent  was  a  delivery  to  his  principal.  "  This  was  a  delivery 
as  an  escrow ;  such  a  delivery  can  only  be  made  to  a  stranger.  It  cannot  be 
made  to  the  party.  If  made  to  the  })arty,  no  matter  what  may  he  the  form  of 
the  words,  the  delivery  is  absolute."  Ward  v.  Lewis,  4  Pick.  518;  Fairbanks  i'. 
Met  calf,  8  Mass.  230.  Mr.  Parsons  says :  "  A  note,  as  well  as  a  deed,  may  be 
delivered  as  an  escrow,  and  the  law  of  escrow  is  substantiallj*  the  same  in  both 
cases.  ...  A  note  cannot  be  delivered  directly  to  the  promisee,  to  be  held 
by  iiim  as  an  escrow."  1  Notes  tJi:  Bills,  51  ;  Badcock  v.  Steadman,  1  Root 
(Conn.),  87. 

W»!  will  examine  the  cases  cited  in  tlie  original  opinion  in  the  case  of  Pepper 
V.  The  State,  supra.  Pawling  ef  al.  r.  The  United  States,  supra,  was  an  action 
"  upon  an  official  bond  given  by  Ballinger,  as  collector  of  the  revenue,  and 
signed  and  sealed  by  Pawling,  Todd,  Adair,  and  Kennedy,  as  his  sureties,  who 
pleaded  that  they  delivered  the  same  as  an  escrow  to  one  Joseph  Ballinger,  to  be 
safely  kept,  &c.,  upon  condition  that,  if  Simon  Ingleman  and  William  Patton, 
named  on  tlie  face  of  the  honil,  should  execute  the  same  as  co-sureties,  then  the 
bond  should  be  delivered  to  James  Morrison,  supervisor,  on  behalf  of  the  Unit- 
ed States  as  their  deed,  and  not  otherwise  ;  and  that  the  same  never  was  executed 
by  Ingleman  and  Patton."  Here  the  representative  of  the  government  had  no- 
tice, on  the  face  of  the  instrument,  that  the  same  was  not  complete,  — not  having 
been  executed  by  all  tiie  parties  whose  names  appeared  upon  its  face  as  co-obli- 
gors. To  have  held  this  delivery  of  the  instrument  obligatory  upon  the  parties 
when  the  writing  itself  proved  the  execution  to  be  incomplete,  would  have  been 
in  contradiction  of  its  express  terms. 

In  the  United  States  v.  Leffler,  11  Peters,  supra,  the  question  under  consid- 
eration is  not  discussed  either  by  court  or  counsel,  and  the  statement  of  facts 


608  SURETYSHIP. 

does  not  disclose  whether  tliere  had  ever  been  any  Intentional  delivery  of  the 
bond,  or,  if  delivered,  by  whom  such  delivery  was  made  ;  and*  tlie  only  question 
considered  was  as  to  the  competency  of  witnesses  to  prove  a  conditional  execu- 
tion. Under  what  circumstances  such  a  defence  was  admitted  does  not  appear. 
If  the  names  of  other  parties  appea'red  on  the  face  of  the  bond,  such  a  defence 
would  have  been  admissible  under  the  ruling  in  Pawling  v.  The  United  States, 
supra.  As  no  question  was  made  by  counsel,  it  was  probably  controlled  by  that 
decision.  If  it  were  otherwise,  the  validity  of  such  a  defence  was  not  so  clearly 
established  upon  authority,  that  Ave  are  authorized  to  suppose  it  would  have 
passed  unquestioned  when  presented  in  the  Supreme  Court  of  the  United  States 
for  the  first  time. 

The  case  cited  from  3  Barr  (Penn.),  308,  was  where  a  party,  in  executing  a 
bond,  expressly  stipulated  that  it  should  not  be  delivered  up  until  twelve  names 
were  obtained,  and  the  persons  who  were  procuring  names  to  the  bond  for  the 
benefit  of  third  parties  agreed  that  they  would  not  deliver  it  until  it  was  so  exe- 
cuted. It  was  held  that  such  bond  was  in  their  hands  as  an  escrow,  and  until 
the  condition  was  performed  it  could  not  lie  delivered.  So  in  the  case  cited  from 
2  Leigh,  157,  where  the  deputy-marshal  procured  a  party  to  sign  a  forthcoming 
bond  taken  upon  execution,  and  agreed  not  to  file  the  bond  in  Court  until  other 
persons  had  signed  it,  it  was  held  that  he  could  not  make  a  valid  delivery  until 
the  condition  was  performed.  And  again  in  2  Johns.  248,  it  was  held  that  a 
sheriff  might  deliver  a  deed  to  an  attorney  to  be  held  as  an  escrow,  aiid  only  de- 
livered to  Ills  client  on  compliance  with  the  condition.  The  case  of  Sharp  v. 
United  States,  4  Watts,  21,  decided  that  a  bond  containing  in  its  body  two 
names  as  sureties,  was  not  binding  on  one  who  signed  it,  unless  it  was  shown 
that  he  dispensed  with  the  execution  of  it  by  the  other.  The  case  in  7  Pick.  91, 
ruled  that  "  where  a  bond  is  signed  and  sealed  but  not  delivered  to  the  obligee, 
and  it  is  afterward  put  into  the  possession  of  the  obligee  by  a  person  who  has 
no  authority  to  deliver  it,  the  obligee  cannot  maintain,  an  action  on  the  instru- 
ment." 

In  the  case  cited  from  7  Ohio,  375,  the  Court  permitted  the  party  receiving 
the  deed  to  testify  that  he  only  received  it  for  the  purpose  of  enabling  him  to 
convey  to  a  third  party.  That  the  purpose  and  consideration  of  the  deed  was  to 
enable  him,  as  agent  of  the  grantor,  to  execute  a  conveyance  to  another.  We 
are  unable  to  find  the  case  cited,  or  any  case  in  4  Johns,  having  even  as  remote 
relation  to  the  subject  under  consideration  as  those  we  have  commented  upon. 
In  34  N.  Hamp.  460,  the  rule  is  stated  that,  "  if  a  deed  is  placed  in  the  hands 
of  a  depositary  to  be  delivered  to  the  grantee  upon  the  death  of  the  grantor, 
provided  it  is  not  previously  recalled,  but  the  grantor  reserves  the  right  and 
power  of  recall  at  any  time,  it  is  not  a  good  delivery." 

In  13  Pick.  75,  the  presumption  arising  from  the  fact  of  a  deed  having  been 
registered,  is  discussed. 

The  case  cited  from  1  Johnson's  Cases  decides  that,  "  where  the  grantor  held 
the  deed  until  the  consideration  should  be  paid,  and  died  before  payment,  there 
was  no  delivery." 

The  remaining  authorities  cited  in  Pepper  v.  The  State,  supra,  refer  to  the 
question  of  agency ;  the  decision  proceeding,  so  far  as  those  authorities  are  rele- 
vant, upon  the  ground  that  the  obligor  in  a  bond  is  the  agent  of  the  obligee,  and 


KEITH    V.    GOODWIN.  609 

the  obligee  is  therefore  responsible  for  all  bis  representations  to  his  sureties.  It 
is  unnecessary  for  us  to  examine  these  authorities,  as  the  appellant  in  this  caae 
does  not  assume  the  position  that  a  person  may,  as  principal,  make  a  valid  con- 
tract with  himself  as  agent.  As  a  (juotation  is  made  from  a  note  by  Judge  Red- 
field  in  the  April  number,  1«G3,  of  the  American  Law  Register,  p.  I34G,  which  rests 
upon  the  case  of  Pawling  r.  The  United  States,  supra,  we  will  cite  the  opinion 
of  the  same  author  in  the  May  number  18G4,  of  the  same  magazine,  p.  402  :  "  It 
seems  to  us  upon  principle  that,  where  there  is  nothing  upon  the  face  of  the 
paper  indicating  that  other  co-sureties  were  expected  to  become  parties  to  the 
instrument,  and  no  fact  Is  brought  to  the  knowledge  of  the  obligee  before  he 
accepts  the  instrument  calculated  to  put  him  on  his  guard  In  regard  to  that  point, 
and  which  would  naturally  have  led  a  prudent  man  interested  in  the  opposite 
direction  to  have  made  Imjulry  before  accepting  the  security,  the  fault  cannot  be 
said  to  rest  to  any  extent  upon  the  obligee.  And,  on  the  other  hand,  where  the 
surety  intrusts  the  bond  to  the  principal  obligor  in  perfect  form,  with  his  own 
name  attached  as  surety,  and  nothing  upon  the  paper  to  indicate  that  any  others 
are  expected  to  sign  the  instrument  in  order  to  give  it  full  validity  against  all  the 
parties,  he  mcdce.s  such  principal  his  agent  to  deliver  the  same  to  the  obliyee,  be- 
cause such  Is  the  natural  and  ordinary  course  of  conducting  such  transactions ; 
and  If  the  principal  under  such  circumstances  gives  any  assurances  to  the  surety 
in  regard  to  procuring  other  co-sureties,  or  performing  any  other  condition  be- 
fore he  delivers  the  bond,  and  which  he  fails  to  perform,  the  surety  ijiviny  confi- 
dence to  such  assurances  must  stand  the  hazard  of  their  performance,  and  cannot 
implicate  the  obligee  in  any  responsibility  in  the  matter,  unless  he  is  guilty  of  fraud 
or  rashness  in  accepting  the  security.''^ 

In  the  note  to  the  April  number  of  the  magazine  referred  to,  some  authorities 
are  cited  as  sustaining  the  application  of  the  doctrine  laid  down  in  Pepper  v.  The 
State,  to  "  promissory  notes  and  other  contracts  not  negotiable,  or  to  negotiable 
contracts  before  negotiation."  The  case  cited,  Lloyd  v.  Howard,  1  Eng  L.  & 
Eq.  227,  was  where  "A,  being  the  payee  and  holder  of  a  bill  of  exchange, 
wrote  his  name  upon  It,  and  gave  it  to  B  for  the  purpose  of  getting  it  discount- 
ed. B  never  paid  A  any  money  in  respect  to  the  bill,  but  kept  it  until  it  teas 
overdue,  when  he  delivered  it  to  C  without  receiving  any  value  for  it.  Held, 
that  there  was  no  indorsement  by  A  to  B."  The  fact  that  C  received  the  bill 
when  overdue,  could  give  him  no  right  to  insist  that  the  apparent  indorsement 
,  by  A  to  B  should  be  treated  as  real.  The  decision  in  the  case  of  Palmer  v. 
Richards,  lb.  529,  wa^  where  "  the  drawer  of  a  bill  of  exchange  Avhich  had  been 
accepted,  wrote  his  name  across  the  back  of  the  bill,  and  delivered  It  to  A  to  get 
discounted,  who,  instead  thereof,  while  the  bill  was  running,  deposited  It  with  B 
as  security  for  money  advanced  to  himself,  without  fraud  on  the  part  of  B.  Held, 
that  this  was  a  valid  indorsement  of  the  bill  by  the  drawer  to  B."  In  the  case  of 
Leaf  V.  Gibbs,  4  Car.  &  P.  4G0,  the  facts  show  that  the  plaintiff,  who  was  the 
payee  of  the  note,  knew  that  when  the  defendant  signed  as  surety,  the  agreement 
was  that  his  mother  was  also  to  sign  the  note  with  him,  and  that  she  afterwards 
refused,  and  the  confidential  clerk  of  the  plaintiff  stated  to  tlie  agent  of  the 
defendant  and  his  mother  that  the  arrangement  was,  in  consequence  of  such  refu- 
sal, incomplete.  The  Court  held  that  the  defendant  was  not  liable  unless  he 
waived  the  execution  of  the  note  by  his  mother.     Where  the  payee  receives  the 

3y 


610  SURETYSHIP. 

instrument  with  full  knowledge  of  its  incomplete  condition,  in  fact  it  would,  it 
seems  to  us,  be  a  fraud  to  permit  him  to  take  advantage  of  its  apparently  perfect 
condition.  The  decision  in  the  case  of  Awde  v.  Dixon,  5  Eng.  L.  &  Eq.  512, 
also  cited,  cannot  be  reconciled  with  the  American  decisions.  Mr.  Parsons  re- 
fers to  that  case  as  in  conflict  with  the  settled  law  in  this  country.  1  Bills  & 
Notes,  111.  .The  Court,  to  sustain  their  ruling,  declare  it  to  be  the  law  in  Eng- 
land, that  if  one  signs  a  negotiable  instrument  in  blank,  and  delivers  it  with  au- 
thority to  fill  it  up  for  £100,  and  it  is  filled  up  for  £200  and  negotiated,  the 
maker  will  not  be  liable.  Lord  Mansfield  did  not  thus  state  the  law  in  Russell 
t'.  Langstaffe,  2  Doug.  514,  and  in  this  country  such  a  doctrine  is  against  all 
authority,  and  a  decision  resting  upon  it  cannot  be  considered  in  our  courts  as 
affording  any -aid  in  the  determination  of  legal  questions.  FuUerton  v.  Sturges, 
4  Ohio  State,  529 ;  1  Parsons,  supra,  and  authorities  cited.  The  decision  in 
Awde  V.  Dixon,  proceeds  upon  the  ground  that  the  writing  of  the  greater  sum 
in  the  instrument  would  constitute  the  crime  of  forgery,  and  Alderson,  B.,  placed 
the  decision  in  the  case  upon  that  ground.  This  is  perhaps  correct  under  the 
English  statute,  but  the  Supreme  Court  of  Massachusetts,  in  Putnam  v.  Sullivan, 
4  Mass.  45,  held  otherwise,  on  the  ground  that  the  instrument  had  been  deliv- 
ered upon  a  trust,  intending  that  something  should  afterward  be  written,  to  which 
the  name  should  apply  as  an  indorsement. 

Judge  Bedfield,  however,  seems  to  have  regarded  the  English  decision  in  the 
case  of  Swan  v.  North  British,  &c.  Co.,  10  Jur.  N.  s.  102,  as  conflicting  with 
the  view  expressed  in  the  note  we  have  quoted  from.  In  that  case,  "  where  A 
was  induced  by  his  broker  to  send  him  blank  forms  of  transfer,  which  the  broker 
filled  up  with  numbers  and  descriptions  of  shares  different  from  those  of  the  com- 
pany intended  by  A,  being  shares  in  the  defendant's  company,  and  by  means  of 
a  duplicate  key  which  he  had  procured  to  be  made  without  the  knowledge  of  A, 
obtained  certificates  from  a  box  of  A's,  necessary  to  perfect  the  transfers,  and 
also  forged  the  names  of  the  attesting  witnesses  ;  held,  in  an  action  against  the 
company  for  damages,  and  for  a  mandamus  to  restore  the  plaintiff's  name  to  the 
registry,  that  the  acts  of  the  plaintiff  were  not  such  as  estopped  him  from  show- 
ing that  the  deed  of  transfer  was  a  forgery."  In  other  words,  that  where  the 
act  of  the  plaintiff,  in  trusting  the  agent  with  the  blank  forms  of  transfer,  did 
not  enable  the  agent  to  commit  a  fraud  upon  a  third  party,  but  such  fraud  could 
only  have  been  consummated  by  the  addition  of  larcen}-  and  forgery,  in  such  case 
the  plaintiff  was  not  estopped.  We  admit  that  we  are  unable  to  understand  • 
what  decision  a  Court  could  legitimately  render  in  such  a  case  having  any  rela- 
tion to  the  question  now  under  consideration. 

There  has  also  been  a  case  decided  by  the  Supreme  Court  of  Tennessee,  5 
Humph.  133,  which  rests  for  support  upon  the  cases  we  have  already  examined  in 
4  Cranch  and  11  Peters,  and  in  our  opinion  is  not  sustained  by  those  authorities. 
Counsel  have  cited  to  us  also  the  case  of  The  State  v.  Bodly,  7  Blackf.  355. 
There  were  in  that  case  no  questions  decided  or  discussed  by  the  Court  involv- 
ing any  point  now  under  consideration.  Nor  could  such  questions  have  been 
presented  in  that  case,  as  the  bond  when  delivered  contained  the  name,  in  the 
body  of  the  instrument,  of  the  other  party  who  was  to  execute  it,  and  the  clerk 
who  was  to  receive  the  bond  had  actual  notice  of  its  imperfect  execution,  he 
being  the  witness  called  to  prove  the  fact  that  the  sureties  signed  on  condition 


KKITH    V.    GOODWIN.  611 

that  the  person  whose  name  was  witli  theirs  in  tlie  body  of  tlic  l)on<l  shoiihl  also 
execute  it. 

Since  the  decision  in  the  case  of  Pepjjcr  v.  The  State,  tlie  New  York  Court 
of  Appeals  has  rendered  a  decision,  holding  that  where  a  bond  is  executed  by 
sureties,  and  delivered  to  one  of  their  number  to  keep  until  also  executed  by 
another  surety,  that  the  instrument,  until  so  executed,  is  held  as  ai^ escrow.  The 
People  V.  Bostwick,  32  N.  Y.  445. 

Blackstone  defines  a  delivery  as  an  escrow,  to  be  a  delivery  "  to  a  tliird  per- 
son to  hold  till  some  conditions  be  performed  on  the  part  of  the  f/rantee.''''  See 
also  4  Kent,  454 ;  1  Coke,  'Ad  a. 

In  Greenleaf's  Cruise  on  Real  Property,  b.  4,  p.  29,  it  is  said:  "  The  deliv- 
ery of  a  deed  may  be  either  absolute,  that  is  to  the  grantee  hirasdf  or  to  some 
person  for  him,  or  else  conditional,  that  is  to  a  third  person,  to  keep  it  till  some- 
thiiui  is  done  by  the  grantee;  in  which  last  case  it  is  not  delivered  as  a  deed,  but 
as  an  escrow."  The  instrument  is  as  perfect  and  complete  in  form  when  deliv- 
ered as  an  escrow,  as  though  it  were  to  be  delivered  absolutely.  An  instrument 
delivered  as  an  escrow  cannot  be  withdrawn,  but  remains  in  the  liands  of  the 
holder  to  be  delivered  over  to  the  party  for  whose  benefit  it  was  executed,  when- 
ever he  performs  the  conditions  upon  which  the  original  delivery  was  made.  But 
so  long  as  tile  instrument  remains  in  the  hands  of  one  of  the  parties,  it  has  no 
force  whatever. 

When  a  decision  is  based  upon  so  total  a  disregard  of  the  essentials  constitut- 
ing the  delivery  of  an  instrument  as  an  escrow,  it  may  be  well  to  look  closely  to 
the  authorities  which  are  cited  to  sustain  this  line  of  ruling. 

Those  authorities  are  the  ones  we  have  already  reviewed,  with  the  additional 
one  of  The  State  Bank  v.  Evans,  3  J.  S.  Green  (N.  J.),  155,  which  was  a  case 
*'  where  the  defendant's  name  was  on  the  bond  as  one  of  the  sureties,  and  he 
proved  that  the  bond  was  brought  to  him  by  one  of  his  co-sureties,  and  that  when 
he  signed  it  he  delivered  it  to  his  co-surety  and  said  to  him  :  '  Now  this  bond  is 
not  to  be  delivered  up  until  all  the  persons  named  in  it  have  signed  it.'  "  The 
Court  held  that  the  testimony  was  admissible,  and  that  it  overcame  the  presump- 
tion of  any  legal  delivery  arising  from  the  mere  fact  of  the  obligee  having  pos- 
session of  the  bond.  This  is  simply  another  case  where  the  instrument  disclosed 
upon  its  face  that  it  had  not  been  executed  by  all  the  parties.  But  while  citing 
authorities  which,  as  we  have  seen,  do  not  sustain  the  position  they  are  quoted  to 
support,  the  case  of  The  I'eoplc  r.  Bostwick  entirely  overlooks  a  decision  ren- 
dered a  year  earlier  by  the  Supreme  Court  of  Maine,  in  which  it  was  held  that 
"  where  a  surety  to  a  bond  signs  upon  the  assurance  that  the  principal  will  pro- 
cure two  other  persons  specified  and  known  to  such  surety  to  sign  the  bond  be- 
fore he  delivers  the  same,  which  he  fails  to  do,  but  this  is  wholly  unknown  to 
the  obligee  at  tlic  time  lie  accepts  the  bond,  such  surety  is  bound  to  perform  the 
obligation." 

The  case  of  Carr  et  al.  v.  Moore,  2  Ind.  602,  was  an  action  of  "  debt  on  a 
bond  given  to  a  school  commissioner,  signed  by  A.  C.  and  P.  As  to  P.  the  bond 
was  a  forgery.  The  bond  was  delivered  to  C,  the  principal,  to  be  signed  and 
sealed,  and  it  was  redelivered  to  the  connnissioner  by  A.  and  C.  perfected.  The 
commissioner  was  ignorant  of  the  forgery,  the  name  of  P.  having  been  placed 
upon  the  bond  after  its  delivery  to  C.  (or  the  signatures.     Jleld,  that  A.  was  lia- 


612  SURETYSHIP. 

ble  on  the  bond."  Mr.  Justice  rerkins,  who  delivered  the  opinion,  says :  "  Had 
Carr  (the  principal)  induced  Athon  (the  surety)  by  fraud  to  execute  the  bond, 
still  the  school  commissioner,  being  ignorant  of  the  fact,  could  not,  we  suppose, 
be  alFected  by  it."  There  was  no  proof,  however,  of  such  fraud,  and  the  ex- 
pression must  therefore  be  taken,  we  suppose,  rather  as  the  judgment  of  the 
writer  of  the  opinion,  than  as  the  ruling  of  the  Court.  But  it  is  certainly  enti- 
tled to  consideration  and  respect. 

The  case  of  IMillett  v.  Parker  et  ah,  2  Met.  (Ky.)  608,  reviews  the  authori- 
ties very  fully  upon  this  question,  and  holds  that  "  a  conditional  delivery  to  the 
principal  by  a  person  who  subscribes  a  paper  as  a  surety,  will  not  make  such 
paper  a  mere  escrow.  The  delivery  of  the  paper,  to  constitute  an  escrow,  must 
be  made  to  a*third  person,  and  not  to  a  co-obligor ;  and  this  whether  the  instru- 
ment be  assignable  or  not." 

The  case  of  The  State  v.  Chrisman  et  al.,  2  Ind.  126,  was  an  action  of  debt 
upon  an  administrator's  bond.  Nelson,  one  of  the  defendants,  filed  the  follow- 
ing plea,  verified  by  oath:  "  That  the  said  supposed  writing  obligatory  in  the 
declaration  mentioned,  was  signed  by  him  upon  condition  that  twelve  or  fifteen 
other  good  men  signed  it,  which  was  not  done  ;  and  that  unless  said  number  of 
persons  did  sign  it,  it  was  not  to  be  considered  his  deed."  A  demurrer  was  sus- 
tained to  the  answer.  The  Court  say:  "This  plea  admits  the  signature  to  the 
bond,  and  does  not  deny  that  the  same  was  delivered  to  the  obligee.  When  so 
signed  and  delivered  it  became  absolute."  Upon  the  face  of  the  bond  it  appears 
that  the  name  of  Nelson  was  written  next  following  that  of  the  principal,  and 
was  followed  by  the  names  of  six  other  sureties.  The  presumption  in  law  is  that 
the  names  were  signed  in  the  order  in  which  they  appear  upon  the  instrument, 
and  as  the  obligee  was  the  State,  and  the  delivery  was  the  filing  of  the  completed 
instrument  with  the  clerk,  no  delivery  could  have  been  made  by  Nelson  to  the 
obligee  upon  his  signing  it.  So  that  the  decision  of  the  case  results,  that  no  de- 
livery by  any  of  his  co-obligors  could  be  made  to  the  obligee  of  the  instrument 
as  an  escrow,  but  the  delivery  by  any  of  them  rendered  Nelson  liable  on  the 
bond. 

It  was  also  held  in  the  case  of  Taylor  &  Co.  v.  Craig,  2  J.  J.  Marshall,  449, 
that  a  conditional  delivery  of  a  promissory  note,  by  a  surety  in  the  note  to  his 
principal,  did  not  make  the  instrument  an  escrow,  but  that  the  plaintiff  had  the 
right  to  hold  the  surety  responsible  without  regard  to  the  condition  he  had  im- 
posed upon  the  principal  at  the  time  of  the  delivery.  The  Bank  of  the  Common- 
wealth V.  Cuny,  2  Dana,  142,  recognizes  this  as  the  law.  Again,  in  the  case  of 
Smith  V.  Moberly,  10  B.  Mon.  266,  in  deciding  a  similar  question,  this  language 
is  used:  "But  a  delivery  of  a  writing  of  this  character,  under  such  circum- 
stances, to  the  principal,  does  not  have  the  effect  of  characterizing  it  as  a  mere 
escrow ;  but  on  the  contrary  the  principal  should  be  considered  as  the  agent  of 
the  surety,  and  empowered  by  him  to  pass  the  writing  to  the  person  to  whom  it 
may  be  made  payable,  and  his  delivery  as  being  sufficient  to  make  it  effectual, 
unless  the  payee  had  notice  of  the  special  terms  upon  which  it  was  signed.  The 
.implied  discretionary  authority  to  use  the  note,  arising  out  of  its  possession  by 
the  principal,  uncontradicted  by  its  terms  or  any  thing  apparent  on  its  face,  can- 
not be  restricted  by  any  agreement  between  the  payors  themselves,  of  which  the 
payee  had  no  notice."     The  Supreme  Court  of  Vermont  have  also  held  that 


KEITH   V.   GOODWIN.  613 

where  a  note  payable  to  a  bank  was  signed  by  a  principal  and  one  suret}-,  with 
an  agreement  on  the  part  of  the  principal  with  such  surety  that  he  would  procure 
another  surety,  which  was  not  done,  before  he  procurcfl  the  note  to  be  discount- 
ed, it  will  constitute  no  defence,  unless  the  officers  of  the  bank  were  cognizant 
of  such  agreement.     Passumpsic  Bank  v.  Goss,  31  Vt.  315. 

It  seems  clear,  on  principle,  that  a  surety  cannot  make  a  delivery  of  a  bond 
to  his  principal  as  an  escrow,  upon  condition  that  other  names  shall  be  procured 
before  its  delivery  to  the  obligee.  The  very  definition  of  an  escrow  involves  the 
holding  of  the  instrument,  complete  in  form,  signed  and  sealed,  prepared  for 
delivery  to  the  obligee  by  a  third  person  who  acts  as  the  agent  of  the  obligors 
and  obligee,  and  who  is  to  make  the  delivery,  not  upon  some  act  done  by  the 
obligors,  but  upon  the  performance  of  some  condition  by  the  obligee.  There  are 
but  two  parties  to  the  instrument,  and  so  long  as  it  is  held  by  the  principal  it 
cannot  be  said  to  be  delivered  for  any  purpose,  for  it  remains  still  in  the  hands 
of  the  one  party,  who  is  only  to  be  bound  in  any  manner  upon  its  delivery  to 
the  other.  And  where  there  is  no  delivery  of  the  instrument  by  the  one  party 
executing  it,  it  cannot  be  said  to  be  held  as  an  escrow. 

Can  a  delivery  then  be  made  to  the  principal,  as  the  agent  of  his  sureties,  for 
any  other  purpose  than  an  unconditional  delivery  to  the  obligee  ? 

The  interest  of  the  principal  is  clearly  to  procure  the  acceptance  of  his  bond 
by  the  obligee  at  the  earliest  moment,  and  with  the  least  number  of  sureties. 
Experience  proves,  and  the  law  so  regards  it,  that  it  is  a  hardship  to  procure 
bail,  and  the  interest  of  the  principal  is  to  avoid  this  hardship.  On  the  other 
hand,  the  interest  of  the  sureties  is  as  clear  to  avoid  a  delivery  until  their  pro 
ra/rt  liability  has  been  reduced  by  the  execution  of  the  bond  by  other  co-sureties. 

It  is  a  well-established  principle  of  law,  that  he  who  has  an  interest  in  the  do- 
ing of  a  particular  act,  cannot  accept  an  agency  in  the  same  matter  for  others 
whose  interests  are  adverse  to  his  own.  A  person  will  not  be  permitted  to  as- 
sume an  agency  for  others,  where  the  interests  of  his  principal  would  be  in  direct 
conflict  with  his  personal  interests.  In  Copeland  v.  Mercantile  Ins.  Co.,  6  Pick. 
198,  Merlon,  J.,  says:  "It  is  a  rule  of  law  well  settled,  and  founded  in  the 
clearest  principles  of  justice  and  sound  policy,  that  the  agent  of  the  seller  can- 
not become  the  purchaser,  or  the  agent  of  the  purchaser."  Judge  Story,  in  liis 
work  on  Agency,  §  211,  says :  "  For  the  like  reason  (that  is,  for  the  same  reason 
that  forbids  an  agent  of  the  seller  himself  to  become  the  buyer),  an  agent  of 
the  seller  cannot  become  an  agent  of  the  buyer  in  the  same  transaction."  And 
again,  §  9  :  "  Yet  we  are  to  understand  that  they  cannot,  at  the  same  time,  take 
upon  themselves  incompatible  duties  and  characters.  .  .  .  A  memorandum  made 
and  signed  by  a  seller,  at  the  request  of  the  purchaser,  will  not  bind."  See  3 
Parsons,  Contracts,  p.  11 ;  Smith's  Merc.  Lsw,  149;  Wright  r.  Dannah,  '2  Camp. 
203;  Farebrother  v.  Simmons,  5  Barn.  &  Ad.  333;  Rayner  v.  Linthorne,  2 
Car.  &  P.  124 ;  Cooper  r.  Smith,  15  East,  103.  In  The  Utica  Ins.  Co.  v.  Toledo 
Ins.  Co.,  17  Barb.  132,  it  is  said:  "The  general  principle  that  a  party  cannot 
act  for  himself  in  the  same  transaction  in  wliich  he  undertakes  to  act  for  another 
is  well  settled,  and  the  validity  of  a  contract  in  which  he  acts,  and  to  which 'he 
is  a  party  as  agent  for  a  third  person  and  also  in  his  own  behalf,  does  not  depend 
upon  the  question  whether  he  makes  an  advantage  by  the  transaction.  .  .  .  The 
character  of  agent  for  one  party  to  a  contract,  and  that  of  principal  upon  the 


614  SURETYSHIP. 

other  part,  are  incompatible."  Ex  parte  Bennett,  10  Ves.  381 :  Florance  v. 
Adams,  2  Rob.  556  ;  Beal  v.  McKiernan,  6  Louis.  407  ;  Bentley  v.  Columbia  Ins. 
Co.,  19  Barb.  595. 

The  law,  indeed,  makes  the  principal  for  a  special  purpose ;  i.  e.,  the  delivery 
of  the  instrument,  the  agent  of  liis  sureties.  Their  delivery  of  the  instrument  to 
the  principal,  after  placing  their  names  upon  it,  authorizes  the  principal  to  make 
the  delivery  to  the  obligee ;  for  such  is  the  channel  through  whicli  the  paper 
would  properly  pass  in  reaching  the  obligee.  And  the  delivery  of  the  instru- 
ment to  be  by  him  at  once  transferred  to  the  obligee,  is  a  delivery  entirely  con- 
sistent with  the  interests  and  inclination  of  the  principal,  and  for  such  a  purpose 
the  delivery  is  proper.  The  original  contract  is  between  the  principal  on  the 
bond  and  the  obligee.  The  compliance  with  the  contract  is  the  delivery  of  the 
bond  by  the  principal  obligor  to  the  obligee,  duly  executed  by  himself  and  his 
sureties.  The  contract  between  the  principal  on  the  bond  and  his  sureties  is, 
that  they  will  enable  him  to  comply  with  his  original  contract.  For  this  purpose 
they  sign  and  deliver  to  him  the  instrument,  that  in  the  fulfilment  of  his  original 
contract  he  may  deliver  it  to  the  obligee. 

Now  is  it  not  clear  that,  as  the  general  purpose  of  the  delivery  by  the  sureties 
to  the  principal  is  that  he  may  make  a  delivery  to  the  obligee,  no  conditions  im- 
posed upon  such  delivery  will  bind  the  obligee  unless  they  are  known  to  him  ? 
In  the  case  of  Pickering  v.  Busk,  15  East,  38,  Lord  Ellenborrmgh,  C.  J.,  states 
the  law  thus :  "  Strangers  can  only  look  to  the  acts  of  the  parties,  and  to  the 
external  indicia  of  property,  and  not  to  the  private  communications  which  may 
pass  between  a  principal  and  his  broker ;  and  if  a  person  authorize  another  to 
assume  the  apparent  right  of  disposing  of  property  in  the  ordinary  course  of 
trade,  it  must  be  presumed  that  the  apparent  authority  is  the  real  authority.  I 
cannot  subscribe  to  the  doctrine  that  a  broker's  engagements  are  necessarily, 
and  in  all  cases,  limited  to  his  actual  authority,  the  reality  of  which  is  afterward 
to  be  tried  by  the  fact.  It  is  clear  that  he  may  bind  his  principal  tvithin  the  lim- 
its of  the  authority  with  lohich  he  has  been  apparently  clothed  by  the  principal  in 
respect  to  the  subject-mailer ;  and  there  would  be  no  safety  in  mercantile  transac- 
tions if  he  could  not.  If  the  principal  send  his  commodity  to  a  place  where  it 
is  the  ordinary  business  of  the  person  to  whom  it  is  confided  to  sell,  it  must  be 
intended  that  the  commodity  was  sent  thither  for  the  purpose  of  sale.  If  the 
owner  of  a  horse  send  it  to  a  repository  of  sale,  can  it  be  implied  that  he  sent  it 
thither  for  any  other  purpose  than  that  of  sale  ?  Or  if  one  send  goods  to  an 
auction-room,  can  it  be  supposed  that  he  sent  them  th'ther  merely  for  safe  cus- 
tody ?  "  And  where  the  surety  signs  and  delivers  the  bond  to  the  principal, 
from  whom  it  would  naturally  pass  to  the  obligee,  are  we  to  suppose  that  such  de- 
livery to  the  principal  was  merely  for  safe  custody  ?  The  rule  laid  down  in  the 
case  cited  is,  where  the  commodity  is  sent  in  such  a  way,  and  to  such  a  place, 
as  to  exhibit  an  apparent  purpose  of  sale,  the  principal  will  be  bound,  and  the 
purchaser  safe.  "  Bayley,  J. :  If  the  servant  of  a  horse-dealer,  with  express 
directions  not  to  warrant,  do  warrant,  the  master  is  bound ;  because  the  servant, 
having  a  general  authority  to  sell,  is  in  a  condition  to  warrant,  and  the  master 
has  not  notified  to  the  world  that  the  general  authority  is  circumscribed."  And 
is  not  the  surety  upon  a  bond,  who  delivers  it  to  his  principal  in  apparent  proper 
condition  to  be  by  him  delivered  to  the  obligee,  and  with  the  general  authority  to 


KEITH    V.    GOODWIN.  615 

make  such  delivery,  but  circumsoriljed  by  a  condition  unknown  to  the  obligee, 
bound  by  the  delivery  which  the  principal  may  make  in  disregard  of  the  londi- 
tion  ?  The  rule  is  stated,  by  a  learned  author  thus:  "An  agent's  authority  is 
that  which  is  given  by  the  declared  terms  of  his  appointment,  notwithstanding 
secret  instructing ;  or  that  with  which  he  is  clothed  by  the  character  in  which  he 
is  held  out  to  the  world,  althougli  not  within  the  words  of  his  commission.  What- 
ever is  done  under  an  authority  thus  manifested,  is  actually  within  the  authority, 
and  the  pi'ineipal  is  bound  for  tliat  reason;  for  he  is  bound  equally  by  the  author- 
ity which  he  actually  gives,  and  by  that  which,  by  his  own  acts,  he  appears  to 
give.  .  .  .  The  appearance  of  the  authority  is  one  thing,  and  for  that  the  princi- 
pal is  responsible."  1  Parsons,  Contracts,  44.  The  surety  places  the  instrument, 
perfect  upon  its  face,  in  the  hands  of  the  proper  person  to  pass  it  to  the  obligee, 
and  the  law  justly  holds  that  the  apparent  authority  with  which  the  surety  has 
clothed  him,  shall  be  regarded  as  the  real  authority,  and  as  the  condition  imposed 
upon  the  delivery  was  unknown  to  the  obligee,  therefore  the  benefit  of  such  con- 
dition shall  not  avail  the  surety. 

Thus,  in  our  opinion,  should  the  rule  be  established  upon  principle  ;  and,  as 
it  appears  by  the  examination  we  have  made,  that  the  authok'itles  relied  upon  to 
sustain  a  contrary  rule  are  In  the  main  irrelevant,  and  are  In  turn  quoted  to  sup- 
port the  cited  decisions  which  are  really  in  point,  we  are  inclined,  after  a  review 
of  all  the  cases,  to  regard  the  real  weight  of  well-considered  decisions  as  sus- 
taining the  rule  which  to  us  .seems  to  rest  also  upon  a  correct  principle. 

So  far  as  the  decision  of  the  case  of  Pepper  v.  The  State,  supra,  rests  upon 
the  construction  of  the  statute,  and  upon  the  fact  of  forgery,  we  are  not  called 
upon  to  review  it. 

The  action  of  the  Court  below  upon  the  demurrer  was  correct. 

Judgment  affirmed. 

It  seems  to  be  entirely  well  settled  that  where  the  instrument  is  of  a  negotiable 
character,  and  is  actually  negotiated  while  current,  in  the  due  course  of  business 
and  for  value  to  a  bona  fide  party,  the  surety  must  be  held  responsible  in  all  such 
cases,  unless  there  is  something  upon  the  face  of  the  paper  to  indicate  its  incom- 
pleteness. Passumpsic  Bank  v.  Goss,  31  Vt.  315 ;  INlcCramer  v.  Thompson,  7 
Am.  Law  Keg.  N.  s.  92,  In  which  latter  case  the  authorities  are  very  care- 
fully commented  upon  by  Wright,  J.  It  has  sometimes  btHin  made  a  question 
how  far  a  surety,  before  he  Is  made  to  pay  any  portion  of  the  debt,  can  be 
regarded  as  standing  in  the  light  of  a  creditor  to  the  principal  debtor.  But  it 
seems,  upon  principle  as  well  as  authority,  to  be  most  undeniable  that  when  the 
surety  is  compelled  to  pay  the  debt,  or  any  part  of  it,  his  right  attaches  to  be 
treated  as  a  creditor  from  the  time  of  assuming  such  suretyship. 

So,  too,  securities  given  to  Indemnify  sureties  are  founded  upon  most  unques- 
tionable consideration  for  value.  Uhler  v.  Semple,  5  C.  E.  tireen  (20  N.  J. 
Ch.),  288.  But  it  has  sometimes  been  held  that  the  creditor  cannot  under  all 
circumstances  claim  the  benefit  of  such  securities.  Jones  r.  Quinnlpiack  Bank, 
29  Conn.  25.  But  see  N.  B.  Savings  Inst.  v.  Fairhaven  Bank,  9  Allen.  175-178. 
The  subrogation  of  the  surety  upon  the  payment  of  the  debt,  to  all  the  rights  of 
the  creditor  Is  clearly  recognized  In  the  American  courts,  although  subroga- 
tion, in  form.  Is  a  remedv  derived  from  the  Roman  civil  law.     Irick  v.  Black, 


616  SURETYSHIP. 

2  C.  E.  Green  (17  N.  J.  Ch.),  189.  And  in  the  case  last  cited  the  right  of  the 
surety,  by  means  of  a  bill  in  equity,  to  compel  the  principal  debtor,  after  the 
debt  falls  due,  to  make  payment  of  the  debt  is  fully  recognized.  And  it  is  here 
declared  that  where  the  creditor  has  the  means  of  fully  indemnifying  himself  out 
of  the  property  of  the  principal  debtor,  and  will  be  subjected  to  mo  loss  or  delay 
thereby,  he  may  in  equity  be  compelled  by  the  surety  to  seek  his  redress  by 
means  of  resort  to  the  property  of  the  principal  debtor.  But  this  rule  is  subject 
to  many  exceptions  ;  and  the  better  opinion  now  seems  to  be  that  in  such  cases 
the  surety  must  assume  the  debt  and  accept  the  transfer  of  such  collateral  rem- 
edies as  the  creditor  may  possess.  1  Story  Eq.  Jur.  §§  499  et  seq.,  499  e,  and 
cases  cited  in  note,  tenth  edition. 

The  question  of  the  defences  to  which  a  surety  for  the  husband  to  secure  the 
wife's  separate  estate  to  her  may  avail  himself  is  discussed  in  Barr  v.  Greenawalt, 
62  Penn.  St.  172. 

In  cases  of  insolvency  the  surety  may  sometimes  compel  the  creditor  to  resort 
to  collateral  remedies  for  the  collection  of  his  debt  before  attempting  to  enforce 
it  against  him.  Thus  it  has  been  held  that  where  the  payee  of  a  note  had 
deceased,  and  the  administrator  was  attempting  to  enforce  the  same  against  a 
surety,  the  maker  of  the  note  being  insolvent,  but  entitled  to  a  distributive  share 
in  the  estate  of  the  payee,  the  surety  might  compel  the  administrator  first  to 
resort  to  such  distributive  share.  Wright  v.  Austin,  56  Barb.  13.  The  author- 
ities are  cited  in  the  opinion,  and  carefully  classified. 

The  operation  of  the  statute  of  limitations  as  between  surety  and  principal, 
and  accommodation  parties  among  themselves,  and  between  indorser  or  drawer 
and  prior  parties,  is  a  question  of  interest  and  importance.  In  the  first  two 
cases  mentioned,  it  is  pretty  well  settled  that  the  statute  begins  to  run  from  the 
time  of  payment.  Barnsback  v.  Reiner,  8  Minn.  59 ;  Preslar  r.  Stalworth,  37 
Ala.  402  ;  Hale  v.  Andrews,  6  Cow.  225 ;  Tillotson  v.  Rose,  11  Met.  299 ;  Rey- 
nolds V.  Doyle,  1  Man.  &  G.  753  ;  Collinge  v.  Heywood,  9  Ad.  &  E.  633  ;  Byles, 
Bills,  333;  Angell,  Limitations,  112,  113.  But  see  Webster  v.  Kirk,  17  Q.  B. 
944. 

It  would  seem  from  analogy  to  these  cases,  and  from  the  fact  that  the  right  of 
action  of  the  indorser  or  drawer  accrues  only  upon  payment,  that  the  statute 
should  begin  to  run  from  that  time.  See  Reynolds  v.  Doyle,  and  Collinge  v. 
Heywood,  supra.  But  the  contrary  is  held  in  Webster  v.  Kirk,  supra,  and  by 
the  courts  of  Pennsylvania.  Kennedy  v.  Carpenter,  2  Whart.  844 ;  Farmers' 
Bank  v.  Gilson,  6  Barr,  51.  The  ground  taken  in  the  Pennsylvania  cases  is, 
that  the  indorser  must  sue  upon  the  paper,  as  to  which  the  statute  begins  to  run 
at  maturity.  Perhaps  the  rule  may  be  different  where  it  is  held  that  such  party 
is  not  limited  to  an  action  upon  the  paper,  but  may  sue  for  money  had  and  re- 
ceived. See  Ellsworth  v.  Brewer,  11  Pick.  316.  We  are  informed  that  a  case 
is  now  pending  in  the  Supreme  Court  of  Massachusetts,  involving  this  point. 
It  may  be  well  to  note  that  Reynolds  v.  Doyle  does  not  appear  to  have  been  be- 
fore the  Court  in  Webster  v.  Kirk ;  and  that  no  reasons  are  given  for  the  deci- 
sion in  the  latter  case. 


BAYARD  V.    SHUNK.  617 


BANK-BILLS   AND   OTHER   PAPER  TAKEN   IN 
PAYMExNT   OF   DEBT. 


Bayard  v.  Shunk. 

(1  Watts  &  Sergeant,  92.     Supreme  Court  of  Pennsylvania,  May,  1841.) 

Pmjment  in  bank-bills.  —  If  a  creditor  receive  current  bank-notes  in  payment,  tliis  dis- 
cliarges  tlie  debt;  tbougli,  by  reason  of  the  failure  of  the  bank,  of  wliicii  both  par- 
ties were  ignorant  at  tlie  time,  tlie  notes  were  wortliless  wlien  received. 

In  this  case,  notes  of  the  Commercial  Bank  of  Millington  had 
been  received  by  the  plaintiff's  attorney  in  payment  of  a  judgment 
against  the  defendant  and  another.  Said  bank  had  actually  failed 
several  days  before  this  transaction,  though  both  parties  were 
ignorant  of  this  fact  at  the  time  ;  and  the  bank-notes  were  worth- 
less when  received.  The  question  was  whether  the  judgment 
were  satisfied. 

Gibson,  C.  J.  Cases  in  which  the  bills  or  notes  of  a  third  party 
were  transferred  for  a  debt,  are  not  to  the  purpose  ;  and  most  of 
those  which  have  been  cited  are  of  that  stamp.  Where  the  parties 
to  such  a  transaction  are  silent  in  respect  to  the  terms  of  it,  the 
rules  of  interpretation  are  few  and  simple.  If  the  securities  are 
transferred  for  a  debt  contracted  at  the  time,  the  presumption  is 
that  they  are  received  in  satisfaction  of  it ;  but  if  for  a  precedent 
debt,  it  is  that  they  arc  received  as  collateral  security  for  it ;  and 
in  either  case  it  may  be  rebutted  by  direct  or  circumstantial  evi- 
dence. But  by  the  conventional  rules  of  business,  a  transfer  of 
bank-notes,  though  they  are  of  the  same  mould  and  obligation  be- 
twixt the  original  parties,  is  regulated  by  peculiar  principles  and 
stands  on  a  different  footing.  They  are  lent  by  the  banks  as  cash  ; 
they  are  paid  away  as  cash  ;  and  the  language  of  Lord  Mansfield 
in  Miller  v.  Race,  was  not  too  strong  when  he  said,  "  they  are  not 
goods,  nor  securities,  nor  documents  for  debts ;   but  arc  treated  as 


618  BANK-BILLS    AND    OTHER    PAPER    TAKEN    IN    PAYMENT. 

money,  as  cash,  in  the  ordinary  course  and  transaction  of  business 
by  the  general  consent  of  mankind,  which  gives  them  the  credit 
and  currency  of  money  to  all  intents  and  purposes ;  they  are  as 
much  money  as  guineas  themselves  are,  or  any  other  coin  that  is 
used  in  common  payments  as  money  or  cash."  If  such  were  their 
legal  character  in  England,  where  there  was  but  one  bank,  how 
emphatically  must  it  be  so  here  where  they  have  supplanted  coin 
for  every  purpose  but  that  of  small  change,  and  where  they  have 
excluded  it  from  circulation  almost  entirely.  It  is  true,  as  was 
remarked  in  Young  v.  Adams,  6  Mass.  182,  that  our  bank-notes 
are  private  contracts  without  a  public  sanction,  like  that  which 
gives  operation  to  the  lawful  money  of  the  country  ;  but  it  is  also 
true  that  they  pass  for  cash  both  here  and  in  England,  not  by  force 
of  any  such  sanction,  but  by  the  legislation  of  general  consent,  in- 
duced by  their  great  convenience,  if  not  the  absolute  necessities  of 
mankind.  Miller  v.  Race  is  a  leading  case  which  has  never  been 
doubted  in  England  or,  except  in  a  case  presently  to  be  noticed,  in 
America  ;  and  it  goes  very  far  to  rule  the  point  before  us  ;  for  if 
the  wheel  of  commerce  is  to  be  stopped  or  turned  backwards  in 
order  to  repair  accidents  to  it  from  impurities  in  the  medium  which 
keeps  it  in  motion,  except  those  which  —  few  and  far  between  — 
are  occasioned  by  forgery,  bank-notes  must  cease  to  be  a  part  of 
the  currency,  or  the  business  of  the  world  must  stand  still.  The 
weight  of  authority  bearing  directly  on  the  point,  is  decisively  in 
favor  of  the  position  that  bona  fide  payment  in  the  notes  of  a  broken 
bank  discharges  the  debt.  Though  Camidge  v.  AUenby,  6  Barn.  & 
C.  373  ;  s.  c,  13  Eng.  Com.  Law  Hep.  202,  was  not  a  case  of  pay- 
ment in  bank-notes,  but  in  the  cash  notes  of  a  banker  who  had 
failed  a  few  hours  before,  it  was  held  that  if  they  were  to  be  con- 
sidered as  cash,  the  debt  would  be  discharged  ;  but  if  as  negotiable 
paper  merely,  the  holder  was  bound  to  use  due  diligence  in  pro- 
curing payment  of  them  ;  and  that  in  either  aspect  the  same  result 
was  inevitable.  Such  notes,  however,  though  formerly  called  gold- 
smiths' notes,  have  not  been  treated  as  cash  by  the  merchants  or 
the  courts.  Strictly  speaking,  they  are  ordin*ary  promissory  notes  ; 
for  none  but  those  of  the  Bank  of  England  are  considered  bank- 
notes in  that  country.  The  judges,  however,  seem  to  have  hesi- 
tated as  to  their  precise  character  in  that  case  ;  but  they  distinctly 
decided  that  bona  fide  payment  in  notes  which  have  received  the 
qualities  of  money  from  the  conventional  laws  of  trade,  is  absolute 


BAYARD    V.    SHUNK.  619 

satisfaction,  notwithstanding  the  previons  faihirc  of  the  drawer.  In 
America  we  have  a  decision  directly  to  the  point  in  Scruggs  v.  Gass, 
8  Yerg.  175,  in  which  the  Supreme  Court  of  Tennessee  held  that 
payment  in  the  notes  of  a  bank  which  had  failed,  discharged  the 
debt;  and  in  Young  v.  Adams,  already  quoted,  we  have  a  decision 
of  the  Supreme  Court  of  Massachusetts  to  tlie  same  purport. 

In  contrast  with  these  stands  Lightljody  v.  The  Ontario  Bank, 
decided  liy  the  Supreme  Court  of  New  York,  11  Wend.  9,  and  af- 
firmed in  the  Court  of  Errors,  13  Wend.  101.^  The  judges  and 
senator  who  delivered  opinions  in  that  case,  seem  not  to  have  coin- 
cided in  their  intermediate  positions,  though  they  arrived  at  the 
same  conclusion.  The  chief  justice  who  delivered  the  opinion  of 
the  Supreme  Court,  appears  to  have  thought  that  a  bank-note 
stands  on  the  footing  of  any  other  promissory  note ;  that  as  he 
who  parts  with  what  is  valuable  ought  on  principles  of  natural 
justice  to  receive  value  for  it  in  return,  a  Aendor  is  not  bound  by 
an  agreement  to  accept  promissory  notes  should  they  have  been 
bad  at  the  time  of  the  transaction  ;  and  that  payment  in  tiie  notes 
of  an  insolvent  bank  is  no  better  than  payment  in  counterfeit  coin. 
It  is  obvious  that  this  involves  a  contradiction  ;  for  to  confound 
bank-notes  with  ordinary  promissory  notes  would  sul)ject  a  debtor, 
who  had  paid  them  away,  to  the  risk  of  the  bank's  ultimate  solven- 
cy. In  the  Court  of  Errors,  the  chancellor,  having  premised  that 
a  State  is  not  at  liberty  to  coin  money,  or  make  any  thing  a  legal 
tender  but  gold  or  silver,  and  consequently  that  the  practice  of 
receiving  bank-notes  as-  money  is  a  conventional  regulation,  and 
not  a  legal  one,  concluded  that  where  the  loss  has  already  iiappened 
by  the  failure  of  the  bank,  there  is  no  implied  agreement  that  the 
receiver  shall  bear  it ;  and  that  if  he  were  called  on  to  express  his 
sense  of  the  transaction  at  the  time,  he  would  say  what  natural 
justice  says,  that  the  risk  of  previous  failure  in  the  value  of  the 
medium  must  be  borne  by  the  debtor.  He  would  more  probably 
say  that  he  had  not  thought  or  formed  an  opinion  about  it.  Sena- 
tor Van  Schaik  also  insisted  much  on  the  natural  justice  of  the 
principle,  and  asserted  that  no  case  in  the  books  authorizes  an  in- 
ference that  bank-notes  arc  considered  as  money  excci)t  in  the 
universally  implied  condition  that  the  banks  which  issued  them 
are  able  to  redeem  them  at  the  time  of  the  transfer.  In  Miller  i'. 
Race,  however,  we  have  seen  that  Lord  Mansfield  asserted  on  the 
other  hand  that  they  arc  money  without  any  qualification  whatever  ; 

1  Post,  404. 


620  BANK-BILLS   AND   OTHER   PAPER  TAKEN   IN   PAYMENT. 

and  Camidge  v.  Alleiiby,  as  well  as  Scrugc^s  v.  Gass,  affirms  that 
they  may  retain  the  character  of  money  after  the  period  of  the 
bank's  failure.  To  assume  that  solvency  of  the  bank  at  the  time 
of  the  transfer  is  an  inherent  condition  of  it,  is  to  assume  the  whole 
ground  of  the  argument.  The  conclusion  concurred  in  by  all, 
however,  was  that  the  medium  must  turn  out  to  have  been  what 
the  debtor  offered  it  for  at  the  time  of  the  payment.  How  does 
that  consist  with  the  equitable  principle  that  there  must  be,  in 
every  case,  not  only  a  motive  for  the  interference  of  the  law,  but 
that  it  must  be  stronger  than  any  to  be  found  on  the  other  side ; 
else  the  equity  being  equal,  and  the  balance  inclining  to  neither 
side,  things  must  be  left  to  stand  as  they  are  (Fonb.  b.  1,  c.  v.  §  3  ; 
ib.  c.  iv.  §  25)  ;  in  other  words,  that  the  law  interferes  not  to  shift  a 
loss  from  one  innocent  man  to  another  equally  innocent,  and  a 
stranger  to  the  cause  of  it  ? 

The  self-evident  justice  of  this  would  be  proof,  were  it  necessary, 
that  it  is  a  principle  of  the  common  law.  But  we  need  go  no 
further  in  search  of  authority  for  it  than  Miller  v.  Race,  in  wliich 
one  who  had  received  a  stolen  bank-note  for  a  full  consideration  in 
the  course  of  his  business,  was  not  compelled  to  restore  it.  It  was 
intimated  in  The  Ontario  Bank  v.  Lightbody,  that  there  was  a  pre- 
ponderance of  equity  in  that  case,  not  on  the  side  of  liim  who  had 
lost  the  note,  but  of  him  who  had  last  giren  value  for  it.  Why 
last  ?  The  maxim,  prior  in  tempore,  potior  in  jure,  prevails  be- 
tween prior  and  subsequent  purchasers  indifferently  of  a  legal  or 
an  equitable  title.  It  is  for  that  reason  the  owner  of  a  stolen  horse 
can  reclaim  him  of  a  purchaser  from  the  thief;  and  were  not  the 
field  of  commerce  market  overt  for,  every  thing  which  performs 
the  office  of  money  in  it,  the  owner  of  a  stolen  note  might  follow  it 
into  the  hands  of  a  bona  fide  holder  of  it.  But  general  convenience 
requires  that  he  should  not ;  and  it  was  that  principle,  not  any 
consideration  of  the  equities  betwixt  the  parties,  which  ruled  the 
cause  in  Miller  v.  Race.  But  a  more  forcible  illustration  of  the 
principle,  were  the  case  indisputably  law,  might  be  had  in  Levy  v. 
The  Bank  of  the  United  States,  4  Dall.  234  ;  s.  c,  1  Binn.  27  ;  in 
which  the  placing  even  a  forged  check  to  the  credit  of  a  depositor 
as  cash — a  transaction  really  not  within  any  principle  of  conven- 
tional law  —  was  held  to  conclude  the  bank  ;  and  to  this  may  be 
added  the  entire  range  of  cases  in  which  the  purchaser  of  an 
article  from  a  dealer  has  been  bound  to  bear  a  loss  from  a  defect 


BAYARD    V.    SHUNK.  621 

in  the  quality  of  it.  And  for  the  same  reason  that  the  law  refuses 
to  interfere  between  parties  mutually  innocent,  it  refuses  to  inter- 
fere between  those  who  are  mutually  culpable ;  as  in  the  case  of 
an  action  for  negligence.  The  rule  of  the  admiralty,  being  that 
of  the  civil  law,  would  apportion  the  loss ;  but  it  Wks  no  place  in 
any  other  court. 

What  is  there,  then,  in  the  case  before  us  to  take  it  out  of  this 
great  principle  of  the  common  law  ?  The  position  taken  by  the 
courts  of  New  York  is,  that  every  one  who  j)arts  with  his  property 
is  entitled  to  expect  the  value  of  it  in  coin.  Doubtless  he  is.  He 
may  exact  payment  in  precious  stones,  if  such  is  the  bargain. 
But  where  lie  lias  accepted  without  reserve  wiiat  the  conventional 
laws  of  the  country  declare  to  be  cash,  his  claim  to  any  thing 
further  is  at  an  end.  Bills  of  exchange  and  promissory  notes 
enter  not  into  the  transactions  of  commerce,  as  money  ;  but  it 
impresses  even  these  with  qualities  which  do  not  belong  to  ordinary 
securities.  The  holder  of  one  of  them,  who  has  taken  it  in  the 
ordinary  course,  can  recover  on  it,  whether  there  was  a  considera- 
tion between  the  original  parties  or  not ;  and  if  no  man  can  part 
with  his  property,  except  subject  to  an  inherent  right  to  have  the 
worth  of  it,  at  all  events,  why  should  not  the  drawer  of  a  note  be 
at  liberty  to  show  want  of  consideration  against  an  indorsee,  on 
the  ground  that  no  one  can  pledge  his  responsibility  without  having 
received  what  he  expected  for  it  ?  Or  why,  on  the  supposed  moral 
and  public  considerations  that  were  invoked  in  the  discussion  of 
the  general  principle,  should  the  vendee  of  a  chattel  be  bound  to 
pay  for  it,  though  it  turn  out  to  be  inferior  in  quality  to  what  he 
expected  it  to  l)e  ?  It  is  because  it  would  stop  the  wlieels  of  com- 
merce to  trace  the  defect  through  a  series  of  transactions  to  the 
author  of  it ;  and  dealers  must  therefore  take  the  risk  of  it  for 
the  premium  of  the  profits.  And  may  not  dealers,  as  well  as 
insurers,  take  the  risk  of  an  event  which  may  have  already  hap- 
pened ?  The  creditor  does  agree  to  take  the  risk  of  the  bank's 
solvency  when  he  makes  its  notes  his  own  without  reserve. 

The  assertion  that  it  is  always  an  original  and  subsisting  part 
of  the  agreement  tliat  a  bank-note  shall  turn  out  to  have  been  good 
when  it  was  paid  away,  can  be  conceded  no  farther  than  regards 
its  genuineness.  Tiuit  genuine  notes  are  supposed  to  be  e([ual  to 
coin,  is  disproved  by  daily  experience,  which  shows  that  they  cir- 
culate by  the  consent  of  the  whole  communities  at  their  nominal 


622  BANK-BILLS    AND    OTHER    PAPER    TAKEN    IN    PAYMENT. 

value  when  notoriously  below  it.     But  why  hold  the  payor  respon- 
sible for  a  failure  of  the  bank  only  when  it  has  been  ascertained 
at  the  time  of  the  payment,  and  not  for  insolvency  ending  in  an 
ascertained   failure   afterwards  ?     As   the   bank  may  have   been 
actually  insolvent  before  it  chose  to  let  the  world  know  it,  we  must 
carry  his  responsibility  back  beyond  the  time  when  it  ceased  to 
redeem  its  notes,  if  we  carry  it  back  at  all.     Were  it  not  for  the 
conventional  principle  tiiat  the  purchaser  of  a  chattel  takes  it  with 
its  defects,  tlie  i)urchaser  of  a  horse,  with  the  seeds  of  a  mortal 
disease  in  him,  might  refuse  to  pay  for  him,  though  his  vigor  and 
usefulness  were  yet   unimpaired  ;  and  if  we  strip  a  payment  in 
bank-notes  of  the  analogous  cash  principle,  why  not  treat  it  as  a 
nullity,  by  showing  that  the  bank  was  actually,  though  not  osten- 
sibly, insolvent  at  the  time  of  the  transaction  ?     It  is  no  answer  to 
say  the  note  of  an  unbroken  bank  may  be  instantly  converted  into 
coin  by  presenting  it  at  the  counter.     To  do  that  may  require  a 
journey  from   Boston   to   New  Orleans,  or   between   places   still 
further  apart,  and  the  bank  may  have  stopped  in  the  mean  time  ; 
or  it  may  stop  at  the  instant  of  presentation,  when  situated  at  the 
place  where  tlie  holder  resides.     And  it  may  do  so  even  when  it  is 
not  insolvent  at  all,  but  perfectly  able  eventually  to  pay  the  last 
shilling.    This  distinction  between  previous  and  subsequent  failure, 
evinced  by  stopping  before  the  time  of  the  transaction  or  after  it, 
is  an  arbitrary  and  impracticable  one.     To   such  a  payment  we 
must  apply  the  cash  principle  entire,  or  we  must  treat  it  as  a 
transfer  of  negotiable  paper,  imposing  on  the  transferee  no  more 
than  the  ordinary  mercantile  responsibility  in  regard  to  presenta- 
tion and  notice  of  dishonor.     There  is  no  middle  ground.     But  to 
treat  a  bank-note  as  an  ordinary  promissory  note  would  introduce 
endless  confusion,  and  a  most  distressing  state  of  litigation.     We 
should  have  reclamations  through  hundreds  of  hands,   and   the 
inconvenience  of  having  a  chain  of  disputes  between   successive 
receivers,  would  more  than  counterbalance  the  good  to  be  done  by 
hindering  a  crafty  man  from  putting  off  his  worthless  note  to  an 
unsuspecting  creditor.     No  contrivance  can   prevent  the   accom- 
plishment of  fraud,  and  rules  devised  for  the  suppression  of  petty 
mischiefs  have  usually  introduced  greater  ones. 

The  case  of  a  counterfeit  bank-note  is  entirely  different.  The 
laws  of  trade  extend  to  it  only  to  prohibit  the  circulation  of  it. 
They  leave  it,  in  all  besides,  to  what  is  the  rule  both  of  the  common 


BAYARD    V.    RHUNK.  623 

and  the  civil  law,  which  requires  a  thing  parted  with  for  a  price  to 
have  an  actual,  or  at  least  a  potential,  existence  (2  Kent,  408)  ; 
and  a  forged  note,  destitute  as  it  is  of  the  quality  of  legitimate 
being,  is  a  nonentity.  It  is  no  more  a  bank-note  than  a  dead  horse 
is  a  living  one ;  and  it  is  an  elementary  principle  that  what  has  no 
existence  cannot  Ijo  the  subject  of  a  contract.  But  it  cannot  ))e 
said  that  the  genuine  note  of  an  insolvent  bank  has  not  an  actual 
and  a  legitimate  existence,  though  it  be  little  worth  ;  or  that  the 
receiver  of  it  has  not  got  the  thing  he  expected.  It  ceases  not 
to  be  genuine  by  the  bank's  insolvency  ;  its  legal  obligation  as  a 
contract  is  undissolved  ;  and  it  remains  a  promise  to  pay,  though 
the  promisor's  ability  to  perform  it  be  impaired  or  destroyed.  But 
as  the  stockholders  of  a  broken  bank  are  the  last  to  be  paiti,  it  is 
seldom  unable  in  the  end  to  pay  its  note-holders  and  depositors  ; 
and  even  where  nothing  is  left  for  them,  its  notes  may  be  })arted 
with  at  a  moderate  discount  to  those  who  are  indebted  to  it.  We 
seldom  meet  with  so  bad  a  case  as  the  present,  in  which  every 
thing  like  etTects,  and  even  the  vestiges  of  the  bank,  disappeared 
in  a  few  hours  after  the  first  symptoms  of  its  failure.  But  inde- 
pendent of  that,  the  difference  between  forgery  and  insolvency  in 
relation  to  the  transfer  of  a  bank-note,  is  as  distinctly  marked  as 
the  difference  between  title  and  quality  in  relation  to  the  sale  of  a 
chattel. 

What  then  becomes  of  the  boasted  principle  that  a  man  shall 
not  have  parted  with  his  property  until  he  shall  have  had  value,  or 
rather  what  he  expected  for  it  ?  Like  many  others  of  the  same 
school,  it  would  be  too  refined  for  our  times,  even  did  a  sembUmce 
of  natural  justice  lie  at  tiie  root  of  it.  But  nothing  devised  by 
human  sagacity  can  do  equal  and  exact  justice  in  the  apprehension 
of  all  men.  Tiie  best  that  can  be  done,  in  any  case,  is  no  more 
than  an  approximation  to  it ;  and  when  the  incidental  risks  of  a 
business  are  so  disposed  of  as  to  consist  with  the  general  con- 
venience, no  injustice  will  in  the  end  be  done  to  those  by  whom 
they  are  borne.  Commerce  is  a  system  of  dealing  in  whicli  risk, 
as  well  as  labor  and  capital,  is  to  be  compensated.  But  nothing 
can  be  more  exactly  balanced  than  the  equities  of  parties  to  a 
payment  in  regard  to  the  risk  of  the  medium  when  its  worthless- 
ness  was  unsuspected  liy  cither  of  them.  The  diirerence  between 
them  is  not  the  tithe  of  a  liair,  or  any  other  inlinitesinKil  (piantity 
that  can  be  imagined  ;  and  in  such  a  case,  the  common  law  allows 


624  BANK-BILLS    AND    OTHER   PAPER  TAKEN   IN   PAYMENT. 

a  loss  from  mutual  mistake  to  rest  where  it  has  fallen,  rather  than 
to  remove  it  from  the  shoulders  of  one  innocent  man  to  the  shoul- 
ders of  another  equally  so.  Tlie  civil-law  principle  of  equality, 
liowever  practicable  in  an  age  when  the  operations  of  commerce 
were  few,  simple,  and  circumspect,  would  be  entirely  unfit  for  the 
rapid  transactions  of  modern  times ;  it  would  put  a  stop  to  them 
altogether.  No  man  can  withhold  his  praise  of  the  civil  law,  as  a 
wonderful  fabric  of  wisdom  for  its  day,  or  deny  that  it  has  con- 
tributed largely  to  the  best  parts  of  our  jurisprudence  ;  but  all  its 
materials  of  superior  value  have  already  been  worked  up  in  our 
more  commodious  modern  edifice  ;  and  if  the  cultivation  of  an 
acquaintance  with  it  is  to  beget  a  desire  to  substitute  its  abstract 
principles  for  the  maxims  of  the  common  law,  —  the  accumulated 
wisdom  of  a  thousand  years'  experience,  —  it  were  better  that  our 
jurists  should  die  innocent  of  a  knowledge  of  it.  This  longing 
after  its  peculiar  doctrines  began  with  Mr.  Verplanck's  commentary 
on  the  decision  of  the  Supreme  Court  of  the  United  States  in 
Laidlaw  v.  Organ,  2  Wheat.  178  ;  and  it  was  subsequently  indulged 
by  the  Supreme  Court  of  his  own  State,  so  far  as  to  sap  the  founda- 
tion of  its  own  sound  decision  in  Seixas  v.  Woods,  2  Caines,  48. 
In  Laidlaw  v.  Organ,  the  purchaser  refused  to  disclose  his  informa- 
tion that  the  article  had  risen  in  the  market,  and  there  was  there- 
fore room  for  a  pretence  of  inequality  in  the  circumstances  of  the 
parties ;  but  where  they  have  acted,  as  in  this  case,  in  equal 
ignorance,  and  with  equal  good  faith,  that  pretence,  flimsy  as  it 
was  even  there,  is  wanting,  and  the  law,  on  principles  of  justice  as 
well  as  convenience,  refuses  to  interfere  between  them.  It  is 
therefore  unnecessary  to  insist  on  the  provisions  of  our  statute  of 
1836,  which  enacts  that  "  it  shall  be  lawful  for  the  officer  charged 
with  the  execution  of  any  writ  of  fieri  facias,  when  he  can  find  no 
other  real  or  personal  estate  of  the  defendant,  to  seize  and  take 
the  amount  to  be  levied  by  such  writ,  of  any  current  gold,  silver, 
or  copper  coin  belonging  to  the  defendant,  in  satisfaction  thereof ; 
or  he  may  take  the  amount  aforesaid  of  any  bank-notes,  or  current 
bills  for  the  payment  of  money,  issued  by  any  moneyed  corpora- 
tion, at  the  par  value  of  such  notes."  At  least  for  the  purpose  of 
seizure  in  execution,  therefore,  bank-notes  are  money  ;  and  had 
the  sheriff  returned  tiiat  he  had  seized  these  notes  as  the  defend- 
ant's property  instead  of  the  property  itself,  it  would  not  be  pre- 
tended that  the  debt  was  undischarged.     But  though  he  returned 


ONTARIO    BANK    V.   LIGIITBODY.  C25 

the  facts  specially,  the  notes  were  received  as  cash  by  the  plaintiff's 
attorney  ;  and  after  that,  on  no  principle  whatever  could  the  trans- 
action be  thrown  open.  The  plaintiff's  case  is  an  unfortunate  one, 
but  we  could  not  relieve  him  without  imposing  an  equal  misfortune 
on  the  defendants.  Judgment  affirmed. 

See  next  case  and  note. 


Ontario  Bank  v.  Lightbody. 

(13  Wendell,  101.     Court  of  Errors  of  New  York,  December,  1834.) 

Payment  in  bank-bills.  —  If  the  holder  of  commercial  paper  receive  bank-notes  in  pay- 
ment of  the  same,  the  risk  of  the  solvency  of  the  bank  whicli  issued  the  notes  is 
upon  him  wlio  gave  tiiera,  in  the  absence  of  agreement ;  and  tlierefore  if  the  bank 
liad  actually  failed  or  stopped  payment  at  the  time  the  notes  were  received,  and 
this  was  unknown  at  the  time  to  the  holder,  this  will  not  constitute  paj;ment  of 
his  paper,  though  such  bank-notes  were  current  at  the  place  where  they  were 
received,  at  that  time. 

Assumpsit  to  recover  the  amount  of  a  note  of  the  Franklin  Bank, 
paid  to  the  plaintiff  by  the  Ontario  Bank^  the  defendant  below,  on 
a  draft  drawn  by  him  upon  his  funds  on  deposit.  The  Franklin 
Bank  had  actually  stopped  payment  at  this  time,  though  the  facts 
were  unknown  to  both  parties,  and  though  the  notes  of  that  bank 
were  current  at  that  time  at  the  place  where  they  were  received. 

Walwouth,  Chancellor.  The  question  to  be  decided  is,  which 
of  the  parties  shall  sustain  the  loss  in  reference  to  the  bill  of  the 
Franklin  Bank,  received  l)y  Lightbody,  })aid  upon  the  ]>rcscntment  of 
his  check.  The  law  is  well  settled,  that  where  the  note  of  a  third 
person  is  received  in  payment  of  an  antecedent  debt,  the  risk  of  his 
insolvency  is  upon  the  party  from  whom  the  note  is  received, 
unless  there  is  an  agreement  or  understanding  between  the  parties, 
either  express  or  implied,  that  the  party  who  receives  the  note  is 
to  take  it  at  his  own  risk.  The  same  principle  is  applicable  to  the 
notes  of  an  incorporated  bank,  except  that  as  to  the  latter  there  is 
always  an  implied  understanding  between  the  parties  that  if  the 
bill,  at  the  time  it  is  received,  is  in  fact  what  the  party  receiving  it 
supposes  it  to  be,  he  is  to  run  the  risk  of  any  future  failure  of  the 

4U 


626  BANK-BILLS    AND    OTHER    TAPER   TAKEN   IN    PAYMENT, 

bank.  This  implied  agreement  between  the  parties  arises  from  the 
fact  that  bills  of  this  description,  so  long  as  the  bank  which  issued 
them  continues  to  redeem  them  in  specie  at  its  counter,  are  by 
common  consent  treated  as  money,  and  are  constantly  passed  from 
hand  to  hand  as  such.  The  receiving  them  as  money,  however,  is 
not  a  legal,  but  only  a  conventional  regulation,  adopted  by  the 
common  consent  of  tlie  community ;  as  no  State  is  authorized  to 
coin  money,  or  to  pass  any  law  by  which  any  thing  but  gold  or 
silver  coin  shall  be  made  a  legal  tender  in  the  payments  of  debts. 
Tliis  principle  of  considering  bank-bills  as  money,  which  the  re- 
ceiver is  to  take  at  his  own  risk,  cannot,  therefore,  be  carried  any 
further  than  the  conventional  regulation  extends  ;  that  is,  to  con- 
sider and  treat  them  as  money  so  long  as  the  bank  by  which  they 
are  issued  continues  to  redeem  them  in  specie,  and  no  longer. 
When,  therefore,  a  bank  stops  payment,  its  bills  cease  to  be  a  con- 
ventional representative  of  the  legal  currency  of  the  country, 
whether  the  holder  is  aware  of  that  fact  or  not;  from  that  moment 
the  bills  of  such  bank  resume  their  natural  and  legal  character  of 
promissory  notes,  or  mere  securities  for  the  payment  of  money ; 
and  if  they  are  afterwards  passed  off  to  an  individual  who  is  isqually 
ignorant  of  the  failure  of  the  bank,  there  is  no  agreement  on  his 
part,  either  express  or  implied,  that  he  shall  sustain  the  loss  which 
has  already  occurred  to  the  original  holder  of  the  bills.  Upon  the 
principles  applicable  to  cases  of  mutual  mistake,  as  those  principles 
are  administered  in  courts  of  equity,  it  is  now  settled  that,  if  an 
individual  passes  to  another  a  counterfeit  bill^  or  an  adulterated 
coin,  both  parties  supposing  it  genuine  at  the  time  it  was  received, 
the  one  wiio  passes  it  is  bound  to  take  it  back  and  give  him  to 
whom  it  was  passed  a  genuine  bill  or  an  unadulterated  coin  in  lieu 
thereof,  or,  in  other  words,  to  make  good  the  loss.  Markle  v.  Hat- 
field, 2  Johns.  455.  That  principle  of  natural  justice  is  equally 
applicable  to  the  case  under  consideration.  The  actual  loss  had 
been  sustained  by  the  failure  of  the  bank  while  the  plaintiffs  in 
error  were  the  holders  and  owners  of  the  bill ;  and  it  is  a  maxim 
of  the  law,  that  the  loss  is  to  him  who  was  the  owner  at  the  time 
such  loss  happened,  if  both  parties  were  ignorant  of  the  loss  at  the 
time  of  making  their  contract.  Here,  the  one  party  intended  to 
pay,  and  the  other  supposed  he  was  receiving  the  bill  of  a  bank 
which  was  redeeming  its  bills  at  its  counter.  Suppose  the  inquiry 
had  been  made  of  the  defendant,  "  Do  you  expect  to  sustain  the 


ONTARIO    BANK   V.    LIGHTBODY.  027 

loss  if  the  ])ank  slioiikl  fail  before  you  shall  have  j»artod  witli  this 
bill?"  The  answer, according  to  the  implied  understanding  of  the 
parties,  arising  from  the  nature  of  the  transaction,  and  considering 
the  bills  of  specie-paying  banks  as  money,  would  ofrtainly  have 
been  the  aflfirmative.  iiut  if  he  had  been  asked,  "  Do  you  under- 
stand that  you  are  to  bear  the  loss,  if  it  should  hereafter  be  ascer- 
tained that  the  Franklin  Bank  has  now  actually  failed  and  stopped 
payment?  "  he  would  unquestionably  have  answered,  "  No  ;  in  that 
event,  as  the  loss  would  have  happened  while  you  was  the  owner 
of  the  bill,  natural  equity  requires  that  you  should  bear  it ;  and  I 
shall  expect  you  to  take  Ijack  the  bill  and  give  me  one  which  is 
good." 

The  principle  adopted  by  the  Supreme  Court  in  this  case,  is  also 
the  only  one  which  can  protect  the  honest  and  unsuspecting  against 
the  frauds  of  those  who  might  be  disposed  to  take  advantage  of  the 
ignorance  of  others  as  to  the  failure  of  a  banking  institution.  A 
person  who  has  heard  of  the  failure  of  a  bank  while  he  has  some  of 
its  bills  on  hand,  will  naturally  be  tempted  to  get  rid  of  them  for 
the  purpose  of  avoiding  a  loss  he  might  otherwise  sustain  ;  and  if 
he  was  disposed  to  be  a  rogue,  he  would  keep  his  knowledge  of  the 
failure  to  himself  until  he  could  pay  out  his  bills  to  those  who 
were  ignorant  of  the  fact,  and  in  such  case  he  would  escape  with 
impunity,  if  those  to  whom  he  passed  them  were  required  to  prove 
that  he  was  aware  of  the  failure  at  the  time  they  received  the  bills 
from  him.  And  even  if  the  first  person  to  whom  a  l)ill  was  passed 
should  be  so  fortunate  as  to  obtain  proof  to  establish  the  fraud,  if 
he  had  honestly  parted  with  the  l)ill  while  he  was  yet  ignorant  of 
the  fact,  so  that  the  one  who  had  received  it  from  him  could  not 
call  for  repayment,  the  original  holder  of  the  l)ill,  who  was  guilty 
of  the  fraud,  would  still  escape  with  impunity.  On  the  whole,  I 
am  satisfied  with  the  judgment  of  the  Supreme  Court  in  this  case  ; 
not  only  as  perfectly  legal  and  just,  but  also  as  that  which  is  most 
consistent  with  the  substantial  interests  of  the  community,  and 
founded  upon  a  correct  principle  of  pul)lic  policy. 

Van  Schaick,  Senator.  A  powerful  effort  was  made  l)y  the  coun- 
sel for  the  plaintitTs  in  error,  and  many  authorities  were  cited  to 
prove  that  bank-notes  have  been  treated  and  viewed  as  /none//  both 
in  this  country  and  in  England  ;  and  he  argued  that  payment  in 
good  faith,  in  bills  current  at  the  time  and  place  of  the  transaction, 


628  BANK-BILLS   AND   OTHER   PAPER   TAKEN   IN   PAYMENT. 

constituted  a  full  discharge  of  the  obligation  of  a  debtor  to  his 
creditor,  even  though,  as  in  the  present  case,  the  bank,  in  the  bills 
of  which  the  payment  was  made,  had  failed  previous  to  the  making 
of  the  paym|nt. 

The  authorities  adduced  by  the  counsel  were  misapplied  ;  and  I 
consider  it  a  full  answer  to  the  argument  which  was  founded  upon 
them,  to  say,  that  there  is  no  adjudged  case  in  the  books  to  author- 
ize the  inference  that  bank-notes  have  ever  been  considered  as 
money,  except  under  the  universally  implied  understanding,  that 
the  banks  which  issued  the  paper  were  able  to  redeem  or  to  substi- 
tute a  full  equivalent  for  their  issues  ;  and  therefore  it  is  not  a 
sound  inference  from  the  cases  to  say  that  the  paper  of  a  bank  shall 
be  entitled  to  the  same  consideration  as  money,  after  the  bank  has 
failed,  that  it  had  before,  in  consequence  of  the  confidence  in  its 
stability.  To  test  this  position,  it  will  be  sufficient  to  select  a  few 
of  the  strongest  cases.  Miller  v.  Race,  1  Burr.  452,  was  the  case  of 
a  bank-note  stolen  from  the  mail,  and  which  fell  into  the  hands 
of  the  defendant,  an  innkeeper,  honestly  in  the  course  of  his  busi- 
ness. The  Court  decided  that  the  action  would  lie  upon  the 
general  course  of  business,  and  the  consequences  to  trade  and 
commerce,  which  would  be  much  incommoded  by  a  contrary  deci- 
sion. Lord  Mansfield,  in  that  case,  says  that  bank-notes  ought  not 
to  be  compared  to  what  they  do  not  resemble,  —  goods,  securities, 
or  documents  for  debts ;  that  they  are  treated  as  money,  as  cash  by 
the  general  consent  of  mankind.  "  They  are  as  much  money  as 
guineas  themselves  are,  or  any  other  current  coin."  The  impor- 
tance attached  to  the  influence  of  the  decision  in  this  case  upon 
trade  and  commerce  is  evidently  overrated.  The  equity  of  the  case 
itself  is  on  the  side  of  the  party  who  last  gave,  in  the  pursuit  of  an 
honest  calling,  a  valuable  consideration  for  the  money.  Circum- 
stances might  change  this ;  but,  generally  speaking,  traders  and 
others  cannot  be  upon  their  guard  to  learn  whether  the  sums  of 
money  they  receive,  suitable  to  the  extent  of  their  business,  are 
stolen  or  found.  But  the  case  itself,  and  the  character  given  by 
Lord  Mansfield  to  bank-notes  as  money ,*assumes  the  fact  of  the 
unquestioned  solvency  of  the  maker  of  the  note.  This  is  all  im- 
portant; for  there  is  a  vastly  wider  difference  between  the  note  of 
an  insolvent  and  that  of  a  solvent  bank,  than  there  is  between  a 
good  note  and  an  equal  amount  in  guineas.  In  the  case  of  The 
Bank  of  the  United  States  v.  The  Bank  of  the  State  of  Georgia,  10 


ONTARIO   BANK   V.   LIGHTBODY.  629 

Wheat.  333,^  notes  issued  by  the  Bank  of  Georgia  had  been 
altered  so  as  to  increase  the  amount  of  the  promise  to  pay  from 
$590  to  'fioOOO.  Having  been  received  in  the  Bank  of  the  United 
States,  they  were,  in  the  ordinary  course  of  their  exchanges,  re- 
mitted to  the  Bank  of  Georgia,  which  received  them  as  (jenuine^ 
but  subsequently  discovering  the  alterations,  otTered  to  return  them. 
The  tender  to  return  the  notes  was  not  made  until  nineteen  days 
after  their  receipt.  The  case  came  before  the  Supreme  Court  of 
the  United  States  upon  a  writ  of  error  from  the  Circuit  Court  of 
Georgia.  Tiie  Supreme  Court  reversed  the  judgment  of  the  Court 
below  upon  two  points :  1.  Because  the  Circuit  Court  had  refused 
to  instruct  the  jury,  that,  if  they  believed  the  evidence,  the  plain- 
tiffs were  entitled  to  recover  the  balance  due  1)y  their  customer's 
book  ;  2.  Tliat  the  plaintiffs  were  entitled  to  interest  from  the 
commencement  of  the  action.  !Mr.  Justice  S'fory,  who  delivered 
the  opinion  of  the  Court,  did  not  consider  that  this  was  a  case  of  a 
special  deposit,  but  the  notes  were  paid  as  money  upon  general 
account,  so  that,  according  to  the  course  of  business,  and  the 
understanding  between  the  parties,  the  identical  notes  were  not  to 
be  restored,  but  an  equal  amount  in  cash  was  to  be  paid ;  that  the 
notes  passed  into  the  general  funds  of  the  Bank  of  Georgia,  and 
became  its  property.  Upon  this  ground,  the  action  as  to  form  was 
maintained.  But  in  going  into  the  merits,  great  stress  was  laid  by 
the  Court  upon  the  fact  that  these  were  not  the  notes  of  another 
bank,  or  the  security  of  a  third  person,  but  were  received  and 
adopted  by  the  bank  as  its  own  genuine  notes,  in  the  most  absolute 
and  unconditional  manner ;  and  the  wliole  general  reasoning  of 
the  case,  separate  from  the  principles  of  other  cases  wliich  are 
brought  to  sustain  collateral  points,  goes  upon  the  broad  ground 
that  a  bank  is  bound  to  know  its  own  paper.  This  position  is  laid 
down  with  so  much  emphasis,  that  it  must  be  considered  as  the 
controlling  reason  for  the  judgment  of  the  Court.  How  the  ques- 
tion of  a  special  deposit  would  have  been  treated  by  the  Court,  if 
the  paper  had  been  the  altered  notes  of  the  United  States  Bank 
itself,  or  of  any  other  bank,  cannot  now  be  known  ;  neither  does 
the  case  reach  the  question  of  the  notes  of  a  third  bank,  being  at 
the  time  of  the  exchange  or  deposit,  an  insolvent  institution. 

In  l.Ld.  Raym.  738,  it  was  held,  an  action  did  not  lie  against 
the  assignee  of  a  bank-bill,  l)ecause  he  had  it  for  a  valuable  consid- 
eration ;  and  it  always  is  an  inquiry  whether  the  bearer  came  fairly 

1  Post,  650. 


630  BANK-BILLS   AND   OTHER   PAPER   TAKEN   IN   PAYMENT. 

by  it.  None  of  the  cases  proceed  exclusively  upon  the  mere  simil- 
itude between  bank  money  and  cash,  and  the  answer  is  the  same 
to  all  the  cases  which  hold  bank  paper  equal  to  money,  as  it  must 
be  to  that  in.  which  Lord  Mansfield  declares  that  bank-notes  are  as 
much  money  as  guineas  are  ;  that  is,  that  the  judges  always  allude 
to  genuine  and  solvent  notes.  There  are  some  individual  oj)inions 
of  judges,  however,  which  appear  to  militate  against  this  position. 
In  the  case  of  Young  v.  Adams,  6  Mass.  182,  a  payee  recovered 
against  a  payer  the  amount  of  a  $5  counterfeit  bill,  which  had  been 
given  him  with  other  money.  It  is  impossible  to  find  in  this  case 
any  thing  to  support  the  doctrine,  that  a  payment  made  in  the 
bills  of  an  insolvent  bank  is  valid.  Yet  the  judge  says,  argumen- 
tatively,  in  a  supposed  case,  "  When  the  bills  paid  are  true  and 
genuine,  the  responsibility  of  the  bank  is,  we  believe,  at  the  risk  of 
the  receiver.  But  it  is  admitted  that  this  construction  goes 
"  farther  in  favor  of  the  currency  of  bank-notes  or  bills,  than  the 
authorities  warrant  in  regard  to  private  notes  or  bills,  or  even 
bankers'  notes  in  England  when  accepted  in  payment."  But  the 
suggestion  is  afterwards  qualified  in  the  following  manner :  "  Pri- 
vate notes,  that  is,  of  individuals  or  companies,  whether  incorpo- 
rated or  not,  where  the  currency  of  them  is  not  regulated  by  some 
notorious  and  peculiar  usage,  when  accepted  in  payment  or  dis- 
charge of  an  existing  contract,  are  taken  at  the  risk  of  the  payer." 
And  the  converse  of  this  proposition  must  be,  that  such  notes  as 
are  regulated  by  notorious  and  peculiar  usage  are  at  the  risk 
of  the  payee.  But  if  this  proposition  were  the  foundation  of  a 
case  to  be  decided,  it  is  not  certain  that  this  would  be  a  satis- 
factory view  of  the  question,  since  between  the  circulation  and 
appreciation  of  public  bank-notes,  issued  by  different  institutions, 
there  is  as  great  a  difference  as  between  public  bank-notes  as  such, 
and  private  notes,  whether  of  private  banks  or  individuals.  To 
say,  because  the  community  has  become  by  habit  inspired  with 
confidence  in  the  trustworthiness  of  banks  and  bank  paper,  that 
therefore  a  payment  made  in  the  paper  of  a  broken  bank,  not 
knowing  it  to  be  broken,  discharges  the  debt,  is  a  principle  not 
dispoverable  in  any  system  of  ethics  or  jurisprudence.  Policy  may 
be  deemed  to  require  that  bank  circulation  should  be  protected  by 
a  leaning  in  support  of  its  reputation  with  the  public ;  but  it  is 
unnecessary.  If  worthy,  it  will  stand  without  the  aid  of  legal 
decisions,  which  tend  to  pervert  the  right,  and  which  some  judges 


ONTARIO    BANK    V.    LIGHTBODY.  631 

believe  give  a  dangerous  facility  to  bank  circulation.  Tiie  conven- 
ience of  a  bank,  and  the  honesty  of  its  administration,  are  its 
safeguards.  When  these  are  withdraNrn,  law  can  render  to  its 
circulation  no  effectual  aid. 

In  ordinary  use,  and  for  many  legal  purposes,  as  in  a  bequest  in 
a  will  or  when  bills  are  taken  on  execution,  bank-notes  are  deemed 
and  taken  to  be  money  ;  but  after  the  payer  has  become  insolvent, 
they  can  be  so  considered  only  for  the  purpose,  of  identification. 
In  real  payments,  they  must  possess  money's  worth.  Not  having 
that  intrinsically,  it  is  to  be  sought  for  in  the  ability  of  the  issuer 
to  redeem  his  paper.  The  strict  legal  definite  character  given  to 
bank  paj)cr  l)y  our  laws  is,  that  of  ])romises  to  pay  and  evidences 
of  debt,  and  this  is  at  least  consistent  with  the  reality  ;  and  when 
so  considered,  the  case  stands  in  a  new  light.  When  a  bank 
issues  a  note  or  bill,  it  creates  a  debt.  By  law,  this  dcl)t  ninst  be 
paid  in  specie,  if  it  be  demanded.  Into  the  engagement  thus  to 
pay,  every  bank  necessarily  enters,  when  it  receives  its  charter. 
By  the  terms  of  this  agreement,  neither  party  regards  bank  paper 
as  money.  The  circulation  of  its  bills  is  derived  from  its  credit ; 
and  its  credit  is  the  concomitant  of  its  acknowledged  and  perma- 
nent solvency.  Its  bills  circulate  like  coined  metal,  so  long  as 
their  representative  character  remains  unimpaired ;  but  a  bank- 
bill  is  not  money,  according  to  the  understanding  between  the 
parties,  any  more  than  it  is  money  according  to  the  signification 
of  that  word.  It  is  admitted  that  bank-notes,  as  the  circulating 
medium  of  the  country,  have  ac([uired  the  denomination  of  money, 
from  their  convenience  as  a  substitute  for  gold  and  silver,  and 
their  utility  in  promoting  the  objects  of  trade,  and  in  exchanging 
the  products  of  industry  ;  but  after  a  bank  has  failed,  its  notes  are 
deprived  of  those  characteristics  of  money  which  entitled  them  to 
that  appellation  by  the  custom  of  trade,  while  they  continued  at  a 
value  equivalent  with  specie,  or  nearly  so.  Their  convertibility 
into  specie  being  lost,  and  their  power  of  circulation  having  de- 
parted, not  one  of  the  ingredients  of  money  remains,  and  they  can 
be  legally  defined  only  as  unpaid  promissory  notes. 

But  it  may  be  well  to  show  more  particularly  that  our  statutes 
do  not  yield  to  bank-notes  the  character  of  money,  even  while  they 
circulate.  In  the  act  concerning  "  monied  corporations,"  1  R.  S. 
589,  §  1,  they  are  called  notes  or  other  evidences  of  debt.  In  the 
Session  Laws  of  1830,  c.  243,  §  1,  p.  '2^jo,  the  designation  is  still 


632  BANK-BILLS   AND   OTHER   PAPER  TAKEN   IN   PAYMENT. 

more  explicit :  "  Notes,  bills,  or  other  evidence  of  debt,  purporting 
to  be  a  bank-note."  In  the  acts  incorporating  banks,  their  appel- 
lation is  evidence  of  debt ;  and  wlicn  mentioned  in  connection  with 
bonds  and  promissory  notes,  they  are  not  distinguished  as  money, 
but  are  regarded  in  the  light  of  promises  to  pay.  Besides,  the  in- 
herent qualities  and  appropriate  characteristics  of  all  bank  paper, 
are  those  which  belong  to  promissory  notes,  "  or  documents  for 
debts,"  and  so  I  think  we  must  consider  them  for  the  purpose  of 
this  adjudication.  If  bank-notes  be  considered  as  mere  promissory 
notes,  then  the  rule  to  be  applied  to  this  case  is,  that  "  paper  is  no 
payment  of  a  precedent  debt ;  it  is  always  taken  under  the  condition 
to  be  payment  if  the  money  be  paid  in  convenient  time."  Ward  v. 
Evans,  2  Ld.  Raym.  928.  This  is  the  settled  law,  and  the  custom 
of  trade  in  this  country,  "  unless  the  party  make  it  his  own  by 
agreement,  or  by  the  act  of  negotiating  it.  The  cases  of  Puckford 
V.  Maxwell,  6  T.  R.  52,  and  Owenson  v.  Morse,  7  id.  64,  were  decided 
upon  modifications  of  this  rule.  The  paper,  possessing  no  value 
at  the  time  the  contract  was  made,  and  there  being  no  agreement 
that  the  party  was  to  take  it  at  his  own  risk,  was  held  to  be  a  nul- 
lity, and  the  party  might  act  as  if  no  such  bill  had  been  given.  In 
Markle  v.  Hatfield,  2  Johns.  455,  the  same  principle  prevailed ;  the 
party  did  not  receive  the  compensation  intended  ;  it  was  a  forged 
bank-note.  In  Johnson  v.  Weed,  9  Johns.  311,  the  Court  says  : 
"  The  books  all  agree  that  there  must  be  a  clear  and  special  agree- 
ment that  the  vendor  shall  take  the  paper  absolutely  as  payment,  or 
it  will  be  no  payment,  if  it  afterwards  turns  out  to  be  of  no  value." 
The  fact  of  an  agreement  is  matter  for  the  jury. 

Owing  to  the  extraordinary  aptitude  of  the  people  of  this  country 
for  business  and  trade,  —  to  the  immense  amount  of  our  resources, 
which  the  application  of  industry  and  science  are  developing  with 
constantly  accumulating  benefits  to  the  community,  and  which 
require  the  indispensable  aid  of  capital  to  bring  them  to  market, 
and  to  the  nearly  total  absence  of  specie  in  large  districts  of  coun- 
try, —  paper  money  has  been  rendered  the  common  medium  of  the 
exchanges  of  property,  or  of  barter,  to  a  greater  extent  among  us 
than  in  any  other  nation  on  the  globe.  Its  great  convenience  and 
the  hitherto  indispensable  necessity  for  its  use  have  created  the 
idea  that  it  should  be  clothed  with  the  attributes  of  real  money  ; 
and  this  opinion  necessarily  gains  ground  among  the  undiscerning; 
but  it  ought  not  to  be  permitted  to  subvert  the  established  princi- 


ONTARIO    BANK    V.    LTGHTBODY.  633 

pies  of  moral  justice.  When  a  citizen  sells  an  article  for  cash,  he 
is  entitled  to  demand  for  it,  not  false,  or  spurious,  or  insolvent, 
but  good  money,  whotiicr  it  be  in  coin  or  l)ills ;  and  when  a  man 
pays  a  debt,  the  medium  of  payment  must  turn  out  to  be  what  he 
represented  it  to  be  at  the  time  of  payment.  The  preceding  view 
of  the  subject  demonstrates  that  the  understanding  that  bank-notes 
shall  pass  current  as  cash  is  entirely  conventional,  and  cannot  be 
traced  to  an  original  principle  ;  but  the  understanding  that  money 
shall  be  good  at  the  time  of  payment  is  an  original  and  always 
subsisting  part  of  the  agreement ;  it  goes  to  the  root  of  every  con- 
tract ;  it  relates  to  its  essence  and  substance  ;  and,  in  strict  morals, 
this  consideration  must  take  precedence  of  every  other  implication 
that  may  arise  upon  a  bargain  for  money,  or  in  the  payment  of  a 
debt.  In  the  case  before  the  Court,  tlie  bill  was  not  at  the  time 
wliat  the  receiver  supposed  it  to  be.  The  tacit  agreement  and 
understanding  between  tlie  parties  was,  what  the  universal  under- 
standing is  in  every  traffic  for  money  ;  that  the  paper  is  good  at 
the  time  of  passing ;  and  this  is  a  previously  existing  and  more 
important  understanding  than  that  it  circulates  as  money. 

Mr.  Gallatin,  in  his  essay  on  the  Currency  and  Banking  of  the 
United  States,  p.  29,  says  :  "  A  payment  made  in  bank-notes  is  a 
discharge  of  the  debt,  the  creditor  having  no  recourse  against  the 
person  from  whom  he  has  received  the  notes,  unless  the  bank  had 
previously  failed."  This  sagacious  statesman  did  not  fail  to  per- 
ceive that  the  inherent  defects  of  paper  money  rendered  it  impos- 
sible to  make  it  fuKil  at  all  times  the  offices  of  real  money,  and 
that  in  the  event  of  the  failure  of  the  bank,  a  question  of  equity 
might  arise  l^etween  innocent  parties  to  the  transfer  and  acceptance 
of  these  notes.  He  does  not  merely  reserve  the  point,  but  expresses 
a  decided  opinion,  without  appearing  to  apprehend  that  the  cur- 
rency of  paper  money  will  be  retarded  by  the  promulgation  of  an 
incontrovertible  position.  The  principle  adopted  by  Mr.  Gallatin 
is  founded  upon  common  usage  and  •  general  consent,  by  which 
every  person  receives  bank  money  which  has  become  current, 
under  the  implied  understanding  that  it  is  good  and  the  bank  sol- 
vent. If  a  bank  lias  failed  before  the  transfer  of  its  notes  from  one 
person  to  another,  the  primary  condition  of  the  contract  has  been 
touched  in  its  vital  part ;  the  understanding  is  not  fulfilled ;  the 
contract  is  a  nullity.  The  want  of  knowledge  at  Utiea  of  the  fail- 
ure of  the  bank  jit  New  York  cannot  be  permitted  to  remove  the 


634  BANK-BILLS    AND    OTHER    PAPER    TAKEN    IN    PAYMENT. 

consequences  tluit  ensued  immediately  upon  the  failure.  The 
money  must  be  lost  in  the  hands  of  him  who  hold  it  when  the  bank 
failed.  On  great  moral  and  public  considerations.  I  can  have  no 
hesitation  in  deciding  the  case  upon  this'  principle,  and  especially 
as  it  will  have  a  tendency  to  prevent  attempts  which  have  fre- 
quently been  ma'de  to  commit  frauds  by  the  circulation  of  insolvent 
bank  paper. 

There  was  no  default  in  the  party  who  received  bad  money  for 
good.  He  transmitted  tlie  note  immediately  to  New  York,  and, 
upon  its  return,  offered  it  to  the  bank,  but  it  was  refused. 

I  am  therefore  of  opinion  that  the  judgment  of  the  Supreme 
Court  ought  to  be  affirmed. 

On  the  question  being  put.  Shall  this  judgment  be  reversed  ?  all 
the  members  of  the  Court  present,  twenty  in  number,  with  one  ex- 
ception voted  in  the  negative.  So  the  judgment  of  the  Supreme 
Court  was  affirmed. 

The  rule  declared  in  Ontario  Bank  v.  Lightbody  is  certainly  more  consistent 
■with  natural  justice  and  fair  dealing  than  that  maintained  in  Bayard  v.  Shunk. 
Mr.  Justice  Story,  in  his  work  on  Promissory  Notes,  §  389,  after  stating,  as  the 
rule,  that  declared  in  Ontario  Bank  v.  Lightbody,  says,  in  a  note  :  "After  all,  the 
point  seems  to  resolve  itself  more  into  a  question  of  fact,  as  to  the  intent,  than 
as  to  law ;  and  it  must  and  ought  to  turn  upon  this,  whether  taking  all  the  cir- 
cumstances together,  the  bill  was  taken  as  absolute  payment  by  the  holder,  at 
his  own  risk,  or  only  as  conditional  payment,  he  using  due  diligence  to  demand 
and  collect  it." 

Fogg  V.  Sawyer,  9  N.  Hamp.  36.5,  is  a  well-considered  case  which  supports 
the  New  York  doctrine.  In  delivering  the  opinion  of  the  Court,  Parker,  C.  J., 
said :  — 

"  It  is  contended,  in  this  case,  that  the  equity  is  equal  between  the  parties, — 
that  there  must  be  a  loss  upon  the  bills  which  were  received  by  the  plaintiff,  and 
that,  both  parties  being  equally  innocent,  the  law  should  not  interfere.  It  is  not 
quite  clear  that  both  parties  were  equally  innocent  in  this  transaction.  The  case 
finds  that  it  did  not  distinctly  appear  that  the  failure  of  the  bank  was  known  to 
the  defendant,  but  it  did  appear  that  it  was  unknown  to  the  plaintiflf.  A  sus- 
picion, however,  that  the  defendant  had  knowledge  of  the  failure,  at  the  time  he 
made  the  purchase,  can  have  no  effect  upon  the  present  decision,  as  no  question 
of  that  kind  has  been  submitted  to  the  jury. 

"  There  are  cases  where  the  parties  being  ecjually  innocent,  or  equally  guilty, 
neither  can  support  an  action  against  the  other ;  but  the  principle  upon  which 
they  are  founded  is  not  applicable  to  this  case.  On  the  supposition  that  neither 
knew  of  the  failure  of  the  bank,  at  the  time  of  the  sale,  the  plaintiff  contracted 
to  sell  the  oxen,  and  the  defendant  to  pay  therefor  a  certain  price.  There  is 
nothing  in  the  case  to  show  any  agreement,  in  fixing  upon  the  price,  that  payment 


ONTARIO    BANK    V.    LIGHTBODY.  635 

was  to  l)e  received  in  bills  of  the  Chelsea  Bank.  Tlie  jtarties,  then,  niuft  have 
contemplated  a  payment  in  money,  or  in  somethiiif^  which  was  equivalent  to 
money,  and  usually  received  as  such.  In  fact  the  plaintiff  might  have  declined 
receiving  any  thing  but  coin,  and  the  defendant  could  not  have  performed  his 
contract  except  by  the  payment  of  coin,  if  it  had  been  rerjuired.  The  ri;,'ht  to 
require  coin  was  waived,  liut  still  there  is  nothing  to  sliow  that  an  equivalent  was 
not  to  be  received. 

"  When,  therefore,  the  plaintiff  received  the  bills,  he  received  them,  and  the 
defendant  paid  them,  as  money.  It  was  in  that  way  only  that  the  defendant 
could  perform  what  he  had  undertaken  to  do,  which  was,  to  pay  a  sum  of  money. 
The  bills  represented  money,  —  were  doing  the  oflice  of  money,  —  and  should 
have  been  of  the  value  of  money  at  the  place  where  they  purported  to  be  re- 
deemable, and  convertible  into  money.  The  plaintiff  was  as  much  entitled  to 
receive  good  bills,  if  he  consented  to  take  bills,  as  he  would  have  been  to  have 
received  good  coin,  in  case  the  payment  had  been  made  with  specie ;  and  it  is 
not  doubted  that  in  such  case,  if  the  payment  had  been  made  in  counterfeit  coin, 
the  plaintiff  would  have  been  entitled  to  recover  The  same  is  true  of  counter- 
feit bills,  when  they  have  been  passed  in  payment.  Young  v.  Adams,  6  Mass. 
1S2  ;  Markle  v.  Hatfield,  2  Johns.  455 ;  Grafton  Bank  v.  Hunt,  4  N.  Hanip. 
4S,s. 

"  The  case  of  a  payment  in  bills  of  a  broken  bank  cannot  be  distinguished,  in 
principle,  from  that  of  a  payment  in  counterfeit  money.  From  the  time  of  the 
failure  of  the  bank  they  cease  to  be  the  proper  representatives  of  money, 
whether  they  are,  at  the  time,  near  to,  or  at  a  distance  from,  the  bank.  They 
may  have  a  greater  value  than  counterfeit  bills,  but  in  neither  case  has  the  party 
received  what  in  the  contemplation  of  both  parties  he  was  entitled  to  receive,  if 
the  contract  was  to  pay  a  certain  sum.  In  neither  case  has  he  received  money, 
or  its  representative.  The  sum  contracted  to  be  paid  has  not  been  paid  in 
money,  or  any  thing  which  by  usage  passes  as  money,  or  which  was  entitled  at 
the  time  to  represent  it ;  and  the  party  has,  therefore,  failed  to  pay  what  he  con- 
tracted to  pay.  Wentworth  i'.  Wentworth,  5  N.  Hamp.  410.  Counterfeit  coin 
may  contain  a  portion  of  good  nutal,  and  thus  have  some  value,  but  this  would 
not  make  it  a  good  medium  of  payment.  Entire  worthlessness,  or  not,  is  not, 
therefore,  the  criterion. 

"It  can  make  no  difference  whether  the  party  making  the  payment  knew,  at 
the  time,  that  the  bank  had  failed.  That  is  of  as  little  consequence  as  it  is 
whether  he  knew  that  the  pieces  of  coin  or  bills  which  he  paid  were  counterfeit. 
Having  undertaken  to  pay  a  sum  of  money,  the  question  is,  whether  he  has  per- 
formed his  obligation. 

"  It  is  not  sufficient  that  the  bills,  in  this  case,  might  have  been  current  at  the 
place  of  payment,  when  the  payment  was  attempted  to  be  made.  They  should 
have  been  current,  or  convertible  into  specie,  at  the  place  where  they  purported 
to  be  redeemable.  When  the  defendant  paid  them  as  money,  he  took  this  risk 
upon  himself  If  they  were  not  so,  they  were  not  what  they  purported  lo  be, 
and  what  they  were  taken  for. 

"  There  is  no  equity  in  the  case  which  should  lead  to  a  different  result.  When 
the  bank  failed  the  loss  fell  upon  the  defendant,  as  the  holder  of  the  bills,  it  he 
held  them  at  that  time.     If  he  had  not  received  information  of  his  loss,  that  is 


636  BANK-BILLS    AND    OTHER    PAPER   TAKEN    IN    PAYMENT. 

of  no  consequence.  The  bills  were  no  longer  redeemed  on  demand,  and  a  loss, 
greater  or  less,  had  accrued.  There  is  no  equity  in  transferring  this  loss  to  the 
phuntifF,  because  he  afterwards  received  the  bills  supposing  them  to  be  equivalent 
to  money.  If  he  had  agreed  to  take  the  risk,  that  would  have  presented  the 
case  in  a  different  aspect.  Or  if  he  had  agreed  to  exchange  the  oxen  for  the 
bills,  that  might  have  altered  the  case.  But  the  bare  reception  of  the  bills  in 
payment  cannot  be  considered  as  evidence  of  an  agreement  to  take  the  risk, 
because  the  defendant  offered  thcMn  as  money,  and  the  plaintiff  received  them  as 
such,  without  knowledge  of  the  failure. 

*'  If  the  bills  had  been  convertible  into  money,  at  the  bank,  when  the  plaintiff 
received  them,  they  would  have  been  what  they  purported  to  be,  and  the  risk  of 
a- subsequent  failure,  while  they  were  in  his  possession,  would  have  been  with  the 
plaintiff. 

"The  plaintiff  having  offered  to  return  the  bills  in  a  reasonable  time,  is 
entitled  to  treat  the  case  as  if  they  had  not  been  received,  and  to  recover  the 
balance  due  on  the  sale  of  the  oxen. 

"  Judgment  for  the  plaintiff ^ 

There  are  several  other  cases  which  sustain  this  view.  See  Wainwright  v. 
Webster,  11  Vt.  576;  Frontier  Bank  v.  Morse,  22  Me.  88;  Timmis  v.  Gibbins, 
14  Eng.  Law  &  E.  64;  Harley  v.  Thornton,  2  Hill  (S.  C),  509;  Thomas  v. 
Todd,  6  Hill  (N.  Y.),  340;  Townsends  v.  Bank  of  Racine,  7  Wis.  185;  Westfall 
V.  Braley,  10  Ohio  State,  188. 

But  the  Pennsylvania  doctrine  has  been  adopted  in  several  States.  See  cases 
cited  by  Chief  Justice  Gibson ;  also  Lowrey  v.  Murrell,  2  Port.  Ala.  280  ;  Corbit 
V.  Bank  of  Smyrna,  2  Harr.  Del.  235,  Layton,  J.,  dissenting;  Ware  v.  Street, 
2  Head,  609 ;  Edmunds  v.  Digges,  1  Grat.  359. 

See  also  Commonwealth  v.  Stone,  4  Met.  43;  Snow  v.  Perry,  9  Pick.  539; 
Alexander  r.  Dennis,  9  Port.  Ala.  174 ;  Alexander  v.  Byers,  19  Ind.  301 ;  Dakin 
V.  Anderson,  18  Ind.  52 ;  Aldrich  v.  Jackson,  5  R.  I.  218  ;  Houghton  v.  Adams, 
18  Barb.  545;  Baker  v.  Bonesteel,  2  Hilton,  397;  Oilman  v.  Peck,  11  Vt.  516; 
Ex  ])arte  Blackburne,  10  Ves.  204 ;  Bank  of  the  United  ^tates  v.  Bank  of 
Georgia,  j)ost,  650. 


THE    PHfENIX   INSURANCE   CO.    V.    ALLEN.  637 

The  PricENix  Insurance  Company  v.  John  Allen. 

(11  Michigan,  501.     Supreme  Court,  July,  1863.) 

Pai^ment  by  paper  of  third  jxtrli/.  Duty  of  creditor.  —  Where  a  party  receives  a  draft  as 
conditional  payment  of  a  debt  due  him,  his  right  of  action  upon  thetlebt  is  suspended 
until  tiie  draft  is  properly  i)resented  for  paj'ment  and  payment  refused.  By  receiv- 
ing such  draft,  the  creditor  accepts  die  duty  of  doing  every  thing  with  respect  thereto 
which  is  necessary  to  fix  the  liability  of  the  parties  ;  and  the  onus  is  upon  him  to 
show  that  he  has  performed  that  duty  when  he  seeks  to  recover  upon  the  original 
cause  of  action. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Christiancy,  J.  This  was  an  action  of  assumpsit  brought  by 
Allen,  the  plaintiff  below,  against  the  company,  to  recover  the 
amount  of  a  loss  by  fire  under  a  policy  issued  by  the  company  to 
Allen. 

The  declaration  contained  counts  upon  the  policy,  and  the  com- 
mon counts.  The  plea  was  the  general  issue.  It  appeared  from 
the  evidence  introduced  by  the  plaintiff  (and  of  these  facts  there 
was  no  dispute),  that  on  the  twentieth  day  of  April,  1861,  the  loss 
under  the  policy  had  been  adjusted  by  compromise  between  Allen 
and  the  company  (the  latter  acting  through  one  Holden,  their 
agent,  having  power  to  adjust  losses),  at  the  sum  of  81106.25, 
whicli  was  agreed  by  said  agent  to  be  paid  by  a  draft  drawn  by 
him  on  the  general  agents  of  the  Phcenix  Company  at  Cincinnati 
"  payable  in  Chicago  exchange."  Tlie  draft  for  the  amount  was 
so  drawn  on  the  same  day,  upon  R.  H.'  and  H.  M.  Magill,  general 
agents  of  the  company  at  Cincinnati,  i)ayable  to  the  order  of  Allen 
at  one  day's  sight.  Tins  draft  was  indorsed  by,  Allen  to  Stephens 
and  Beatty,  of  Detroit,  for  whose  use  the  action  was  brouglit ;  the 
plaintiff,  however,  retaining  some  interest  in  it  (but  what,  did  not 
appear).  Stephens  and  Beatty  indorsed  and  transmitted  this  draft 
to  Harrison  and  Hooper,  their  agents  in  Cincinnati,  for  present- 
ment and  demand  of  i)ayment,  who  duly  presented  it  to  the 
drawees,  on  the  second  of  May,  1861,  and  received  and  accepted 
from  the  drawees,  as  and  for  a  compliance  with  said  draft  or  order, 
a  bill  of  exchange  drawn  by  J.  H.  Bussing  <fc  Co.,  bankers  at  Cin- 


638  BANK-BILLS    AND    OTHER    PAPER    TAKEN    IN    PAYMENT. 

cinnati,  upon  Hoffman  and  Gelpecke,  bankers  at  Chicago,  and 
indorsed  by  said  R.  H.  and  H.  M.  Magill,  general  agents  as  afore- 
said.    This  last  draft  was  in  the  following  words  and  figures  :  — 

"  11106.25.  Walnut  Street  Bank :  Cincinnati,  May  2,  1861. 

"  Pay  to  the  order  of  R.  H.  and  H.  M.  Magill,  general  agents, 

11106.25  current  funds. 

"  G.  H.  Bussing  &  Co. 

"  To  Hoffman  and  Gelpecke,  Chicago,  111." 

This  draft  was  received  by  Stephens  and  Beatty,  at  Detroit,  from 
their  agents  in  Cincinnati,  on  the  fourth  day  of  May,  1861,  and 
on  the  twenty-fifth-  day  of  the  same  month  they  transmitted  it  by 
mail  to  their  agents  in  Chicago,  for  presentment  and  demand  of 
payment ;  and,  on  the  twenty-ninth  day  of  the  same  month,  it  was 
duly  presented  to  Hoffman  and  Gelpecke,  the  drawees,  and  payment 
demanded,  which  payment  was  refused  ;  and  it  was  thereupon  pro- 
tested for  non-payment,  and  due  notice  thereof  given. 

It  was  admitted  there  were  daily  mails  between  Detroit  and 
Cincinnati,  between  Detroit  and  Chicago,  and  between  Detroit  and 
Grand  Ra[)ids,  and  that  the  several  times  occupied  in  the  trans- 
mission of  the  mails  between  these  several  points  were  as  fol- 
lows :  Between  Detroit  and  Cincinnati,  from  twelve  to  twenty-four 
hours  ;  between  Detroit  and  Chicago,  from  twelve  to  fourteen  hours, 
and  between  Detroit  and  Grand  Rapids,  less  than  twelve  hours  ; 
There  was  no  other  evidence  touching  the  question  of  diligence  in 
presenting  the  draft  for  payment. 

The  draft  was  offered  in  evidence  by  the  plaintiff,  under  the 
common  counts,  but  rejected  by  the  Court  on  the  ground  that  it 
was  not  negotiable,  because  payable  in  current  funds,  and  not  in 
cash.  As  the  plaintiff  does  not  complain  of  the  judgment,  and 
we  think  the  draft  was  properly  excluded  for  another  reason,  it  is 
only  important  to  notice  this  point  for  the  bearing  it  may  be  sup- 
posed to  have  upon  another  question  in  tlie  cause.  But  in  the 
absence  of  all  evidence  that  any  thing  else  than  cash  was  treated 
as  current  funds  in  Chicago,  we  do  not  see  how  the  Court  could 
assume  judicially  to  know  the  fact  or  presume  it ;  until  this  should 
be  made  to  appear,  the  current  funds  in  which  it  was  made  pay- 
able, should,  we  think,  be  held  to  be  such  funds  only  as  were  cur- 
rent by  law.  We  must  therefore  treat  this  draft  as  a  negotiable 
bill  of  exchange  payable  in  money.     It  does  not  appear  to  have 


THE   PHfENIX   INSURANCE   CO.    V.    ALLEN.  639 

been  obtained  for  tbe  purposes  of  exchange,  that  is,  for  the  pur- 
pose of  transmitting  funds  to  Chicago  ;  but  it  is  clear  tliat  it  was 
received  in  payment  of  tiie  llrst  draft  or  order  drawn  by  Ibjlden 
and  indorsed  to  Stephens  and  Beatty,  or,  in  other  words,  in  j)ay- 
moiit  of  tlie  sum  due  the  pkiintiff  for  liis  loss  under  the  policy. 
Whether  received  in  absolute  or  conditional  payment,  was  a  ques- 
tion for  the  jury  \\\m\\  the  evidence.  Had  they  found  it  was 
received  as  absolute  payment,  they  could  not  have  found  for  the 
plaintiff,  as  his  remedy  would  then  clearly  have  been  confined  to 
the  draft  itself,  which  the  plaintiff  was  not  allowed  to  introduce  in 
evidence.  It  is  only,  therefore,  in  respect  to  its  reception  as  con- 
ditional payment  that  we  are  to  consider  the  question  of  the  plain- 
tiff's right  to  sue  for  the  original  indebtedness,  and  the  question 
of  diligence  in  presenting  the  draft  for  payment.  Its  reception  as 
conditional  {)aymcnt  would  operate  as  a  suspension  of  the  plain- 
tiff's original  right  of  action  till  the  draft  sliould  be  properly 
presented  for  payment,  and  such  payment  was  refused.  See 
authorities  cited  2  Am.  Lead.  Cas.  182.  And  wc  think  the  plain- 
tiff, by  such  acceptance,  must  also  be  understood  to  have  accepted 
the  duty  of  doing  every  tlnng  with  respect  to  the  paper  which  was 
necessary  to  fix  the  liability  of  the  drawer  and  indorsers,  and  the 
onus  of  proving  that  he  has  performed  this  duty  when  he  seeks  to 
recover  upon  the  original  cause  of  action  for  wiiich  the  paper  was 
received. 

In  Jennison  v.  Parker,  7  Mich.  355,  it  was  held  by  a  majority  of 
this  Court  that  where  a  draft  drawn  by  a  third  person  was  indorsed 
by  the  debtor,  and  l)y  him  sent  to  the  creditor  to  be  applied  when 
paid,  the  creditor  made  the  ])apcr  his  own,  and  could  not  sue  u|)on 
the  original  debt  if  he  neglected  the  steps  necessary  to  hold  the 
debtor  liable  as  indorser.  We  sec  no  reason  for  departing  from 
the  rule  there  laid  down.  We  think  the  same  reasons  ai)ply  here, 
not  only  with  reference  to  the  indorser,  but  with  at  least  equal 
force  to  the  drawers  also ;  since,  if  the  drawers  have  been  dis- 
charged by  the  neglect  of  the  holder  to  present  for  payment  in 
due  time,  the  indorsers  (who,  so  far  as  the  present  question  is 
concerned,  may  be  considered  as  the  company  for  whom  they 
acted)  would  lose  their  remedy  over  upon  the  drawers ;  for  there 
is  nothing  in  the  case  to  show  that  the  drawers  could  be  held  liable 
without  due  presentment. 

In  2  Am.  Lead.  Cases,  p.  183,  u[»on  a  careful  review  of  the  cases 


640  BANK-BILLS    AND    OTHER    PAPER    TAKEN    IN    PAYMENT. 

it  is  laid  down  as  a  general  priifciple  of  the  law  merchant  that, 
"  a  plea  that  the  plaintiff  has  taken  the  note  or  bill  of  a  third  per- 
son on  acconnt  of  the  cause  of  action,  is  a  sufficient  bar  to  the 
suit,  which  can  only  be  removed  by  showing  that  the  ordinary 
course  of  business  has  been  pursued  with  reference  to  the  security 
thus  taken,  and  that  it  has,  notwithstanding,  proved  inadequate  as 
a  means  of  payment."  As  a  general  rule  we  think  this  is  just 
and  equitable  to  all  parties,  though  we  think  the  same  special  cir- 
cumstances affecting  the  time  of  presentment  and  notice  might  be 
shown  as  in  cases  between  indorser  and  indorsee.  Thus  under- 
stood, the  rule  is  substantially  the  same  as  that  which  requires 
presentment  to  be  made  within  a  reasonable  time,  having  reference 
to  the  ordinary  course  of  business,  and  the  circumstances  of  each 
particular  case.  The  law  upon  this  subject,  as  a  general  rule, 
adapts  itself  to  the  ordinary  course  of  business,  or,  more  properly 
speaking,  the  ordinary  course  of  business  constitutes  the  general 
rule  of  law.  When  the  ordinary  course  of  business  has  estab- 
lished a  rule  as  to  time  of  presentment,  which  the  law  has  recog- 
nized, courts  are  bound  judicially  to  notice  it  without  proof,  as  in 
the  case  of  bills  payable  at  a  specified  day  or  a  certain  number  of 
days  after  date ;  and  doubtless  the  ordinary  course  of  business 
may,  to  some  extent,  be  judicially  noticed  in  other  cases.  But 
where  the  law  has  adopted  no  rule  as  to  time  of  presentment,  ex- 
cept that  it  shall  be  within  a  reasonable  time,  as  in  the  case  of 
bills  payable  at  sight,  like  the  present,  the  Court  cannot,  without 
overlooking  the  objects  for  which  such  presentment  and  notice  of 
non-payment  are  required,  say,  as  matter  of  law,  that  any  delay  is 
reasonable  beyond  that  which  may  be  fairly  required  in  the  ordi- 
nary course  of  business  without  special  inconvenience  to  the 
holder;  or  by  the  special  circumstances  of  the.  particular  case. 
And  in  a  case  like  the  present,  where  the  paper  does  not  appear  to 
have  been  obtained  for  mere  purposes  of  exchange,  but  in  payment 
of  a  precedent  debt ;  and  was  not  put  in  circulation,  but  detained 
by  the  plaintiff  for  twenty-one  days  before  it  was  transmitted  for 
presentment;  if  we  cannot  take  judicial  notice  that  tliis  delay  was 
greater  than  required  by  any  considerations  of  necessity  or  con- 
venience in  the  usual  course  of  business,  we  certainly  cannot, 
without  evidence  ujjon  the  point,  determine,  as  matter  of  law,  that 
this  length  of  time  was  required  by  any  such  considerations,  or 
authorized  by  any  usage  or  course  of  business  which  we  can  judi- 


THE   PIKENIX   INSURANCE   CO.    V.    ALLEN.  641 

cially  notice  without  proof.  If  fliere  was  any  thing  in  the  special 
circumstances  of  the  case  to  require  it,  or  'to  excuse  the  delay, 
those  circumstances  should  have  been  proved.  But  no  such  evi- 
dence was  given  or  offered.  Nothing  whatever  was  shown  to  ex- 
cuse or  explain  the  delay,  or  to  show  why  the  paper  might  not, 
with  equal  convenience  to  the  holder  or  any  other  person,  have 
been  sent  by  the  first,  or  next  succeeding  mail.  There  was,  there- 
fore, no  evidence  before  the  jury  tending  to  show  that  the  time 
was  reasonable.  Tlie  time  —  the  unexplained  delay  of  twenty-one 
days  —  was  shown.  But  there  was  no  evidence  of.  any  usage  or 
course  of  business,  nor  any  special  circumstances  connected  with 
the  particular  case,  from  which  the  jury  could  be  authorized  to 
draw  any  inference  that  the  time  was  reasonable.  And  the  burden 
of  proof  upon  this  point  rested  upon  the  plaintiff.  So  far  as  the 
jury  are  to  pass  upon  the  question  of  reasonable  time,  their  verdict 
must  be  based  u{)on  evidence  before  them.  If  from  the  naked  fact 
of  the  length  of  time,  the  jury  are  to  determine  its  reasonableness 
without  any  evidence  bearing  upon  the  point,  they  must  necessarily 
determine  it  as  a  question  purely  of  law  ;  and  tliis  is  not  within 
their  province.  The  Court  therefore  erred  in  submitting  the  ques- 
tion to  the  jury. 

Had  there  been  evidence  upon  the  point,  the  questions  might 
have  arisen,  which  were  so  fully  and  ably  discussed  by  the  counsel, 
whether  the  reasonableness  of  the  time  was  a  question  of  fact  for 
the  jury,  or,  the  facts  being  undisputed,  a  question  of  law  for  the 
Court,  or,  if  disputed,  of  mixed  law  and  fact,  to  be. decided  by  the 
jury  under  the  charge  of  the  Court  upon  the  law.  But  tlie  plain- 
tilT,  upon  whom  the  burden  of  proof  rested,  having  failed  to  pro- 
duce any  evidence  tending  to  sliow  that  the  time  was  reasonable, 
and  there  being  no  such  evidence  in  the  case,  these  questions  are 
not  i)roperly  before  us,  and  we  shall  not  enter  upon  their  discus- 
sion. But  whatever  view  may  be  taken  of  these  (questions,  we  can 
see  no  ground  on  wdiich  the  counsel  for  the  plaintiff  could  be 
allowed  to  read  to  the  jury,  and  to  comment  upon  decided  cases 
upon  the  question  found  in  the  books  of  reports.  So  far  as  the 
question  was  one  of  law,  these  cases  and  the  arguments  upon 
them  were  for  the  consideration  of  the  Court  only ;  so  far  as  it 
was  a  question  of  fact,  it  was  to  l)e  decided  by  the  jury  upon  the 
facts  given  in  evidence  in  the  regular  course  of  the  trial.  .See 
Darby  v.  Ouseley,  36  Eug.  L.  &  Eq.  519  ;  and  the  finding  of  courts  or 

41 


642  BANK-BILLS   AND   OTHER   PAPER   TAKEN   IN   PAYMENT. 

juries  in  other  similar  eases  would  be  wholly  inadmissible  as  evi- 
dence in  any  stage  of  the  trial. 

As  there  was  no  evidence  tending  to  sbow  the  time  to  be  reason- 
able, and  the  Court  held  the  question  to  be  one  of  fact  for  the 
jury,  and  permitted  the  reported  cases  to  be  read  to  them  against 
the  objection  of  defendant's  counsel,  the  jury  must  naturally  have 
inferred  that  they  were  at  liberty  to  consider  those  decided  cases 
as  evidence  upon  which  they  had  a  right  to  base  their  verdict. 
Tiie  cases  could  only  be  properly  read  to,  or  considered  by,  the 
jury  upon  the  hypothesis  that  they  were  to  decide  the  question  as 
one  of  law ;  and  such,  in  this  case,  must  have  been  the  result,  so 
far  as  their  verdict  may  have  been  in  any  way  influenced  by  the 
cases  and  the  argument  based  upon  them. 

The  judgment  must  be  reversed,  with  costs,  and  a  new  trial 
granted. 

In  most  States  of  the  Union  taking  a  note  or  bill  for  a  pre-existing  debt  is 
prima  fade  only  conditional  payment,  and  the  burden  is  upon  the  debtor,  in  an 
action  upon  the  original  debt  to  show  that  the  intention  was  otherwise.  Story, 
Promissory  Notes,  §§  104,  117,  389,  438,  and  numerous  authorities  cited.  But 
in  Maine,  Massachusetts,  Vermont,  Indiana,  and  Louisiana,  the  presumption  is 
that  the  paper  is  taken  in  absolute  payment,  if  it  is  negotiable ;  the  presumption, 
however,  may  be  repelled  by  proof.  Descadillas  v.  Harris,  8  Greenl.  298 ; 
Wiseman  v.  Lyman,  7  Mass.  286  ;  Spooner  v.  Rowland,  4  Allen,  485 ;  Wait  v. 
Brewster,  31  Vt.  516  ;  Arnold  v.  Sprague,  34  Vt.  402  ;  Gaskin  v.  Wells,  15  Ind. 
253  ;  Hunt  v.  Boyd,  2  La.  109. 

The  ruling  in  the  principal  case  that  the  party  who  takes  a  bill  or  note  for  a 
pre-existing  debt  must  take  the  proper  measures  to  charge  the  parties  to  the 
same,  on  pain  of  discharging  the  party  from  whom  he  received  it,  is  well  settled. 
See  Story,  Bills  of  Exchange,  §  109 ;  ib.  Promissory  Notes,  §  117,  and  authori- 
ties cited. 

But  if  the  debtor  give  his  creditor  a  bill  drawn  on  another  who  has  no  effects 
in  his  hands,  and  who  refuses  to  accept  it,  the  creditor  may  treat  the  bill  as  waste 
paper,  and  resort  to  his  original  demand.  Stedman  v.  Gooch,  1  Esp.  3,  per 
Lord  Kenyan.  See  Kearslake  v.  Morgan,  5  T.  R.  513;  Tarleton  v.  Allhusen, 
2  Adol.  &  Ellis,  32 ;  Puckford  v.  Maxwell,  6  T.  R.  52 ;  Ilsley  v.  Jewett,  2  Met. 
168. 

As  to  the  receipt  of  forged  paper,  see  Bank  of  the  United  States  v.  Bank 
of  Georgia,  post,  650. 


CANAL  BANK  V.    BANK  OF  ALBANY.  643 


FORGERY. 


Canal  Bank  v.  Bank  of  Albany. 

(1  Hill,  -287.     Supreme  Court  of  New  York,  May,  184L) 

Recovery  of  moneij  paid  upon  for()ed  indorsement.  Notice.  —  Money  paid  by  the  acceptor 
of  a  bill  to  an  innocent  holder  under  a  forged  indorsement  of  the  payee  may  be 
recovered,  if  seasonable  notice  of  the  forgery  be  given. 

Assumpsit  against  the  defendants,  indorsees  of  a  draft  drawn  on 
the  plaintiffs  by  the  Montgomery  County  Bank,  payal)le  to  the 
order  of  E.  Bentley,  Jr.  Bentley's  indorsement  was  forged,  and 
the  paper  finally  passed  for  value  and  without  notice  into  the 
liands  of  the  defendants.  It  was  then  presented  to  the  plaintiffs 
and  paid.  A  little  over  two  months  afterwards  the  acceptors  noti- 
fied the  defendants  that  tiie  payee's  name  was  a  forgery,  and 
called  upon  them  to  refund,  which  they  refused  to  do  ;  whereupon 
this  action  was  brought  to  recover  the  sum  paid. 

After  speaking  of  the  competency  of  Bentley  as  a  witness,  the 
Court  proceeded  ;  the  opinion  being  delivered  by 

CowEN,  J.  On  the  merits,  there  was  nothing  in  the  nature  of 
the  transaction  to  conclude  tlie  plaintiffs  against  showing  the  forg- 
ery. They  had  done  no  act  giving  currency  to  the  bill  on  the 
strength  of  Bentley's  name.  Even  had  they  accepted  it  on  the 
day  when  it  was  drawn,  the  defendants  could  have  holden  them 
concluded  only  in  respect  to  the  genuineness  of  the  drawer's 
name,  he  being  their  immediate  correspondent.  Chitty,  Bills,  330, 
7  Am.  ed.  of  1839.  And  the  act  of  payment  could  amount  to  no 
more.  Id.  Neither  acceptance  nor  payment,  at  any  time, 
nor  under  any  circumstances,  is  an  admission  tiiat  the  first,  or  any 
other  indorser's  name  is  genuine.  lb.  G28.  In  point  of  title, 
then,  the  case  of  the  defendants  was  tlie  same  as  if  the  name  of 
Bentley  had  not  appeared  on  tlie  bill.  They  have  obtained  money 
of  the  plaintiffs  without  right,  and  on  the  exhibition  of  a  forged 


644  "  FORGERY. 

title  as  a  genuine  one.  The  plaintiffs  paid  their  money  under  the 
mistaken  belief  thus^  induced  that  the  name  was  genuine.  To  a 
note  or  bill  payable  to  order,  none  but  the  payee  can  assert  any 
title  without  the  indorsement  of  such  payee;  not  even  a  bona  fide 
holder.     lb.  2SG  a,  430. 

But  it  is  said,  the  equities  of  the  parties  are  equal,  and  the  de- 
fendants having  possession,  must  prevail.  No  doubt  the  parties 
were  equally  innocent  in  a  moral  point  of  view.  The  conduct  of 
both  was  bona  fide,  and  the  negligence  or  rather  misfortune  of  both 
the  same.  It  was  the  duty,  or,  more  properly,  a  measure  of  pru- 
dence, in  each  to  have  inquired  into  the  forgery,  which  both 
omitted.  But  this  raises  no  preference  at  law  or  equity  in  favor 
of  the  defendants,  but  against  them.  They  have  obtained  the 
plaintiffs'  money  without  consideration  ;  not  as  a  gift,  but  under  a 
mistake.  For  the  very  reason  that  the  parties  were  equally  inno- 
cent, the  plaintiffs  have  the  right  to  recover ;  and  that  was  con- 
ceded throughout,  in  the  authority  cited  on  another  point  by  the 
defendants'  counsel.  United  States  Bank  v.  Bank  of  Georgia,  10 
Wheat.  333,  354. ^  The  whole  course  of  argument  and  authority 
in  that  case,  went  on  tlie  fault  of  the  party  who  paid  the  money. 
It  was  likened  to  the  case  of  a  bank  paying  a  check,  on  which  the 
name  of  the  drawer  was  forged,  which  was  again  assimilated  to 
the  acceptance  of  a  bill  of  exchange,  where  the  drawer's  name  is 
forged.  It  was  said  that,  in  such  cases,  the  payor  or  acceptor 
takes  upon  himself  the  knowledge  of  his  correspondent's  hand- 
writing, and  shall  be  concluded.  Even  that  is  going  a  great  way, 
unless  some  bona  fide  holder  has  purchased  the  paper  on  the  faith 
of  such  an  act.  But  it  is  sufficient  to  distinguish  the  case,  that  it 
goes  on  the  superior  negligence  of  the  party  paying  or  accepting. 
At  page  355,  the  Court  draw  an  express  distinction  between  the 
effect  of  acceptance  or  payment  as  a  recognition  of  the  drawer's, 
and  the  indorser's  handwriting.  It  is  said,  the  forgery  of  an  in- 
dorsement is  not  a  fact  which  the  acceptor  is  presumed  to  know. 
And  perhaps  the  decision  in  the  case  cited  should  be  rested 
entirely  on  negligence  in  the  Bank  of  Georgia.  Vid.  ib.  p.  344  ; 
also  the  case  of  the  Gloucester  Bank  v.  The  Salem  Bank,  IT  Mass. 
33,  cited  10  Wheat.  350. 

But,  it  is  said,  the  plaintiffs  here  delayed  giving  notice  of  the 
forgery,  from  the  twenty-eighth  of  March  till  the  seventh  of  June. 

1  Post,  650. 


CANAL  BANK  V.    BANK  OF  ALBANY.  645 

Under  what  circumstances,  is  not  disclosed  ;  for  tlie  point  of  delay 
was  not  made  at  the  trial.  That  is  a  suf|^cieiit  reason  why  it 
should  not  be  listened  to  liere.  But  I  am  not  willing  to  concede 
that  delay  in  the  abstract,  as  seems  to  be  supposed,  can  deprive 
the  party  of  his  remedy  to  recover  l)ack  money  paid  under  the 
circumstances  before  us.  It  is  said,  the  defendants  had  indorsers 
behind  them  ;  and  by  delay,  tiiey  were  prevented  from  charging 
them,  by  giving  seasonable  notice.  Admit  this  to  be  so ;  the 
plaintiffs  did  not  stand  in  the  relation  of  a  holder. '  They  were 
the  drawees,  and  advanced  the  money  by  way  of  payment.  They 
would  never,  therefore,  think  of  notice  to  the  defendants,  till  they 
accidentally  discovered  the  forgery.  If  there  had  been  any  unrea- 
sonable delay  after  such  discovery,'  another  question  would  he  pre- 
sented. I  infer  from  the  rigor  of  the  case  cited  by  the  defendants' 
counsel.  Cocks  v.  Masterman,  9  Barn.  &  C.  902,  that  he  would 
exact  as  great,  indeed  greater  diligence  in  giving  notice,  than  is 
necessary  to  fix  an  indorser.  There  the  plaintiffs  had  paid  to  the 
defendants,  the  holders,  an  acceptance,  purporting  to  be  in  the 
name  of  the  plaintiffs'  customers.  The  bill  was  drawn  payable  at 
the  plaintiffs'  bank.  The  next  day,  discovering  the  forgery,  they, 
on  the  same  day,  gave  notice  to  the  defendants  and  the  indorsers. 
This  was  held  too  late.  The  Court  even  declined  to  give  an 
opinion,  whether  notice  on  the  very  day  of  payment  would  have 
entitled  the  plaintiffs  to  recover ;  but  held,  that  notice  on  the  very 
day  was  at  all  events  necessary,  and  that  short  of  this,  the  plain- 
tiffs were  not  entitled  to  recover.  They  said  the  holder  must  not, 
by  want  of  notice,  be  deprived  of  the  right  to  take  steps  against 
the  parties  to  the  bill  on  the  very  day  when  it  was  paid  :  and  they 
admitted  that  this  was  requiring  one  day  increased  diligence,  be- 
yond what  would  have  been  required  in  the  ordinary  case  of  dis- 
honor. In  the  latter  case,  they  allowed  that  notice  on  the  next 
day  would  have  been  in  season.  In  a  previous  case  of  payment 
under  the  like  circumstances,  notice  having  been  given  on  the  very 
day,  the  bankers  who  paid  for  their  customers,  were  allowed  to 
recover.  Wilkinson  v.  Johnson,  3  Barn.  &  C.  428.  In  this 
earlier  case,  the  payment  was  made  for  the  honor  of  indorsers, 
whose  bankers  the  plaintiffs  were.  Both  cases  were  treated  by 
the  Court,  as  standing  on  the  same  principles,  thougli.  in  the  latter 
case,  they  do  not  put  it  distinctly  on  any  principle.  In  tiie  earlier 
case,  they  said  the  plaintiffs  were  not  the  drawees,  or  acceptors, 


646  FORGERY. 

nor  the  agents  of  any  supposed  acceptors.  The  same  thing  may, 
I  take  it,  l)c  said  of  tbe  latter  case,  though  the  plaintiffs  assumed 
to  pay  for  the  acceptors.  They  could  scarcely  have  intended  to 
pay  as  mere  agents  for  the  acceptors,  an  act  which  would  have 
extinguished  the  bill,  and  cut  them  off  from  a  remedy  against  the 
drawers  and  indorsers.  Where  a  bill  or  note  is  payable  at  a  bank, 
and  no  express  direction  given  by  the  principal  to  the  bank,  on 
its  coming  in  with  indorsers,  the  bank,  of  course,  takes  the  paper 
as  a  purchaser,  or  holder  ;  and,  for  its  own  indemnity,  presents  it 
to  the  principal  for  payment,  on  the  very  day,  or  as  soon  as  may 
be.  Thus,  there  is  a  good  chance  to  detect  the  forgery  of  his 
name  ;  and  hurry  the  notices  to  the  other  parties.  Whatever  forg- 
eries there  may  be,  are  soon  brought  to  light.  In  the  earlier  of 
the  two  cases  cited,  the  Court  said,  "  the  general  rule  of  law  is 
clear  and  not  disputed;  viz.,  that  money  paid  under  a  mistake  of 
facts,  may  be  recovered  back,  as  being  paid  without  consideration." 
In  the  latter  case,  the  Court  do  not  deny  the  rule,  nor  that  it 
would  apply  to  the  case  l^efore  them.  But  to  enforce  it,  they  re- 
quire an  almost  impracticable  diligence.  I  doubt  whether  this 
case  can  be  sustained,  except  upon  its  own  peculiar  circumstances, 
if  it  can  be  sustained  at  all.  In  all  the  previous  cases,  where  a 
recovery  had  been  denied,  there  was  carelessness,  or  delay,  or 
both.  Smith  v.  Mercer,  6  Taunt.  76,  was  much  like  Cocks  v. 
Masterman,  and  there  had  been  a  neglect  to  discover  the  forgery 
and  give  notice,  for  a  week's  time.  The  case  of  Price  v.  Neale,  3 
Burr.  1354,  was  one  of  palpable  neglect,  in  both  payment  and 
delay.  Some  other  cases  turn  on  similar  principles.  Barber  v. 
Gringell,  3  Esp.  60  ;  United  States  Bank  v.  Bank  of  Georgia,  and 
Gloucester  Bank  v.  Salem  Bank,  before  cited ;  Levy  v.  Bank  of 
United  States,  1  Binn.  27  ;  s.  c,  4  Dall.  234.  If  Cocks  v.  Master- 
man  is  to  be  followed,  it  must,  I  think,  be  on  the  same  principle. 
The  plaintiffs  paid  on  the  faith  of  their  correspondent's  name. 
The  former  were  not  named  as  drawees  ;  but  they  had  a  superior 
knowledge  of  their  correspondents'  handwriting,  which  they 
neglected  to  exert.  It  might,  therefore,  have  been  reasonable  to 
require  that  they  should  overcome  the  objection  of  neglect,  by  such 
a  speedy  movement  as  to  save  all  possible  advantage  to  the  holder, 
against  the  prior  parties.  But,  where  each  party  enjoys  only  tlie 
same  chance  of  knowledge,  no  case  demands  any  thing  more  than 
reasonable  diligence  in  giving  notice,  after  a  discovery  of  the  forg- 


CANAL  BANK  V.    BANK  OF  ALBANY.  647 

ery.  The  common  case  of  paying  forged  bank-notes,  is  one 
instance.  And  navy  and  victualling  bills,  have  been  treated  as 
standing  on  the  same  footing.  Jones  v.  Ryde,  5  Taunt.  488  ; 
Bruce  v.  Bruce,  ib.  405,  note.  These  are  cases  of  transferring 
notes  from  one  to  another,  which  turn  out  to  be  unavailal)l(;  by 
reason  of  a  forgery,  in  respect  to  which  botii  parties  are  equally 
ignorant,  the  one  being  no  more  guilty  of  neglect  than  the  other ; 
indeed,  neither  being  negligent,  but  both  being  impo.sed  upon 
under  the  exercise  of  ordinary  diligence.  At  all  events,  it  does 
not  lie  with  the  payor  to  complain  of  the  very  neglect  imputable 
to  himself.  Neglect  to  give  notice,  after  cliscovering  tlie  forgery, 
is  another  matter.  Vide  Chitty,  Bills,  Am.  ed.  of  1839,  p.  463. 
If  the  indorsers  are  to  be  charged,  as  such,  why  should  not  the 
accidental  delay  in  discovering  the  forgery,  on  a  paid  bill  espe- 
cially, operate  as  an  excuse  for  not  giving  them  immediate 
notice  ? 

The  defendants  did  not  disclose  their  agency,  and  must,  there- 
fore, as  between  them  and  the  plaintiffs,  be  taken  to  have  acted  as 
principals.  They  obtained  the  money  of  the  plaintilis  on  a  bill  of 
exchange,  payable  to  the  order  of  Bentley,  under  a  forged  indorse- 
ment of  his  name.  Money  has  been  successively  paid  by  mistake 
of  the  several  indorsees,  the  plaintiffs,  the  defendants,  the  Bank  of 
New  York,  (fee,  and  the  remedy  by  each  is  plain.  It  is  by  action 
over,  each  against  his  respective  indorser.  The  bill  has  never 
been  put  in  a  regular  course  of  negotiation,  for  want  of  Bentley's 
name.  No  one  who  has  advanced  money  on  it,  therefore,  obtained 
what  he  supposed  he  had  got ;  and  the  indorsers,  beside  being 
liable  as  such,  may  each  be  sued,  as  having  received  money  without 
consideration. 

The  proof  offered,  relative  to  the  custom  of  banks  to  collect 
paper  received  liy  them  as  agents,  witliout  communicating  the 
name  of  their  principal,  would  have  disclosed  a  case  in  which  it 
would  be  apparent  that  the  defendants  might  or  might  not  have 
been  agents.  The  object  of  the  ])roposed  proof  was,  to  supply  the 
want  of  direct  evidence,  that  notice  of  the  agency  had  been  given 
by  them  at  the  time.  Till  they  had  superadded  proof  of  another 
custom,  for  banks  never  so  to  receive  paper  and  collect  as  prin- 
cipals, the  proposed  evidence  could  have  had  no  tendency  to  affect 
the  plaintiffs  with  such  notice.  Knowledge  that  the  defendants 
might  be  acting  as  agents,  was  not  enough.     This  is  so  of  every 


648  FORGERY. 

man  ostensibly  transacting  business  as  a  principal.  Vide  Mills  v. 
Hunt,  20  Wend.  481.  The  proof  offered  and  rejected  was,  there- 
fore, irrelevant. 

JYew  trial  denied. 

If  the  forgery  of  the,  payee's  signature  were  on  the  paper  when  tliu  drawer 
put  it  into  circulation,  the  acceptor  cannot  recover  from  an  innocent  -hohler  to 
whom  lie  has  paid  it.     See  Plortsman  v.  Henshaw,  ante,  57,  and  note. 

But  if  the  forgery  is  owing  to  the  fault  or  carelessness  of  the  drawer,  he  must 
bear  the  loss.  Young  v.  Grote,  4  Bing.  253 ;  Morrison  v.  Buchanan,  6  Car.  & 
P.  18.  Sec  Belknap  v.  National  Bank  of  North  America,  100  Mass.  376,  cited 
in  full  in  note' to  Bank  of  the  United  States  v.  Bank  of  Georgia,  post,  650. 

Respecting  the  question  of  the  reasonable  time  within  which  notice  of  the 
forgery  should  be  given,  it  has  been  said  that  the  strict  rule  of  the  English 
courts  has  not  been  adopted  in  this  country ;  and  that  what  is  reasonable  time 
will  depend  upon  the  circumstances  of  each  case.  2  Parsons,  Notes  and  Bills, 
598,  599.  See  Bank  of  Commerce  v.  Union  Bank,  3  Comst.  230 ;  Worrall  v. 
Gheen,  39  Penn.  State,  388 ;  Gloucester  Bank  v.  Salem  Bank,  17  Mass.  33  ;  Pope 
V.  Nance,  Minor  (Ala.),  299 ;  Bank  of  St.  Albans  r.  Farmers'  and  Mechanics' 
Bank,  10  Vt.  141  ;  McKleroy  v.  Southern  Bank  of  Kentucky,  14  La.  An.  458. 
See  also  Chitty,  Bills,  431,  432. 

The  late  case  of  Merchants'  National  Bank  v.  National  Eagle  Bank,  101  Mass. 
281,  discusses  this  subject  of  negligence  in  its  relation  to  the  rules  of  the  Clearing 
House.    The  facts  will  sufficiently  appear  in  the  opinion  of  the  Court,  delivered  by 

Colt,  J.  This  action  is  brought  by  the  plaintiffs  to  recover  the  amount  of  a 
check  drawn  upon  them  and  paid  by  them  through  the  agency  of  the  Boston 
Clearing  House,  there  being  no  funds  of  the  drawer  in  their  hands  at  the  time  of 
the  payment. 

It  is  Avell  settled  by  recent  decisions  that  money  paid  to  the  holder  of  a  check 
or  draft  drawn  twithout  funds  may  be  recovered  back,  if  paid  by  the  drawee  under 
a  mistake  of  fact.  And  though  the  rule  was  originally  subject  to  the  limitation 
that  it  must  be  shown  that  the  party  seeking  to  recover  back  had  been  guilty  of 
no  negligence,  it  is  now  held  that  the  plaintiff  in  such  case  is  not  precluded  from 
recovery  by  laches  in  not  availing  himself  of  the  means  of  knowledge  in  his 
power.  It  is  otherwise  if  the  money  is  intentionally  paid  without  reference  to 
the  truth  or  falsehood  of  the  fact,  and  with  the  intention  that  the  payee  shall 
have  the  money  at  all  events.  Appleton  Bank  v.  McGilvray,  4  Gray,  518 ; 
Kelly  V.  Solari,  9  Mees.  &  W.  54 ;  Townsend  v.  Crowdy,  8  C.  B.  x.  s.  477. 
This  right  to  recover  back  the  money,  however,  will  in  no  case  be  permitted  to 
prejudice  the  payee  who  has  suffered  any  damage,  or  changed  his  situation  in 
respect  to  his  debtor  by  reason  of  the  laches  of  the  plaintiff,  or  his  failure  to 
return  the  check  within  a  reasonable  time. 

It  is  plain,  in  the  case  here  presented,  that  if  the  plaintiffs  had  paid  this  check 
at  their  own  counter  under  a  mistake  of  fact,  they  could  have  maintained  this 
action  to  recover  it  back.  Is  there  any  thing  in  the  manner  in  which  the  pay- 
ment was  in  fact  made,  or  in  the  relation  of  the  parties  to  each  other  as  members 
of  the  Clearing  House  Association,  which  prejudicially  affects  this  right? 


CANAL  BANK  V.    BANK  OF  ALBANY.  649 

It  is  declarod  hy  tlic  articles,  wliich  were  sigiu*(l  by  the  plaintifTand  (l<'f»?n<lant 
banks,  to  l)e  the  object  of"  tlie  association  to  elFect  at  (^ne  time  ami  ]tlace  tlie 
daily  exchanges  between  the  several  assoeiated  banks,  and  the  paynaent  of  the 
balances  resolting  from  such  exchanges.  An  early  hour  is  fixed  for  making 
these  exchanges,  and  a  later  time  in  the  day  for  the  receipt  and  payment  of 
balances  from  the  debtor  and  creditor  banks.  These  settlements  are  ujafle,  not 
from  an  examination  in  detail  of  the  vouchers  presented,  but  from  ujemoranda 
and  tickets  accompany injx  them.  .And  any  mistakes  resulting  from  this  mode  of 
settlement  are  to  be  adjusted  directly  l)etween  the  banks  which  are  parties  tiierein. 
It  is  furtiier  provided  that  "  whenever  checks  are  sent  through  the  Clearing 
House  which  are  not  good,  they  shall  be  returned,  by  the  banks  receiving  the 
same,  to  the  banks  from  which  they  were  received,  as  soon  as  it  shall  be  found 
that  said  checks  are  not  good  ;  aiul  in  no  case  shall  they  be  retained  after  one 
oVlock."  Under  this  arrangement,  the  payment  required  of  the  Clearing  House 
to  a  creditor  bank,  upon  a  check  presented,  must  be  regarded  as  only  provisional 
until  the  liour  of  one  o'clock,  to  become  complete  only  in  case  the  check  is  not 
returned  at  that  time.  And  if  by  any  mistake  of  fact  the  return  of  the  check  is 
not  so  made,  then,  as  between  the  two  banks,  it  is  to  be  treated  as  a  payment 
made  under  a  mistake  of  fact,  precisely  to  the  same  extent,  and  with  the  same 
right  to  reclaim,  which  would  have  existed  if  the  payment  Iiad  been  made  by  the 
simple  act  of  passing  the  money  across  the  counter  directly  to  the  payee  on 
the  presentation  of  the  check.  The  manifest  purpose  of  the  provision  is,  to  fix 
a  time  at  which  the  creditor  bank  may  be  authorized  to  treat  the  check  as  paid 
and  be  able  to  regulate  with  safety  its  relations  to  other  parties. 

We  cannot  adopt  the  theory  that  a  failure  to  present  a  bad  check,  before  the 
time  named,  to  the  bank  sending  it  through  the  Clearing  House,  works  an  abso- 
lute forfeiture,  and  is  in  itself  a  perfect  bar  to  any  action  to  recover  the  amount  of 
such  check.  The  whole  arrangement,  in  all  its  provisions  and  declared  purposes, 
is  to  be  construed  together.  And  the  law  will  not  construe  any  portion  so  as  to 
subject  parties  to  a  penalty  or  forfeiture  of  their  rights,  where  other  reasonable 
inter])retation  can  be  given  which  will  give  effect  and  consistency  to  the  whole. 
The  parties  have,  in  terms,  affixed  no  penalty  or  forfeiture  to  the  stii)ulation 
under  consideration  ;  and  a  failure  to  comply  with  its  terms  must  leave  the  par- 
ties in  the  same  position,  and  precisely  as  they  would  stand  when  a  payment 
is  made  under  a  mistake  of  fact  in  the  'ordinary  way.  Afler  one  o'clock,  the 
defendants,  upon  the  failure  to  return  the  check,  had  the  right  to  consider  it 
paid,  and  to  treat  it  so  in  their  dealings  with  others.  The  report  finds  that  the 
delay  in  its  return  was  occasioned  by  a  mistake  on  the  part  of  the  messenger,  a 
mistake  which  was  (juite  as  nuich  a  mistake  of  fact  as  if  it  had  been  produced 
by  the  false  time  of  a  clock  which  was  relied  on.  And  no  suggestion  is  made 
that  there  has  been  any  change  of  circumstances,  after  the  time  when  the  de- 
fendants had  a  right  to  treat  the  check  as  i)aid,  and  before  it  was  returned,  which 
would  now  subject  the  defendants  to  damage  or  loss,  and  render  it  unjust  for  the 
plaintilFs  to  recover. 

AVc  have  considered  the  case  as  if  the  agreement  required  the  return  of  the 
check  to  the  bank  from  which  it  was  received  before  or  at  one  o'clock ;  but  it 
will  be  noticed  that  the  stipulation  is,  that  the  check  shall  in  no  case  be  retained 
after  one  o'clock.     If  it  were  necessary  to  save  a  penalty  or  a  forfeiture,  it  might 


650  FORGERY. 

be  hold  that  the  delivery  of  it  to  a  messenger  before  one  o'clock,  to  be  returned 
to  the  bank  depositing  it,  with  suflicient  time,  in  the  absence  of  any  accident  or 
mistake,  to  reach  the  bank  before  that  hour,  would  be  a  compliance  with  its 
terms,  although  it  was  not  in  fact  delivered  until  some  minutes  after. 

Judgment  on  the  vei'dict  for  the  plaintiffs. 

See  Overman  v.  Hoboken  City  IJank,  2  Vroom,  563;  s.  c,  1  Vroom,  61. 


The  President,  Directors,  &c.,  of  the  Bank  of  the 
United  States  v.  The  President,  Directors,  &c.,  of 
the  Bank  of  the  State  of  Georgia. 

(10  Wheaton,  333.     Supreme  Court  of  the  United  States,  February,  1825.) 

Bank's  own  forged  bills  received  as  cjenuine.  —  If  a  bank  receives  from  a  debtor  forged 
notes  purporting  to  be  its  own,  as  genuine,  and  passes  them  to  the  credit  of  the 
debtor,  who  acts  in  good  faith,  the  receiving  bank  is  bound  by  such  credit ;  and 
it  cannot  recover  from  the  depositor  and  debtor  tiie  amount  of  the  forged  bills. 

The  case  is  stated  in  the  opinion  of  the  Conrt. 

Story,  J.  This  is  a  case  of  great  importance  in  a  practical 
view,  and  has  been  very  fnlly  argued  upon  its  merits.  The  Bank 
of  Georgia  having  originally  issued  the  bank-notes  in  question, 
they  were,  in  the  course  of  circulation,  fraudulently  altered,  and 
having  found  their  way  into  the  Bank  of  the  United  States,  the 
latter  presented  them  to  the  former,  who  received  them  as  genuine, 
and  placed  them  to  the  general  account  of  the  Bank  of  the  United 
States,  as  cash,  by  way  of  general  deposit.  The  forgery  was  not 
discovered  until  nineteen  days  afterwards,  upon  which  notice  was 
duly  given,  and  a  tender  of  the  notes  was  made  to  the  Bank  of 
the  United  States,  and  by  them  refused.  Both  parties  are  equally 
innocent  of  the  fraud,  and  it  is  not  disputed,  that  the  Bank  of  the 
United  States  were  holders,  bona  fide.,  for  a  valuable  considera- 
tion. Under  these  circumstances,  the  question  arises,  which  of 
the  parties  is  to  bear  the  loss,  or,  in  other  words,  whether  the  i)lain- 
tiflfs  are  entitled  to  recover,  in  this  action,  the  amount  of  this 
deposit. 

Some  observations  have  been  made  as  to  the  form  of  the  action, 
the  declaration  embracing  counts  for  the  balance  of  an  account 
stated,  as  well  as  for  money  had  and  received,  &c.     But,  if  the 


BANK    OP    THE    UNITED    STATES    V.    BANK    OF    GEORGIA.  651 

plaiiitilTs  arc  entitled  to  recover  at  all,  we  see  no  oi)jcctioM  to  a 
recovery  upon  either  of  these  counts.  The  stiiu  sued  for  is  tiie 
balance  due  upon  the  general  account  of  the  parties,  and  it  is 
money  had  and  received  to  the  use  of  the  plaintilfs,  if  the  transac- 
tion entitled  the  plaintiiTs  to  consider  the  deposit  as  money.  It  is 
clearly  not  the  case  of  a  special  deposit,  where  the  identical 
thing  was  to  be  restored  by  the  defendauts ;  the  notes  were  paid 
as  money  upon  general  account,  and  deposited  as  such  ;  so  that, 
according  to  the  course  of  business,  and  the  understanding  of  the 
parties,  the  identical  notes  were  not  to  be  restored,  but  an  equal 
amount  in  cash.  They  passed,  therefore,  into  the  general  funds 
of  the  Bank  of  Georgia,  and  l>ecame  the  property  of  the  bank. 
The  action,  has,  therefore,  assumed  the  proper  shape,  and  if  it  is 
maintainable  upon  the  merits,  there  is  no  difficulty  in  point  of 
form. 

We  may  lay  out  of  the  case,  at  once,  all  consideration  of  the 
point,  how  far  the  defendants  would  have  been  liable,  if  these 
notes  had  been  the  notes  of  any  other  bank,  deposited  by  the 
plaintiff,  in  the  Bank  of  Georgia,  as  cash.  That  might  depend 
upon  a  variety  of  considerations,  such  as  the  usages  of  banks, 
and  the  implied  contract  resulting  from  their  usual  dealings  with 
their  customers,  and  upon  the  general  [)rinciples  of  law  applicable 
to  cases  of  this  nature.  The  modern  authorities  certainly  do,  in 
a  strong  manner,  assert,  that  a  payment  received  in  forged  paper, 
or  in  any  base  coin,  is  not  good  ;  and  that  if  there  be  no  negli- 
gence in  the  i)arty,  he  may  recover  back  the  consideration  paid 
for  them,  or  sue  upon  his  original  demand.  To  this  effect  are  the 
authorities  cited  at  the  bar,  and  particularly  Markle  v.  Hatfield,  2 
Johns.  4o5  ;  Young  v.  Adams,  G  Mass.  182  ;  and  Jones  r.  Ryde, 
6  Taunt.  488.^  But,  without  entering  upon  any  examination  of 
this  doctrine,  it  is  sufficient  to  say  that  the  present  is  not  such  a 
case.  The  notes  in  question  were  not  the  notes  of  another  bank, 
or  the  security  of  a  third  person,  but  they  were  received  and 
adopted  by  the  bank  as  its  own  genuine  notes,  in  the  most  absolute 
and  unconditional  mannor.  They  were  treated  as  cash,  and  carried 
to  the  credit  of  the  plaintiff  in  the  same  manner,  and  with  the 
same  general  intent,  as  if  they  had  been  genuine  notes  or  coin. 

INlany  considerations  of  j)ul)lic  convenience  and  policy  would 
authorize  a  distinction  between  cases  where  a  bank  receives  forged 
^  See  Ontario  Bank  v.  Lightbody,  ante,  625,  and  note. 


652  FORGERY. 

notes  purporting  to  be  its  own,  and  those  where  it  receives  the 
notes  of  other  hanks  in  payment,  or  upon  general  deposit.  It  has 
the  benefit  of  circulating  its  own  notes  as  currency,  and  command- 
ing thereby  the  public  confidence.  It  is  bound  to  know  its  own 
paper,  and  provide  for  its  payment,  and  must  be  presumed  to  use 
all  reasonal)lo  means,  by  private  marks  and  otherwise,  to  secure 
itself  against  forgeries  and  impositions.  In  point  of  fact,  it  is 
well  known,  that  every  bank  is  in  the  habit  of  using  secret  marks, 
and  peculiar  characters,  for  this  purpose,  and  of  keeping  a  regular 
register  of  all  the  notes  it  issues,  so  as  to  guide  its  own  discretion 
as  to  its  discounts  and  circulation,  and  to  enable  it  to  detect 
frauds.  Its  own  security,  not  less  than  that  of  the  public,  re- 
quires such  precautions. 

Under  such  circumstances,  the  receipt  by  a  bank  of  forged  notes, 
purporting  to  be  its  own,  must  be  deemed  an  adoption  of  them. 
It  has  the  means  of  knowing  if  they  are  genuine  ;  if  these 
means  are  not  employed,  it  is  certainly  evidence  of  a  neglect  of 
that  duty,  which  the  public  have  a  right  to  require.  And  in  re- 
spect to  persons  equally  innocent,  where  one  is  bound  to  know  and 
act  upon  his  knowledge,  and  the  other  has  no  means  of  knowl- 
edge, there  seems  to  be  no  reason  for  burdening  the  latter  with 
any  loss  in  exoneration  of  the  former.  There  is  nothing  uncon- 
seientious  in  retaining  the  sum  received  from  the  bank  in  payment  of 
such  notes,  which  its  own  acts  have  deliberately  assumed  to  be 
genuine.  If  this  doctrine  be  applicable  to  ordinary  cases,  it  must 
apply  with  greater  strength  to  cases  where  the  forgery  has  not 
been  detected  imtil  after  a  considerable  lapse  of  time.  The 
holder,  under  such  circumstances,  may  not  be  able  to  ascertain 
from  whom  he  received  them,  or  the  situation  of  the  other  par- 
ties may  be  essentially  changed.  Proof  of  actual  damage  may 
not  always  be  within  his  reach  ;  and  therefore  to  confine  the 
remedy  to  cases  of  that  sort  would  fall  far  short  of  the  actual 
grievance.  The  law  will,  therefore,  presume  a  damage  actual  or 
potential,  sufficient  to  repel  any  claim  against  the  holder.  Even 
in  relation  to  forged  bills  of  third  persons  received  in  payment  of 
a  debt,  there  has  been  a  qualification  ingrafted  on  tlie  general 
doctrine,  that  the  notice  and  return  must  be  within  a  reasonable 
time  ;  and  any  neglect  will  absolve  the  payor  from  responsibility. 

If,  indeed,  we  were  to  apply  the  doctrine  of  negligence  to  the 
present  case,  there  are  circumstances  strong  to  show  a  want  of 


BANK    OF   THE    UNITED   STATES   V.    BANK   OF   GEORGIA.  653 

due  diligence  and  circumspection  on  the  part  of  the  Bank  of  Geor- 
gia. It  appears  from  the  statement  of  facts,  that  all  the  genuine 
notes  of  that  bank  of  the  denomination  of  one  hnndred  dcjllars, 
in  circulation  at  this  time,  were  marked  with  the  letter  A  ;  whereas 
twenty-three  of  the  forged  notes  of  one  hundred  dollars  hore  the 
marks  of  the  letter  1>,  C,  and  I).  Tiicsc  facts  were  known  to  the 
defendants,  but  unknown  to  the  plaintiffs  ;  so  that  by  ordinary 
circumspection  tlie  fraud  might  have  been  detected. 

The  argument  against  this  view  of  the  subject,  derived  from  tlie 
fact,  that  the  defendants  have  received  no  consideration  to  raise  a 
promise  to  pay  this  sum,  since  the  notes  were  forgeries,  is  certainly 
not  of  itself  sufficient.  There  are  many  cases  in  the  law,  where 
the  party  has  received  no  legal  consideration,  and  yet  in  which,  if 
he  has  paid  the  money,  he  cannot  recover  it  back  ;  and  in  which, 
if  he  has  merely  promised  to  pay,  it  may  be  recovered  of  him. 
The  first  class  of  cases  often  turns  upon  the  point,  whether  in 
good  faith  and  conscience  the  money  can  be  justly  retained ;  in 
the  latter,  whether  there  has  l)een  a  credit  therel)y  given  to  or  by  a 
tliird  person,  whose  interest  may  be  materially  atTected  by  the  trans- 
action. So  that,  to  apply  the  doctrine  of  a  want  of  consideration 
to  any  case,  we  must  look  to  all  the  circumstances,  and  decide 
upon  them  all. 

Passing  from  these  general  considerations,  it  is  material  to  in- 
quire, how,  in  analogous  cases,  the  law  has  dealt  with  this  matter. 
The  present  case,  does  not,  indeed,  appear  to  have  been  in  terms 
decided  in  any  court ;  but  if  principles  have  been  already  estab- 
lished, which  ought  to  govern  it,  then  it  is  the  duty  of  the  Court 
to  follow  out  those  principles  on  this  occasion. 

Tlic  case  has  been  argued  in  two  respects :  first,  as  a  case 
of  payment,  and,  secondly,  as  a  case  of  acceptance  of  the  notes. 

In  respect  to  the  first,  upon  the  fullest  examination  of  the  facts, 
we  arc  of  opinion,  that  it  is  a  case  of  actual  payment.  We  treat 
it  in  this  respect,  exactly  as  the  parties  have  treated  it ;  that  is,  as 
a  case  where  the  notes  have  been  paid  and  credited  as  cash.  Tlie 
notes  have  not  been  credited  as  notes,  or  as  a  special  deposit ;  but 
the  transaction  is  precisely  the  same  as  if  the  money  had  been 
first  paid  to  the  plaintitfs,  and  instantaneously  the  same  money  had 
been  deposited  by  them.  It  can  make  no  difference  that  the  same 
agent  is  employed  by  both  parties,  the  one  to  receive,  and  the 
other  to  pay  and  credit.     Upon  what  principle  is  it,  then,  that  the 


654  FORGERY. 

Court  is  called  upon  to  construe  the  act  different  from  the  avowed 
intention  of  the  parties  ?  It  is  not  a  case  where  the  law  construes 
an  act  done  with  one  intent  to  be  a  different  act,  for  the  purpose 
of  making  it  available  in  law  ;  to  do  that,  e//  pres^  which  would  be  de- 
fective in  its  direct  form.  Here  the  parties  were  at  liberty  to  treat 
it  as  they  pleased,  either  as  a  payment  of  money,  or  as  a  credit  of 
the  notes.  In  either  way  it  was  a  legal  proceeding,  effectual  and  per- 
fect ;  and  as  no  reason  exists  for  a  different  construction,  we  think 
that  the  parties,  by  treating  it  as  a  cash  deposit,  must  be  deemed 
to  have  considered  it  as  paid  in  money,  and  then  deposited  ;  since 
that  is  the  only  way  in  which  it  could  legally  become,  or  be  treated 
as  cash.  Nor  is  there  any  novelty  in  this  view  of  the  transac- 
tion. Bank-notes  constitute  a  part  of  the  common  currency  of 
the  country,  and,  ordinarily,  pass  as  money.  When  they  are  re- 
ceived as  payment,  the  receipt  is  always  given  for  them  as  money. 
They  are  a  good  tender  as  money,  unless  specially  objected  to ; 
and,  as  Lord  31ans/ield  observed,  in  Miller  v.  Race,  1  Burr.  452, 
they  are  not,  like  bills  of  exchange,  considered  as  mere  securities 
or  documents  for  debts.  If  this  be  true  in  respect  to  bank-notes 
in  general,  it  applies,  a  fortiori,  to  the  notes  of  the  bank  which 
receives  them ;  for  they  are  then  treated  as  money  received  by  the 
bank,  being  the  representative  of  so  much  money  admitted  to  be 
in  its  vaults  for  the  use  of  the  depositor.  The  same  view  was 
taken  of  this  point  in  the  case  of  Levy  v.  The  Bank  of  the  United 
States,  4  Dall.  234 ;  1  Binn.  27,  where  a  forged  check  had  been 
accepted  by  the  bank,  and  carried  to  the  credit  of  the  plaintiff 
(a  depositor)  as  cash,  and  upon  a  subsequent  discovery  of  the 
fraud,  the  bank  refused  to  pay  the  amount.  The  Court  there 
said :  "  It  is  our  opinion,  thai  when  the  check  was  credited  to  the 
plaintiff  as  cash,  it  was  the  same  thing  as  if  it  had  been  paid  ;  it 
is  for  the  interest  of  the  bank  that  it  should  be  so  taken.  In  the 
latter  case,  the  bank  would  have  appeared  as  plaintiffs ;  and  every 
mistake  which  could  have  been  corrected  in  an  action  by  them 
may  be  corrected  in  this  action,  and  none  other."  The  case  of 
Bolton  V.  Richard,  6  Durn.  &  East,  139,  is  not,  in  all  its  circum- 
stances, directly  in  point ;  but  there  the  Court  manifestly  con- 
sidered the  carrying  of  a  check  to  the  credit  of  a  party,  was 
equivalent  to  the  transfer  of  so  much  money  in  the  hands  of  the 
banker,  to  his  account. 

Considering,  then,  the  credit  in  this  case  as  a  payment  of  the 


BANK    OF   THE   UNITED   STATES   V.    BANK    OF   GEORGIA.  655 

notes,  the  question  arises,  whether,  after  a  payment,  the  defend- 
ants would  be  permitted  to  recover  the  money  back ;  if  they  would 
not,  then  they  have  no  right  to  retain  the  money,  and  the  plain- 
tiffs are  entitled  to  a  recovery  in  the  present  suit. 

In  Price  v.  Neal,  o  Burr.  1355,  there  were  two  bills  of  ex- 
change, which  had  been  paid  by  the  drawee,  the  drawer's  hand- 
writing being  a  forgery ;  one  of  these  bills  had  been  paid,  when  it 
became  due,  without  acceptance  ;  the  other  was  duly  accepted, 
and  paid  at  maturity.  Upon  discovery  of  the  fraud,  the  drawee 
brought  an  action  against  the  holder  to  recover  back  the  money  so 
paid,  both  parties  l)eiiig  admitted  to  be  equally  innocent.  Lord 
Mansfield,  after  adverting  to  the  nature  of  the  action,  which  was 
for  money  had  and  received,  in  which  no  recovery  could  be  had, 
unless  it  be  against  conscience  for  the  defendant  to  retain  it, 
and  that  it  could  not  be  allirmed  that  it  was  unconscientious  for 
the  defendant  to  retain  it,  he  having  paid  a  fair  and  valuable  con- 
sideration for  the  bills,  said,  "  here  was  no  fraud,  no  wrong.  It 
was  incumbent  upon  the  plaintiff  to  be  satisfied  that  the  bill  drawn 
upon  him  was  the  drawer's  hand,  before  he  accepted  or  paid  it. 
But  it  was  not  incumbent  upon  the  defendant  to  inquire  into  it. 
There  was  notice  given  by  the  defendant  to  the  plaintiff,  of  a  bill 
drawn  upon  him,  and  he  sends  his  servant  to  pay  it,  and  take  it 
up.  The  other  bill  he  actually  accepts,  after  which,  the  defendant, 
innocently  and  bona  fide  discounts  it.  The  plaintiff  lies  by  for  a 
considerable  time  after  he  has  paid  these  bills,  and  then  found  out 
that  they  were  forged.  He  made  no  objection  to  them  at  the  time 
of  paying  them.  Whatever  neglect  there  was,  was  on  his  side. 
The  defendant  had  actual  encouragement  from  the  plaintiff  for 
negotiating  the  second  bill,  from  the  plaintiff's  having,  witiiout 
any  scruple  or  hesitation,  paid  the  first ;  and  he  paid  the  wholo 
value  bona  fide.  It  is  a  misfortune  which  has  happened  without 
the  defendant's  fault  or  neglect.  If  there  was  no  neglect  in  the 
plaintiff,  yet  there  is  no  reason  to  throw  off  the  loss  from  one  inno- 
cent man  upon  another  innocent  man.  But,  in  this  case,  if  there 
was  any  fault  or  negligence  in  any  one,  it  certainly  was  in  the 
plaintiff,  and  not  in  the  defendant."  The  whole  reasoning  of  this 
case  applies  with  full  force  to  that  now  before  tlie  Court.  In  re- 
gard to  the  first  bill,  there  was  no  new  credit  given  by  any  accept- 
ance, and  the  holder  was  in  possession  of  it  before  the  time  it 
was  paid  or  acknowledged.     So  that  there  is  no  pretence  to  allege. 


656  FORGERY. 

that  there  is  any  legal  distinction  hetween  the  case  of  a  liolder 
bcibre  or  after  the  acceptance.  13uth  were  treated  in  this  judg- 
ment as  being  in  the  same  predicament,  and  entitled  to  the  same 
equities.  The  case  of  Neal  v.  Price  has  never  since  been  departed 
from ;  and,  in  all  the  subsequent  decisions  in  which  it  has  been 
cited,  it  has  had  the  uniform  support  of  the  Court,  and  has  been 
deemed  a  satisfactory  authority.  Tiie  case  of  Smith  v.  Mercer,  6 
Taunt.  70,  was  a  stronger  application  of  the  principle.  There, 
the  acceptance  was  a  forgery,  and  it  purported  to  be  payable  at  the 
plaintiff's,  who  was  a  banker,  and  paid  it,  at  maturity,  to  the  agent 
of  the  defendant,  who  paid  it  in  account  with  the  defendant.  A 
week  afterwards  the  forgery  was  discovered,  and  due  notice  given 
to  the  defendant.  But  the  Court  (Mr.  Justice  Chambre  dissent- 
ing) decided,  that  the  plaintiff  was  not  entitled  to  recover.  Two 
of  the  judges  proceeded  upon  the  ground,  that  the  banker  was 
bound  to  know  the  handwriting  of  his  customers  ;  and  that  there 
was  a  want  of  caution  and  negligence  on  the  part  of  the  plaintiff. 
The  Chief  Justice,  without  dissenting  from  this  ground,  put  it  upon 
the  narrower  ground,  that  during  the  whole  week  the  bill  must  be 
considered  as  paid,  and  if  the  defendant  were  now  compelled  to 
pay  the  money  back,  he  could  not  recover  against  the  prior  indors- 
ers  ;  so  that  he  would  sustain  the  whole  loss  from  the  negligence 
of  the  plaintiff.  The  very  case  occurred  in  the  Gloucester  Bank 
V.  The  Salem  Bank,  17  Mass.  33,  where  forged  notes  of  the  latter 
had  been  paid  to  the  former,  and,  upon  a  subsequent  discovery, 
the  amount  was  sought  to  be  recovered  back.  The  authorities 
were  there  elaborately  reviewed,  both  by  the  counsel  and  the 
Court,  and  the  conclusioji  to  which  the  latter  arrived  was,  that  the 
plaintiffs  were  not  entitled  to  recover,  upon  the  ground,  that  by 
receiving  and  paying  the  notes,  the  plaintiffs  adopted  tliem  as 
their  own,  that  they  were  bound  to  examine  them  when  offered  for 
payment,  and  if  they  neglected  to  do  it  within  a  reasonable  time, 
they  could  not  afterwards  recover  from  the  defendants  a  loss 
occasioned  by  their  own  negligence.  In  that  case,  no  notice  was 
given  of  the  doubtful  character  of  the  notes  until  fifteen  days  after 
the  receipt,  and  no  actual  averments  of  forgery  until  about  fifty 
days.  The  notes  were  in  a  bundle  when  received,  which  had  not 
been  examined  by  the  cashier  until  after  a  considerable  time  had 
i^  elapsed.  Much  of  the  language  of  the  Court  as  to  negligence,  is 
to  be  referred  to  this  circumstance.     The  Court  said,  "  the  true 


BANK    OP   THE    UNITED    STATES    V.    BANK    OF    GEORGIA.  657 

rule  is,  that  the  party  receiving  such  notes  must  examine  them  as 
soon  as  he  has  opportunity,  and  return  them  immediately,  if  he 
does  not,  he  is  negligent,  and  negligence  will  defeat  his  right  of 
action.  This  principle  will  api)ly  in  all  cases  where  forged  notes 
have  l>een  received,  l>ut  certainly  with  more  strength,  when  the 
party  receiving  them  is  the  one  purporting  to  be  bound  to  pay. 
For  he  knows  better  than  any  other  whether  they  are  his  notes  or 
not ;  and  if  he  pays  them,  or  receives  them  in  payment,  and  con- 
tinues silent  after  he  has  had  sufficient  opportunity  to  examine 
them,  he  should  be  considered  as  having  adopted  them  as  his 
own." 

Against  the  pressure  of  these  authorities  there  is  not  a  single 
opposing  case ;  and  we  must,  therefore,  conclude,  that  both  in 
England  and  America,  the  question  has  been  supposed  to  be  at 
rest.  Tlie  case  of  Jones  v.  Ryde,  5  Taunt.  488,  is  clearly  distin- 
guishable, as  it  ranged  itself  within  the  class  of  cases,  where 
forged  securities  of  third  persons  had  been  received  in  payment. 
Bruce  v,  Bruce,  5  Taunt.  495,  is  very  shortly  and  obscurely  re- 
ported ;  but  from  what  is  there  mentioned,  as  well  as  from  the 
notice  taken  of  it  by  Lord  Ciiief  Justice  Gibbs,  in  Smith  v.  Mercer, 
6  Taunt.  77,  it  must  have  turned  on  the  same  distinction  as  Jones 
V.  Ryde,  and  was  not  governed  by  Price  v.  Neal. 

But  if  the  present  case  is  to  be  considered,  as  the  defendants' 
counsel  is  most  solicitous  to  consider  it,  not  as  a  case  where  the 
notes  have  been  paid,  but  as  a  case  of  credit,  as  cash,  upon  the 
receipt  of  them,  it  will  not  help  the  argument.  In  that  point  of 
view,  the  notes  must  be  deemed  to  have  been  accepted  by  the  de- 
fendants, as  genuine  notes,  and  payment  to  have  been  promised 
accordingly.  Credit  was  given  for  them,  as  cash,  by  the  defend- 
ants for  nineteen  days,  and,  during  all  this  period,  no  right  could 
exist  in  the  ])laintifTs  to  recover  the  amount  against  any  other  per- 
son from  whom  they  were  received.  By  such  delay,  according  to 
the  doctrine  of  Lord  Chief  Justice  Gibbs,  in  Smith  v.  Mercer,  6 
Taunt.  76,  the  prior  holders  would  be  discharged  ;  and  the  case  of 
the  Gloucester  Bank  c.  The  Salem  Bank,  17  Mass.  33,  adopts  the 
same  principle ;  so  that  there  would  be  a  loss  produced  by  the 
negligence  of  the  defendants.  But,  waiving  this  narrower  view, 
we  think  the  case  may  be  justly  placed  upon  the  broad  ground, 
that  there  was  an  acceptance  of  the  notes  as  genuine,  and  that  it  ♦ 
falls  directly  within   the  authorities  which  govern  the    cases    of 

42 


« 

658  •  FORGERY. 

acceptances  of  forged  drafts.  If  there  be  any  difference  between 
them,  the  principle  is  stronger  here  than  there ;  for  there,  the 
acceptor  is  presumed  to  know  the  drawer's  signature.  Here, 
a  fortiori,  the  maker  must  be  presumed,  and  is  bound  to  know  his 
own  notes.  He  cannot  be  heard  to  aver  his  ignorance  ;  and  when 
he  receives  notes,  purporting  to  be  his  own,  without  objection,  it 
is  an  adoption  of  them  as  his  own. 

The  general  question,  as  to  the  effect  of  acceptances,  has  re- 
peatedly come  under  the  consideration  of  the  courts  of  common 
law.  In  the  early  case  of  Wilkinson  v.  Lutwidge,  1  Str.  648,  the 
lord  chief  justice  considered  that  the  acceptance  of  the  bill  was, 
in  an  action  against  the  acceptor,  a  sufficient  proof  of  the  hand- 
writing of  the  drawer  ;  but  it  was  not  conclusive.  In  the  subse- 
quent case  of  Jenys  v.  Fawler,  2  Str.  946,  the  lord  chief  justice 
would  not  suffer  the  acceptor  to  give  the  evidence  of  witnesses, 
that  they  did  not  believe  it  the  drawer's  handwriting,  from  the 
danger  to  negotiable  notes  ;  and  he  strongly  inclined  to  think  that 
actual  forgery  would  be  no  defence,  because  the  acceptance  had 
given  the  bill  a  credit  to  the  indorsee.  Subsequent  to  this  was 
the  case  of  Price  v.  Neal,  already  commented  on,  in  which  it  was 
thought  that  the  acceptor  ought  to  be  conclusively  bound  by  his 
acceptance.  The  correctness  of  this  doctrine  was  recognized  by  Mr. 
Justice  Bulle7\  in  Smith  v.  Chester,  1  Durn.  &  East,  654,  by  Lord 
Kenyan,  in  Barber  v.  Gingell,  3  Esp.  60,  where  he  extended  it  to 
an  implied  acceptance ;  and  by  Mr.  Justice  Dampier,  in  Bass  v. 
Olive,  4  M.  &S.  15,  and  it  was  acted  upon  by  necessary  im- 
plication by  the  Court,  in  Smith  v.  Mercer,  6  Taunt.  76.  In  Levy 
V.  The  Bank  of  the  United  States,  1  Binn.  27,  already  referred  to, 
where  a  forged  check,  drawn  upon  the  bank,  had  been  accepted  by 
the  latter  and  carried  to  the  credit  of  the  plaintiff,  and  on  the  re- 
fusal of  the  bank  afterwards  to  pay  the  amount,  the  suit  was 
brought,  the  Court  expressly  held  the  plaintiff  entitled  to  recover, 
4ipon  the  ground  that  the  acceptance  concluded  the  defendant. 
The  case  was  very  strong,  for  the  fraud  was  discovered  a  few  hours 
only  after  the  receipt  of  the  check,  and  immediate  notice  given. 
But  this  was  not  thought  in  the  slightest  degree  to  vary  the  legal 
result.  "  Some  of  the  cases,"  said  the  Court,  "  decide  that  the 
acceptor  is  bound,  because  the  acceptance  gives  a  credit  to  the 
bill,  ttc.  But  the  modern"  cases  certainly  notice  another  reason 
for  his  liability,  which  we  think  has  much  good  sense  in  it ;  namely, 


BANK   OP   THE   UNITED   STATES    V.    BANK    OP   GEORGIA.  659 

that  the  acceptor  is  presaraed  to  know  the  drawer's  handwriting, 
and  by  his  acceptance  to  take  this  knowledge  ujjon  himseir.''  After 
some  research,  we  have  not  l)een  able  to  find  a  single  case,  in 
which  the  general  doctrine,  thus  asserted,  has  been  shaken,  or 
even  doubted  ;  and  the  diligence  of  the  counsel  for  the  defendants 
on  the  present  occasion,  has  not  been  more  successful  than  our 
own.  Considering,  then,  as  we  do,  that  the  doctrine  is  well-estab- 
lished, that  the  acceptor  is  bound  to  know  the  handwriting  of  the 
drawer,  and  cannot  defend  himself  from  payment  by  a  subsequent 
discovery  of  the  forgery,  we  are  of  opinion,  that  the  present  case 
falls  directly  within  the  same  principle.  We  think  the  defendants 
were  bound  to  know  their  own  notes,  and  having  once  accepted 
the  notes  in  question  as  their  own,  they  are  concluded  \>y  their 
act  of  adoption,  and  cannot  be  permitted  to  set  up  the  defence  of 
forgery  against  the  jjlaintifTs. 

It  is  not  thought  necessary  to  go  into  a  consideration  of  other 
cases  cited  at  the  bar,  to  establish,  that  the  acceptor  may  show  that 
the  accepted  bill  was  void  in  its  origin,  as  made  in  violation  of  the 
Stamp  Act,  etc. ;  for  all  these  cases  admit  the  genuineness  of  the 
notes,  and  turn  upon  questions  of  another  nature,  of  public  policy, 
and  a  violation  of  the  laws  of  the  land.  Nor  are  the  cases  appli- 
cable, in  which  bills  have  been  altered  after  they  were  drawn,  or 
of  forged  indorsements,  for  these  are  not  facts  which  an  acceptor 
is  presumed  to  know.  Nor  is  it  deemed  material  to  consider  in 
what  cases  receipts  and  stated  accounts  may  be  opened  for  sur- 
charge and  falsification.  They  depend  upon  other  principles  of 
general  application.  It  is  sufficient  for  us  to  declare  that  we 
place  our  judgment  in  the  present  case,  upon  the  ground  that  the 
defendants  were  bound  to  know  their  own  notes,  and  having  re- 
ceived them  without  objection,  they  cannot  now  recall  their  assent. 
We  think  this  doctrine  founded  on  public  policy  and  convenience  ; 
and  that  actual  loss  is  not  necessary  to  be  proved,  for  potential 
loss  may  exist,  and  the  law  will  always  presume  a  possible  loss  iiy 
cases  of  this  nature. 

The  remaining  consideration  is,  whether  there  has  been  a  legal 
waiver  of  the  rights  of  the  plaintilfs  derived  under  the  cash  de- 
posit, or,  in  other  words,  whether  they  have  consented  to  treat  ^t 
as  a  nullity.  There  is  nothing  on  which  to  rest  such  a  defence, 
unless  it  is  to  be  inferred  from  the  letter  of  Mr.  Early,  the  cashier 
of  the  Bank  of  the  United  States,  under  date  of  the  seventeenth  of 
March,  1819,  addressed  to  the  cashier  of  the  Bank   of  Uuuts- 


660  FORGERY. 

ville.  That  letter  contains  information  of  the  forgery  of  the 
notes,  and  then  proceeds  ;  "  by  the  person  whicli  we  shall  in  a 
few  days  send  to  your  place,  as  heretofore  intimated,  we  will 
forward  these  altered  bills  for  the  purpose  of  getting  yoii  to 
exchange  them  for  other  money."  Now,  there  is  no  evidence 
that  this  letter  was  ever  shown  to  the  Bank  of  Georgia,  or  its  con- 
tents ever  brought  to  the  cognizance  of  its  officers.  It  states  no 
agreement  to  take  back  the  notes,  or  to  transmit  them,  on  account 
of  the  Bank  of  the  United  States,  to  Huntsville.  For  aught  that 
appears,  the  intention  may  have  been  to  transmit  tliem  on  account 
of  the  Bank  of  Georgia,  under  the  expectation  that  the  latter 
might  desire  it.  But  what  is  almost  conclusive  on  this  point  is, 
that  on  the  same  day  the  Bank  of  Georgia  had  made  a  tender  of 
the  notes  to  the  plaintiffs,  which  had  been  refused.  This  is  wholly 
inconsistent  with  the  notion  that  they  had  agreed  to  take  them 
back,  or  to  .treat  the  previous  credit  as  a  nullity.  Assuming, 
therefore,  that  the  cashier  had  a  general  or  special  authority  for 
tlie  purpose  of  extinguishing  the  rights  of  the  plaintiffs,  growing 
out  of  the  prior  transactions  (which  is  not  established  in  proof), 
it  is  sufficient  to  say,  that  it  is  not  shown  that  he  exercised  such 
an  authority.  And  the  case  of  Levy  v.  The  Bank  of  the  United 
States  affords  a  very  strong  argument,  that  a  waiver  witliout  some 
new  consideisation,  upon  a  sudden  disclosure,  and  under  a  mistake 
of  legal  rights,  ought  not  to  be  conclusive  to  the  prejudice  of  the 
party,  where,  upon  farther  reflection,  he  refuses  to  acquiesce  in  it. 
The  subsequent  letter  of  the  twenty-fifth  of  March,  demonstrates, 
that  the  intention  of  waiving  the  rights  of  the  l)ank,  if  ever  enter- 
taiiied,  had  been  at  that  time  entirely  abandoned. 

The  letter  from  the  Huntsville  Bank,  of  the  fourth  of  May,  can- 
not vary  the  legal  result.  What  might  be  the  rights  of  tlie  plain- 
tiffs against  that  Bank,  in  case  of  an  unsuccessful  issue  of  the 
present  cause,  it  is  unnecessary  to  determine.  The  contract, 
whatever  it  may  be,  is  res  inter  alios  acta,  from  which  the  defend- 
ants cannot,  and  ought  not  to  derive  any  advantage 

It  only  remains  to  add,  that  if  the  plaintiffs  are  entitled  to  re- 
cover the  principal,  they  are  entitled  to  interest  from  the  time  of 
iiMBtituting  the  suit. 

Upon  the  whole,  it  is  the  opinion  of  the  Court,  that  the  Circuit 
Court  erred  in  refusing  the  first  and  third  instructions  prayed  for 
by  the  plaintiffs ;  and  for  these  errors  the  judgment  must  be  re- 
versed, with  directions  to  award  a  venire  facias  de  novo.     On  the 


BANK   OF  THE   UNITED   STATES   V.    BANK    OP   GEORGIA.  661 

second  instruction  asked  by  the  plaintiffs,  it  is  unnecessary  to  ex- 
press any  opinion. 

Judgment  reversed  accordingly. 

In  Matlier  v.  Lord  Maidstone,  18  Com.  B.  273,  (185G)  the  question 
of  f'orj^ed  acceptance's  is  considered.  Jervis,  C.  J.,  in  delivering  tlie  opinion 
of  the  Court,  said:  "lam  of  opinion  tliat  our  judgment  in  this  case  must 
be  for  the  plaintifl".  As  a  general  rule,  the  holder  of  a  bill  of  exchange  has 
a  right  to  know  whether  or  not  it  has  been  duly  honored  by  the  acceptor  at 
maturity ;  and  when  tlie  bill  is  presented,  if  the  acceptor  pays  it, the  money 
cannot  be  recovered  back,  if  the  acceptor  has  the  means  of  satisfying  him- 
self of  his  lial)ility  to  pay  it,  though  it  should  turn  out  that  the  acceptance  was 
a  forgery.  Can  it  make  any  dinTerence  that,  instead  of  paying  money  for  the 
bill,  he  takes  the  bill,  examines  it,  and  gives  another  acceptance  in  ^ieu  of  it? 
The  replication  in  this  case  having  been  amended,  the  facts  which  appear  upon 
the  whole  record  are  these  :  A  bill  of  exchange  was  drawn  by  Villiers  upon  the 
defendant,  and  accepted  by  the  defendant  for  the  accommodation  of  Villiers,  and 
indorsed  by  Villiers  to  Clark,  and  by  Clark  to  the  plaintifl";  that  bill  was  pre- 
sented and  dishonored,  and  notice  of  the  dishonor  duly  given  to  Villiers  and 
Clark,  in  order  to  preserve  the  holder's  remedy  over  against  them;  the  bill  was 
subsequently  offered  to  the  defendant,  who  having  had  an  opportunity  of  inspect- 
ing it,  kept  it,  and  gave  the  plaintiff  a  renewed  bill  at  three  months ;  and  a 
month  afterwards  he  discovered  that  the  acceptance  was  not  his  signature,  and 
that  he  was  not  liable,  and  he  proposed  to  return  the  bill,  having  delayed  the 
plaintiir  of  his  reuiedy  against  the  parties  liable  for  thirty  days.  Under  these 
circumstances,  I  appre!i(.'nd  the  defendant  could  not  be  allowed  to  say  that  the 
acceptance  was  not  his  handwriting." 

Mr.  Justice  Cresswell:  "  I  am  clearly  of  the  same  opinion.  A  man  accepts  a 
bill  of  exchange  purporting  to  be  drawn  by  one  Thompson,  and  pays.it,  and  it 
afterwards  turned  out  to  be  a  forgery  ;  lie  cannot  afterwards  be  permitted  to  say 
that  he  paid  the  money  under  a  mistake.  I  apprehend  the  same  result  must 
follow  if  in  lieu  of  money  a  fresh  acceptance  is  given  ;  and  particularly  where  the 
party  has  retained  the  instrument  in  his  hands  so  long  as  the  defendant  has  done 
in  this  case."  See  Beeman  v.  Duck,  11  Mees.  &  W.  251 ;  Leach  v.  Buchanan, 
4  Esp  22G ;  Cooper  r.  Le  Blanc,  2  Strange,  1051;  Barber  v.  Gingell,  3  Esp. 
GO;  Hall  v.  Fuller,  5  Barn.  &  C.  750;  Levy  v.  Bank  of  the  United  States,  1 
Binn.  27  ;  and  the  recent  case  of  Stout  v.  Benoist,  39  Mo.  277.  See  also  Morris 
V.  Betiiell,  Law  Rep.  5  Com.  P.  47,  cited  at  length,  post,  p.  669. 

But  the  acceptor  does  not  warrant  the  genuineness  of  the  signature  of  afiy 
party  except  that  of  the  drawer;  not  even  that  of  the  payee  indorsed  before 
acceptance.  See  Ilortsman  r.  Henshaw,  ante,  57,  and  note.  If  however  the 
drawer  puts  a  bill  into  circulation,  bearing  a  forged  indorsement  of  the  payee, 
the  former  thus  warrants  such  indorsement  to  be  genuine  ;  and  the  acceptor 
cannot,  on  discovering  the  forgery,  recover  the  amount  paid  to  a  subsequent 
bona  fide  holder.  He  has  paid  the  bill  to  the  person  to  whom  the  drawer 
directed,  and  must  look  to  the  latter  for  indemnity.  Id.  See  also  bleacher  v. 
Fort,  3  Hill,  (S.  C.)  227,  cited  in  full  in  note  to  Hortsman  v.  Henshaw,  ante, 
69. 


662  FORGERY. 

And  it  has  been  held  In  one  case  that  the  rule  that  the  acceptor  admits  the 
genuineness  of  the  signature  of  the  drawer  must  be  taken  strictly,  and  does  not 
apply  to  a  forgery  In  the  body  of  the  paper.  Bank  of  Commerce  v.  Union  Bank, 
3  Comst.  230.  But  this  may  be  doubted.  See  Ward  v.  Allen,  2  Met.  53 ;  Van 
Duzer  v.  Howe,  21  N.  Y.  (7  Smith)  5:51;  Hall  v.  Fuller,  5  Barn.  &  C.  750; 
Langton  v.  Lazarus,  5  Mees.  &  W.  629;  Chltty,  Bills,  428;  Byles,  Bills,  323; 
note  to  Hortsman  v.  Henshaw,  ante,  57. 

An  exception  Is  made  to  the  rule  where  the  defendant  becomes  the  holder  of 
a  forged  draft  before  acceptance  by  the  plaintiff,  and  before  he  had  any  knowl- 
edge of  its  existence,  and  when  the  loss  had  already  attached ;  the  acceptor 
giving  notice  of  the  forgery  immediately  upon  discovering  the  same.  In  such 
case  It  has  been  held  that  the  acceptor  may  recover  the  sum  paid.  McKleroy  v. 
Southern  Bank  of  Kentucky,  14  La.  An.  458.  In  this  case  the  opinion  of  the 
Court  was  delivered  by 

Land,^.     The  evidence  In  this  case  establishes  the  following  facts,  viz  :  — 

The  plaintiffs  were  the  factors  of  James  Smith,  a  cotton  planter,  residing  in 
the  State  of  Arkansas.  One  John  Zimraer,  who  had  for  a  few  months  been  a 
private  tutor  in  Smith's  family,  assuming  the  name  of  John  Belmont,  fo^-ged  a 
draft  on  the  plaintiffs.  In  the  name  of  Smith,  as  follows  :  — 

$986.  ,  "  Homestead,  Nov.  5th,  1857. 

"  On  the  loth  December,  1857,  pay  to  the  order  of  John  Belmont  nine  hun- 
dred and  eighty-six  dollars,  value  received,  and  chai'ge  the  same  to  the  account 
of  Jas.  Smith. 

"To  Messrs.  McKleroy  and  Bradford,  New  Orleans,  La." 

ZImmer  also  forged  a  letter  of  Introduction,  in  the  name  of  Smith,  to  Shotwell 
and  Son,  of  Louisville,  Kentucky,  as  follows:  — 

"Homestead,  Nov.  5th,  1857. 
"Messrs.  Shotwell  and  Son. 

' '  Gentlemen,  —  I  introduce  to  you  Mr.  John  Belmont,  a  gentleman  who  resided 
in  my  family  as  our  tutor.  Having  been  sick,  he  Is  now  ti'avelling  to  Improve 
his  health.  I  gave  him  a  draft  on  McKleroy  and  Bradford,  my  commission  house 
in  New  Orleans,  which  he  Is  desirous  to  get  cashed  In  your  city.  If  you  can 
give  Mr.  Belmont  any  assistance,  by  perhaps  recommending  my  draft,  as  Mr. 
Belmont  Is  a  stranger  in  your  city,  and  not  yet  fully  recovered,  you  will  greatly 
oblige  me.  I  am,  gentlemen,  yours  respectfully, 

"James  Smith." 

The  house  of  Shotwell  and  Son  had  been  In  correspondence  with  James  Smith 
for  about  twelve  years  ;  and  being  deceived  by  the  forger,  indorsed  the  draft  for 
the  purpose  of  enabling  the  holder  to  negotiate  it.  The  draft  bearing  the  In- 
dorsements of  John  Belmont  and  of  Shotwell  and  Son,  was  presented  for  discount 
at  the  Branch  of  the  Southern  Bank  of  Kentucky,  and  being  considered  good, 
was  purchased  by  the  bank.  The  draft  was  remitted  to  the  Louisiana  State 
Bank,  with  the  following  additional  indorsement  upon  it —  "  Pay  to  R.  J.  Pal- 
frey, cashier,  J.  B.  Alexander,  cashier."  The  draft  thus  Indorsed,  was  presented 
to  plaintiff's  for  acceptance  by  the  Louisiana  State  Bank,  and  was  accepted  on  the 
last  of  November,  or  first  of  December,  and  was  paid  at  maturity,  on  the  18th 
December,  1857,  by  the  plaintiffs  to  the  agent  of  the  Southern  Bank  of  Ken- 


BANK   OF   THE   UNITED   STATES    V.    BANK    OF    GEORGIA.  GG3 

tucky.  In  January,  l.sr).S,  Jainos  Sinitli,  bein;,'  in  the  city,  made  known  to  the 
plaintifTs,  upon  an  examination  of  liis  account  with  them,  tliat  the  draft  was  a 
forgery.  Mr.  Shotwell,  of  the  house  of  Shotwell  and  Son,  was  in  this  city  at  the 
time,  and  was  immediately  sent  for,  and  the  fact  of  forgery  communicated  to  him. 
On  the  9th  January,  1858,  the  plaintiffs  gave  formal  notice  by  letter,  of  the 
forgery,  to  A.  L.  Shotwell  and  Son,  to  the  Southern  Bank  (jf  Kentucky,  and  also 
the  Louisiana  State  Bank. 

This  suit  was  instituted  by  the  plaintiffs  to  recover  back  the  money  paid  on 
the  draft,  on  the  ground  of  payment  in  error. 

There  was  judgment  for  the  defendant,  and  the  plaintiffs  have  appealed. 

The  district  judge  held,  that  the  acceptance  of  a  bill  of  exchange  admits  the 
genuineness  of  the  drawer's  signature,  and  that  where  an  acceptor  has  pai<l  to  a 
6o?irtj^(7e  holder  of  a  forged  draft  or  bill,  having  no  notice  of  the  forgery,  he  can- 
not recover  back  the  money  paiil,  although  the  forgery  is  established  by  the  most 
conclusive  evidence.  And  where  one  of  two  innocent  persons  must  puffer,  he 
who  has  misled  the  other,  or  has  omitted  his  duty,  must  bear  the  loss. 

These  principles  of  law  are  well  established,  and  admit,  perhaps,  of  neither 
doubt  nor  controversy,  and  if  applicable  to  this  case,  must  determine  the  rights 
of  the  parties. 

The  defendant  became  the  holder  of  the  draft,  before  it  was  accepted  by  the 
plaintiffs,  and  before  they  had  any  knowledge  of  its  existence,  and  consequently, 
before  the  defendant  had  any  right  of  action  against  them  for  its  recovery.  The 
plaintiffs,  therefore,  had  done  no  act  which  induced  the  defendant  to  believe  the 
signature  of  the  di-awer  to  be  genuine,  at  the  time  the  bill  was  purchased.  How, 
then,  can  it  be  said  that  the  defendant  purchased  the  bill  on  the  faith  of  the 
plaintiffs'  acceptance,  or  on  their  guarantee  of  the  genuineness  of  the  drawer's 
signature?  Or  how  can  it  be  said  that  the  plaintiffs  misled  the  defendant  at  the 
time  of  the  purchase  of  the  bill,  or  was  then  guilty  of  the  omission  of  any  duty 
toward  the  defendant  as  the  purchaser  of  the  bill  ? 

If  the  defendant  had  purchased  the  bill  on  the  faith  of  the  acceptance  of  plain- 
tiffs, or  had  sustained  any  loss  in  consequence  of  their  negligence,  we  would 
have  no  difficulty  in  affirming  the  judgment  of  the  lower  court ;  but  such  are  not 
the  facts  made  known  to  us  by  the  record. 

The  defendant  purchased  the  bill  on  the  faith  of  the  indorsement  of  Shotwell 
and  Son,  which  was  a  warranty  of  the  genuineness  of  the  drawer's  signature  to  the 
bank;  and  there  is  no  good  reason,  why  the  accidental  payment  made  by  the 
plaintiffs  should  inure  to  the  benefit  of  the  defendant. 

IMr.  Chitty  says  on  this  subject,  "  If  he  [the  holder]  thought  fit  to  rely  on  the 
bare  representation  of  the  party  from  whom  he  took  it  [the  bill],  there  is  no 
reason  that  he  should  profit  by  the  accidental  payment,  when  the  loss  had  already 
attached  upon  himself,  and  why  he  should  be  allowed  to  retain  the  money,  when, 
by  an  immediate  notice  of  the  forgery,  he  is  enabled  to  proceed  against  all  other 
parties,  precisely  the  same  as  if  the  payment  had  not  been  made,  and  consequently, 
the  payment  to  him  has  not  in  the  least  altered  his  situation,  or  occasioned  any 
delay  or  prejudice.  It  seems  that,  of  late,  upon  questions  of  this  nature,  these 
latter  considerations  have  influenced  the  Court  in  determining  whether  or  not 
the  money  shall  be  recoverable  back ;  and  it  will  be  found,  on  examining  the 
older  cases,  that  there  were  facts  affording  a  distinction,  and  that  upon  attempt- 


664  FORGERY. 

ing  to  reconcile  them,  they  are  not  so  contradictory  as  might  on  first  view  have 
been  supposed."     Chitty,  Bills,  404. 

The  facts  in  this  case  afford  the  distiniition  to  which  Mr.  Chitty  refers,  and 
take  the  case  out  of  the  general  rule,  which  prevents  the  acceptor  of  a  bill  of 
exchange  from  recovering  back  the  money  paid  in  cases  of  forgery  of  the 
drawer's  signature. 

The  loss  had  already  attached,  before  the  bill  was  either  accepted  or  ])aid,  and 
the  acceptors  gave  immediate  notice  to  the  defendant,  and  Shotwelland  Son,  after 
ascertaining  for  the  first  time,  from  James  Smith,  in  whose  name  the  bill  was 
drawn,  the  fact  of  forgery. 

The  evidence  shows  that  plaintiffs  accepted  the  bill,  in  the  language  of  the 
witness,  "  chiefly  through  the  respectability  of  the  channels  through  which  it 
came."  It  is,  therefore,  difficult  to  conceive  upon  what  principle  of  equity  or 
right  the  defendant  can  be  permitted  to  retain  the  money  paid  in  error  by  the 
plaintiffs,  upon  the  facts  of  this  case.  No  authority  applicable  to  the  particular 
circumstances  of  this  case  has  been  cited  by  the  defendant's  counsel,  and  we  have 
no  hesitation  in  reversing  the  judgment  upon  the  authority  of  Mr.  Chitty,  above 
quoted. 

.  In  a  case  like  the  present,  the  acceptor  is  not  estopped  from  proving  the  forg- 
ery of  the  bill. 

It  is,  therefore,  ordered,  adjudged,  and  decreed,  that  the  judgment  of  the 
lower  court  be  avoided  and  reversed ;  and  it  is  now  ordered,  adjudged,  and  de- 
creed, that  the  plaintiffs  do  have  and  recover  of  the  defendant  the  sum  of  nine 
hundred  and  eighty-six  dollars,  with  five  per  cent  per  annum  interest,  from  the 
eighteenth  day  of  December,  1857,  with  costs  in  both  Courts. 

A  case  (National  Bank  of  North  America  v.  Bangs)  is  now  pending  in  the 
Supreme  Court  of  Massachusetts,  as  we  are  informed  by  counsel,  presenting  facts 
somewhat  similar  to  those  in  McKleroy  v.  Southern  Bank  of  Kentucky,  supra ; 
and  which  the  plaintiff  will  endeavor  to  bring  within  the  rule  in  that  case. 

Though  the  general  rule  is  that  the  drawee  by  acceptance  admits  the  genuine- 
ness of  the  drawer's  signature,  or,  more  strictly  speaking,  is  precluded  from 
alleging  that  the  drawer's  signature  has  been  forged,  still  it  seems  that  in  sound 
reason  the  doctrine  should  be  restricted  to  the  case  of  an  action  against  an  inno- 
cent indorsee;  and  that  it  should  not  apply  in  a  suit  against  the  payee  of  an 
unnegotiable  or  unindorsed  bill,  who  has  received  money  from  the  acceptor  under 
a  forgery  of  the  name  of  the  drawer.  The  reason  why  the  acceptor  is  jirecluded 
from  recovering  against  an  innocent  indorsee  is  that  the  latter  has  honestly  paid 
value  for  the  bill,  and  that  it  would  be  an  unjust  loss  to  require  him  to  refund ; 
it  would  be  a  loss,  because  he  had  parted  with  his  money  in  taking  the  bill ;  it 
would  be  unjust,  because  the  inducement  to  take  the  bill  may  have  been,  and 
usually  is,  the  very  fact  of  acceptance  and  confidence  in  the  acceptor.  See  Bank  of 
St.  Albans  v.  Farmers'  &  Mechanics'  Bank,  10  Vt.  141.  But  no  such  reason  exists 
where  the  acceptor  seeks  to  recover  from  the  payee.  The  payee  can  be  no  loser 
by  refunding  money  paid  under  a  forgery  of  the  drawer's  signature.  His  debt 
against  the  one  whose  name  was  forged  as  drawer,  if  the  latter  owed  the  payee 
any  thing,  would  remain  ;  it  could  not  be  paid  by  a  forgery.  He  could  still  re- 
cover it,  whether  he  refunded  to  the  acceptor  or  not.     So  not  being  involved  in 


BANK    OF    THIC    UNITED    STATES    V.    BANK    OF   GEORGIA.  6G5 

any  loss  by  being  reijuircil  to  refinid,  it  woulil  be  great  injustice  to  tiie  aeceplor 
t9  allow  the  j)ayee  to  retiiiii  the  money. 

The  recent  case  of  National  Park  Bank  v.  Ninth  National  Bank,  .5o  Barb.  87, 
is  one  of  nnuh  importance.  It  is  there  held,  Mr.  Justice  Sutherland,  dissenting, 
that  where  the  drawee  of  a  bill,  containing  a  forgery  of  the  drawer's  name,  and 
also  an  alteration  of  the  sum  payal)le  and  of  the  name  ol'  the  payee,  has  paid  the 
same  to  a  bona  Jidc  holder,  he  may  recover  the  excess  i)aid  above  tlie  amount 
originally  inserted  in  the  bill.  This  alteration  of  the  amount  of  the  draft  was 
held  by  a  majority  of  the  ( 'ourt  to  con.«titute  an  exception  to  the  general  rule 
that  the  drawee  must  bear  the  loss  when  he  pays  a  forged  draft.  See  Bank  of 
Commerce  v.  Union  Bank,  .'5  Comst.  230;  Goddard  v.  Merchants' Bank,  4  Comst. 
147;  Worrall  v.  CJheen,  :i9  Penn.  State,  .388;  Bruce  v.  Bruce,  5  Taunt.  49.">; 
Hall  V.  Fuller,  5  Barn.  &  ('.  760;  Young  r.  Grolc,  4  Bing.  2.03  ;  Pagan  r.  W>lie, 
Ross,  Leading  Cas.  Bills  and  Notes,  194;  Graham  v.  Gillespie,  ib.  195;  "Wilkin- 
son V.  Johnson,  3  Barn  &  C.  428. 

Another  exception  has  been  made  in  Ohio,  where  either  by  express  agreement, 
or  a  settled  course  of  business  between  the  jjarties,  or  by  a  general  custom  in  the 
place,  and  applicable  to  the  business  in  which  both  parties  are  engaged,  the 
holder  takes  ujjon  himself  the  duty  of  exercising  some  material  precaution  to 
prevent  the  fraud  ;  and  by  his  negligent  fltilure  to  perform  it,  has  contributed  to 
induce  the  drawee  to  act  upon  the  paper  as  genuine,  and  to  advance  the  money 
upon  it.  It  is  also  held  to  be  an  exception  to  the  rule,  if  the  parties  are  in 
mutual  fault,  or  where  the  money  is  paid  upon  a  mistake  of  facts  in  respect  to 
which  both  were  bound  to  inquire.  Ellis  v.  Ohio  Life  Insurance  Co.,  4  Ohio 
State,  ()28,  per  PiOnney,  J.  See  Goddard  v.  Merchants'  Bank,  4  Comst.  147; 
In-ing  Bank  v.  Wetherald,  36  N.  Y.  335. 

If  a  bill  of  exchange,  payable  to  order,  be  accepted  payable  at  the  acceptor's 
bankers,  and  the  indorsement  of  the  payee  be  forged,  and  the  bankers  pay  the 
bill  to  a  party  presenting  it  for  payment,  they  are  guilty  of  no  breach  of  duty 
towards  the  acceptor  in  making  the  payment ;  but  they  cannot  charge  the  amount 
of  the  l)ill  in  account  against  him,  though  the  payee  be  a  stranger  to  them,  and 
they  have  no  immediate  means  of  ascertaining  the  genuineness  of  his  signature, 
and  have  dealt  with  the  bill  in  the  ordinary  course  of  business.  Robarts  v. 
Tucker,  4  Eng.  Law  &  E.  236,  in  the  Exchequer  Chamber.  Per  Maule,  J.,  in 
the  course  of  the  argument :  "  I  conceive  that  if  a  bill  were  presented  to  a  banker 
by  a  stranger,  with  an  indorsement  on  it  of  a  person  necessary  to  make  out  the 
title,  but  unknown  to  the  banker,  the  banker  would  be  justified  in  refusing  to  pay 
at  once."  Per  Parke,  B.,  upon  the  same  point:  "Probably  in  such  a  case  the 
obligation  wouM  be  to  pay  in  a  reasonable  time." 

The  question  of  negligence  on  the  part  of  the  drawer  arose  in  the  recent  case 
of  Belknap  v.  National  Bank  of  North  America,  100  Mass.  376.  The  case  is  one 
of  great  interest,  and  we  give  the  full  report  of  it.     It  was 

Contract  to  recover  .'?70l. 49  deposited  by  the  plaintiffs  with  the  defendants. 
Answer,  that  the  defendants  didy  i)aid  upon  checks  of  the  jjlaiutiffs  the  amount 
sued  for. 

At  the  trial  in  the  Superior  Court  before  Morton,  J.,  it  was  not  disputed  that 
the  defendants  paid  the  amount  on  two  checks,  signed  by  the  plaintiffs,  the  first 


QQG  FORGERY. 

of  wliich  was  in  form  substantially  as  follows  ;  and  the  second  precisely  resembled 
it,  except  in  the  name  of  the  payee  (Edward  Williams),  the  number  of  the 
check  (10,982),  and  the  amount  thereof  ($371.86)  :  — 


o  a 


S     3 


"  The  National  Bank  of  North  America. 
$[329.63.]  Boston,  [June  12,]  1867. 


=3  I  Pay  to  [Alfred  Boyden  or  bearer]  -or-ordor-  [Three  Hundred  Twenty-Nine] 
liars,  [Sixty-Three]  Cents. 

No.  [10,980]  [Lyman  Belknap  &  Co."] 


Each  check  was  filled  out  upon  a  lithographed  blank,  and  those  portions  which 
were  written  by  hand  in  ink  are  designated  by  being  inclosed  within  braeskets  in 
the  foregoing  copy.  Across  the  lithographed  words  ''  or  order"  in  each  check 
was  drawn  a  broad  line  with  a  lead  pencil. 

The  only  question  raised  was,  whether  the  defendants  were  justified  in  making 
payments  on  these  checks ;  and  there  was  evidence  tending  to  show  facts  as 
follows  ;  — 

One  of  the  plaintiffs  signed  six  such  lithographed  blanks,  on  June  13,  1867, 
and  left  them  in  charge  of  Wilde,  the  plaintiffs'  book-keeper,  to  be  filled  up  and 
sent  by  mail  to  parties  living  at  a  distance,  in  settlement  of  accounts  due  from 
the  firm.  Wilde  handed  them,  together  with  the  six  statements  of  account,  to 
Bryant,  a  clerk  twenty-one  years  old,  who  had  come  into  the  plaintiffs'  employ- 
ment on  June  10 ;  and  directed  Bryant  to  fill  them  out  to  correspond  in  date  and 
amounts  with  the  accounts,  and  make  them  payable  to  the  respective  orders  of 
the  parties  to  whom  they  were  intended  to  be  sent.  Bryant  filled  them  out 
accordingly,  and  returned  all  the  papers  to  Wilde,  who  examined  the  checks, 
compared  them  with  the  accounts,  found  them  correctly  drawn,  placed  internal 
revenue  stamps  upon  them,  which  he  cancelled  with  the  initials  of  the  firm  and 
the  date,  and  then  put  them,  with  the  accounts,  into  envelopes,  which  he  addressed 
to  the  respective  payees,  sealed  and  delivered  to  Bryant,  near  evening,  to  take 
to  the  post-ofHce. 

The  plaintilTs,  who  were  commission  merchants,  had  kept  a  bank  account  with 
the  defendants  for  six  or  seven  years,  and  drew  on  the  defendants,  and  mailed 
to  their  consignors,  as  many  as  two  or  three  thousand  cheeks  each  year,  using 
always  the  same  lithographed  form,  and  invariably  drawing  them  payable  to 
order,  for  the  purpose  of  procuring  receipts  upon  them.  In  drawing  money  for 
their  own  use,  or  to  pay  notes,  the  plaintiffs  frequently  drew  checks  payable  to 
"notes  payable  or  order,"  but  in  all  such  cases  some  one  of  the  plaintiffs  per- 
sonally, or  their  book-keeper,  received  the  money  from  the  bank. 

All  of  the  six  checks  but  the  two  in  question  were  returned  to  the  plaintiffs  in 
due  course  of  business,  indorsed  by  the  parties  to  whom  they  were  mailed.  The 
payees  of  these  two,  within  a  few  days  after  June  14,  gave  notice  to  the  defend- 
ants that  they  had  not  received  the  remittances  due  to  them  on  their  accounts ; 
whereupon  the  plaintiffs  went  to  the  defendants'  bank  and  tliere  found  the  two 
checks,  altered  by  the  insertion,  in  ink,  in  Bryant's  handwriting,  of  the  words 
"  or  bearer"  after  the  names  of  Boyden  and  Williams,  and  by  the  cancellation  of 
the  words  "  or  order  "  by  the  line  drawn  by  lead  pencil ;    and  the  teller  of  the 


BANK    OP   THE    UNITED   STATES   V.    BANK  OF   GEORGIA.  667 

bank,  being  then  asked,  could  not  tell  to  whom  he  had  paid  these  two  checks,  or 
either  of  them.  Bryant  came  to  the  plaintiffs'  place  of  business  early  on  the 
morning  of  June  14,  and  about  ten  o'clock  went  away  "  to  be  gone  for  an  hour 
or  two,"  and  never  came  back. 

Much  evidence,  which,  by  the  decision  of  this  Court,  has  become  inimaterial, 
was  introduced  on  the  question  whether  the  defendant's  teller  used  due  care  in 
paying  the  two  checks. 

On  the  whole  case,  the  plaintiffs  requested  the  judge  to  rule  as  follows :  1. 
*•  That,  if  tlie  checks  were  altered  by  erasing  tfie  words  '  or  order'  and  inserting 
the  words  '  or  bearer,'  alter  they  were  executed  by  the  plaintiffs,  and  without 
authority  from  them,  the  checks  were  void,  and  the  defeiulaiits  could  not  set  up 
a  payment  under  them  to  defeat  the  plaintiffs'  claim,  unless  the  plaintiffs  were 
guilty  of  negligence  with  respect  to  them. 

2.  "  That,  if  the  checks  were  altered  by  erasing  the  words  '  or  order,'  and  in- 
serting the  words  '  or  bearer,'  and  the  alteration  was  apparent  on  the  face  of  the 
instrumeiit^i,  it  was  the  duty  of  the  defendants,  before  paying  the  checks,  to  as- 
certain whether  the  alterations  were  authorized ;  otherwise  they  would  run  the 
risk  of  their  being  unauthorized. 

3.  "  That,  if  the  checks  were  taken  from  the  letters  in  which  they  were 
inclosed,  and  the  alterations  were  made  with  a  fraudulent  purpose,  after  the 
execution  of  the  checks,  by  a  clerk  of  the  plaintiffs,  who  was  merely  employed 
and  authorized  to  take  the  letters  containing  the  checks  to  the  post-ofiice,  the 
plaintiffs  were  not  responsible  for  his  fraudulent  acts,  although  lie  may  have  been 
employed  to  fill  in  the  body  of  the  checks  under  the  direction  of  the  book-keeper 
who  had  charge  of  the  filling  in  of  the  checks. 

4.  "  That,  if  the  checks  were  altered  by  cancelling  the  words  '  or  order,'  and 
inserting  the  words  '  or  bearer,'  without  the  authority  of  the  plaintiffs,  and  after 
the  plaintiffs  had  signed  the  checks,  such  alteration  was  a  forgery,  and  the  bank 
paid  the  checks  at  its  own  risk." 

The  judge  declined  so  to  rule;  and  instructed  the  jury  "  tliat,  if  the  words 
'  or  bearer '  were  written  in  the  checks  before  they  were  sent  out  by  the  plain- 
tiffs' book-keeper,  the  bank  was  justified  in  paying  the  checks  ;  but  if  the  words 
*  or  bearer'  were  inserted  after  the  checks  were  issued,  it  did  not  necessarily  fol- 
low that  the  plaintiffs  would  not  be  held  on  the  checks ;  that  if  the  checks  were 
signed  in  blank  by  the  plaintiffs,  and  given  to  Wilde  to  be  filled  up,  and  he 
delivered  them  to  Bryant,  and  directed  him  to  fill  them  up,  and  they  were  filled 
up  by  him,  leaving  a  blank  space  after  the  names  of  the  payees  and  before  the 
printed  words  '  or  order,'  and  they  Avere  then  issued  in  that  form,  and  he, 
Bryant,  afterwards  inserted  in  the  blank  space  the  words  '  or  bearer,'  in  the  same 
handwriting  as  the  rest  of  the  written  part  of  the  checks,  and  if  the  jury  should 
find  there  was  nothing  in  the  appearance  of  the  checks,  when  presented  to  the 
teller  for  payment,  to  excite  any  suspicion,  or  which  ought  to  have  excited  any 
suspicion  on  his  part,  or  to  indicate  that  the  checks  had  been  altered  after  they 
were  issued,  and  he  exercised  due  care  in  paying  them,  then  the  bank  would  be 
protected  in  making  the  payment ;  that,  as  matter  of  law,  the  mere  fact  of  the 
printed  words  '  or  order '  having  been  erased,  the  words  '  or  bearer '  being  in 
the  checks,  would  not  in  itself  alone  be  such  a  suspicious  circumstance  as  would 
deprive  the  bank  of  this  defence,  but  that  that  fact,  with  the  other  facts  in  the 


668  FORGERY. 

case,  niiirht  .show  want  of  clue  care  on  tlie  part  of  the  teller;  "  and  the  jury  were 
instructed  on  this  point  "  to  take  into  consideration  the  fact  of  the  erasure  of  the 
words  '  or  order '  and  all  the  other  facts  in  the  case,  and  if,  upon  all  the  facts, 
there  was  anj'  thing  suspicious  in  the  appearance  of  the  checks  when  presented 
for  payment,  or  which  ought  to  have  excited  suspicion,  or  if  the  teller  did  not 
exercise  due  care,  then  the  fact  that  the  plaintiffs  had  been  careless  in  respect  to 
the  checks  would  not  relieve  the  defendants  from  liability;  and  further,  that,  if 
there  was  any  thing  suspicious  in  the  appearance  of  the  checks,  or  whicli  ought  to 
have  excited  suspicion,  or  if  there  was  any  want  of  due  care  on  the  i)art  of  the 
teller  in  paying  the  checks,  then  any  practice,  at  the  banks  in  Boston,  to  pay 
checks  to  persons  presenting  the  same,  if  known  to  the  teller,  or  identified  by 
some  person  known  to  him,  though  there  was  such  identification  upon  payment 
of  the  checks  in  question,  would  not  protect  the  hank  in  paying  the  same.'" 
The  jury  found  for  the  defendants,  and  the  plaintiffs  alleged  exceptions. 

Chapman,  C.  J.  It  appears  that  the  plaintiffs  signed  several  checks  di-awn 
upon  the  defendants,  payable  to  [blank]  or  order,  and  left  them  with  Wilde, 
their  book-keeper,  to  be  filled  up  and  sent  by  mail  to  several  parties  living  at  a 
distance,  for  the  payment  of  debts  owed  to  them  severally.  "Wilde  handed  these 
checks  to  Bryant,  the  clerk,  to  be  filled  up  with  the  proper  dates,  names  and 
amounts,  leaving  them  payable  to  the  order  of  the  several  creditors.  Bryant  did 
so,  and  then  returned  them  to  t"lie  book-keeper,  who  examined  them,  found  them 
correct,  stamped  them,  cancelled  the  stamps,  placed  them,  with  the  accounts  to 
be  paid  by  them,  in  envelopes,  sealed  the  envelopes,  and  addressed  them  to  the 
proper  persons. 

It  is  not  necessary  to  consider  the  question  whether  any  part  of  tl)e  plaintiffs' 
conduct  thus  far  was  careless ;  for  their  confidence  was  not  abused,  but  every 
thing  had  been  properly  done.  The  case  is  not  different  from  wiiat  it  would 
have  been  if  he  had  given  the  blanks  to  the  clerk  to  fill  up  before  they  signed 
them,  and  had  sjgned  them  after  they  were  filled  up,  stamped  and  returned  to 
them. 

The  sealed  letters  were  delivered  to  the  clerk  to  carry  to  the  post-office.  We 
cannot  assume,  as  is  implied  in  the  instructions,  that  it  was  careless  on  the  part 
of  the  plaintiffs  to  send  sealed  letters  to  the  post-office  by  a  clerk,  although  the 
clerk  knew  their  contents.  For  he  could  not  obtain  access  to  the  contents  with- 
out committing  a  crime.  The  checks  were  not  intrusted  to  him  as  in  the  cases 
of  Putnam  v.  Sullivan,  4  Mass.  45,  or  Young  v.  Grote,  4  Bing.  253. 

He  obtained  possession  of  the  checks  surreptitiously;  and,  by  the  erasure  of 
the  words  "  or  order,"  and  inserting  the  words  "  or  bearer,"  he  committed  a 
forgery ;  for  it  was  a  fraudulent  alteration  of  the  instruments  in  a  material  part, 
whereby  a  new  operation  was  given  to  them.  Before  the  alteration,  the  checks 
could  only  be  paid  to  the  creditor  or  his  order,  and  such  payment  would  discharge 
the  debt  which  each  check  was  designed  to  pay.  After  the  alteration,  each  check 
was  payable  to  any  one  who  should  present  it.  Such  an  alteration  would  vitiate 
the  instruments,  even  in  the  hands  of  a  bona  fide  holder  for  value.  Wade  v. 
Withington,  1  Allen,  561.  The  case  was  presented  to  the  jury  upon  the  question 
of  the  diligence  or  fault  of  the  defendants,  and  the  Court  are  of  opinion  that  this 
was  an  erroneous  view  of  it.  Exceptions  sustained. 


BANK  OF  THP:  UNITED  STATES  V.    BANK  OF  GKOKGIA.     G09 

"When  an  innocent  holder  of  nef.'otiable  paper  parts  with  it  by  delivery, 
witliout  indorsing  it,  in  payment  of  a  debt  due,  or  then  created,  as,  for  example, 
in  payment  for  goods  then  purchased,  or  by  way  of  discount  for  money  then 
loaned  by  a  bank,  banker,  or  individual,  and  the  paper  proves  to  have  been 
forged,  the  debt  or  loan  not  being  paid  by  it  may  be  recovere*].  In  such  case 
there  is  a  warranty  implied  by  law  that  the  paper  is  genuine,  as  there  is  tliat  coin 
or  bank-notes  used  for  like  purposes  are  genuine.  Per  Hhcpley,  C  J.,  in  Bax- 
ter V.  Duren,  29  Me.  (1(J  Shepl.)  434,  440  (1849),  citing  Jones  v.  Hyde,  5 
Taunt.  488 ;  Fuller  i\  Smith,  1  Car.  &  P.  197  ,*  Camidge  i'.  Allenby,  6  Barn.  & 
C.  873;  Coolidge  v.  Brigham,  1  Met.  547. 

"  When  no  debt  is  due  or  created  at  the  time,  and  the  [forged]  paper  is  sold 
as  other  goods  and  elfects  arc,  the  purchaser  cannot  recover  from  the  seller  the 
purchase-money.  There  is  in  such  case  no  implied  warranty  of  the  genuineness 
of  the  paper.  The  law  respecting  the  sale  ol"  goods  is  ai)plicable.  The  only 
implied  warranty  is  that  the  seller  owns  or  is  lawfully  entitled  to  dispose  of  the 
paper  or  goods."  Id.,  citing  Bank  of  England  v.  Newman,  1  Ld.  Kaym.  442; 
Fenn  v.  Harrison,  3  T.  11.  7o7 ;  Fydell  v.  Clark,  1  Esp.  447 ;  Emiy  v.  Lye, 
15  East,  6;  Ex  j^aiie  Shuttleworth,  3  Ves.  368;  Ex  parte  Blackburne,  10  Ves. 
204;  Ellis  v.  Wild,  6  Mass.  321. 

Tlie  learned  chief  justice  says  that  the  cases  upon  this  subject  are  in  appar- 
ent, but  not  real  conllict;  and  that  "  the  principal  difliculty  appears  to  have 
been  experienced  in  coming  to  a  conclusion  whetlier  the  paper  when  discounted 
or  sold  was  received  in  payment  of  a  debt  or  loan  due  or  then  created,  or  taken 
by  way  of  purchase  and  sale."  He  proceeds  to  say :  "  The  use  of  the,  word 
'  discount '  in  two  different  senses,  has  also  contributed  to  introduce  obscurity; 
it  being  used  in  some  of  the  cases,  and  by  some  judges,  to  designate  the  re- 
ception of  paper  in  payment  of  a  loan  or  debt,  and  in  other  cases,  and  by 
other  judges,  in  the  sense  in  which  it  appears  to  have  been  used  by  the  broker  in 
this  case,  to  designate  the  reception  of  it  on  a  sale  as  a  piece  of  property." 

But  the  editor  of  Story,  Promissory  Xotes,  §  118,  says  that  the  distinction 
above  drawn  may  well  be  doubted,  both  on  principle  and  authority;  citing  Rie- 
man  v.  Fisher,  4  Am.  Law  Reg.  433,  in  which  the  doctrine  of  Baxter  v.  Duren  is 
directly  denied.  Rieman  v.  Fisher  takes  the  broad  ground  tiiat  a  public  bill-bro- 
ker who  sells  commercial  paper  inipiiedly  warrants  the  genuineness  of  the  signa- 
tures and  indorsements ;  and  that  if  the  paper  should  prove  to  be  forged,  the 
loss  must  fall  upon  the  vendor.  And  this  is  the  doctrine  of  the  English  Courts, 
and  seems  to  be  the  better  rule.  See  Gurney  r.  Womersley,  4  Ellis  &,  B. 
133,  decided  in  1854.  See  also  Cabot  Bank  v.  Morton,  4  (iray,  156,  per  Shaw, 
C.  J.;  IMerriani  /-.  Wolcott,  3  Allen,  258;  Canal  Bank  v.  Bank  uf  Albany, 
ante,  p.  643. 

The  question  of  estoppel  by  payment  of  a  forged  bill  has  arisen  in  several  in- 
stances. The  most  recent  case  is  that  of  Morris  v.  Bethel!,  Law  Rep.  5  Com. 
P.  47,  decideil  in  1869.  TliIs  was  an  Action  by  the  holder  against  the  defend- 
ant as  the  acceptor  of  a  bill.  The  case  was  this  :  In  August,  1;S67,  the  defend- 
ant paid  a  bill  of  exchange,  of  which  the  plaintiff  was  the  holder,  upon  which 
the  defendant's  name  had  been  written  as  acceptor  without  his  authority.  In  an 
action  against  him  upon  another  bill  similarly  accepted,  the  jury  found  that  the 
acceptance  was  not  the  defendant's  signature,  or  written  witii  his  authority;  that 


670  FORGERY. 

the  forged  signature  was  not  adopted  by  the  defendant ;  that  the  defendant  did 
not  know  that  tlie  phiintifF  was  the  holder  of  the  former  bill ;  and  that  he  did 
not  lead  the  plaintiff  to  believe  that  the  acceptance  written  on  the  bill  sued 
upon  was  his.  The  Court  unanimously  held  that  the  fact  that  the  defendant  had 
paid  the  bill  in  August,  above  mentioned,  did  not  estop  him  from  denying  that 
the  bill  declared  on  was  accepted  by  him  or  with  his  authority  ;  that  the  circum- 
stances were  properly  submitted  to  the  jury ;  and  that  the  judge  was  not  bound 
to  tell  them  that,  as  matter  of  law,  the  plaintiff  was  entitled  to  recover.  The 
Court  distinguished  the  case  from  Barber  v.  Gingell,  3  Esp.  60.  Bovill,  C.  J., 
said :  *'  If  it  were  made  to  appear  that  there  had  been  a  regular  course  of  mer- 
cantile business,  in  which  bills  have  been  accepted  by  a  clerk  or  agent  whose  sig- 
nature has  been  acted  upon  as  the  signature  of  the  principal,  there  would  be 
evidence,  and  almost  conclusive  evidence,  against  the  latter,  that  the  acceptance 
was  written  by  his  authority.  That  was  the  case  of  Barber  v.  Gingell.  It  would 
have  been  idle  to  contend  there  that  the  defendant  was  not  responsible  for  the 
signature."  See  also  Beeman  w.  Duck,  11  Mees.  «fc  W.  251;  Mather  r.  Lord 
Maidstone,  cited  at  length,  ante,  p.  661. 


PINTARD   V.   TACKINGTON.  671 


LOST   BILLS   AND   NOTES. 


[As  to  stolen  paper,  see  Goodman  v.  Simonds,  ante,  230,  and  note.] 


PiNTARD    V.    TaCKINGTON. 
(10  Johnson,  104.     Supreme  Court  of  New  York,  January,  1813.) 

When  owner  may  recover.  —  Tlie  plaintiff  declared  on  a  promissory  note,  payable  on 
demand,  and  stated  that  the  note  had  been  lost  or  destroyed ;  and  the  existence 
and  contents  of  the  note  being  proved,  and  it  not  appearing  that  the  note  was 
negotiable,  or  if  negotiable,  that  it  liad  been  negotiated,  htkl,  that  the  plaintiff  was 
entitled  to  recover. 

In  error,  on  certiorari.,  from  the  justices'  court  of  the  city  of  New 
York.  Tackington  brought  an  action  in  the  Court  below,  against 
Pintard,  and  declared  for  money  had  and  received  by  the  de- 
fendant to  the  use  of  the  plaintiff;  and  also  that  the  defendant,  in 
May,  1811,  being  indebted  to  him,  for  work  and  labor  to  the  amount 
of  $G2,  gave  his  note  to  the  plaintiff,  for  that  amount  payable  on 
demand ;  that  the  plaintiff  put  the  note  in  his  chest  on  board  of 
the  vessel  of  the  defendant,  and  that  the  defendant  sailed  out  of 
the  port,  with  the  plaintiff's  chest  on  board  containing  his  clothes 
and  the  note,  leaving  the  plaintiff  behind. 

A  witness  for  the  plaintiff  testified,  that  after  the  return  of  the 
defendant  to  New  York,  in  the  vessel,  Avhich  was  about  three 
months  after  the  trunk  was  i)ut  on  board,  he  apjAied  as  attorney 
of  the  plaintiff,  for  the  note,  to  the  defendant,  wlio  said  he  did  not 
know  where  it  was,  but  supposed  it  was  in  the  plaintiff's  chest,  in 
the  fore  part  of  the  vessel,  but  that  he  could  not  then  get  at  the 
chest,  and  that  the  witness  must  call  again  ;  that  he  called  again, 
and  on  opening  and  examining  the  chest  the  note  could  not  be 
found.  The  defendant  admitted  that  he  had  given  such  a  note  to 
the  plaintiff.  Another  witness  testified  that  she  saw  the  plaintiff, 
(who  was  a  sailor),  put  the  note  into  the  chest,  which  was  put  on 
board  of  the  defendant's  vessel. 


672  LOST   BILLS    AND   NOTES. 

The  Court  below,  being  of  opinion  that  there  was  sufficient 
evidence  of  the  loss  of  the  note,  and  of  the  existence  of  a  debt 
due  from  the  defendant  to  the  plaintiff,  for  which  the  note  was 
given,  gave  judgment  for  foO,  being  the  extent  of  their  juris- 
diction. 

Per  Curiam}  The  declaration  of  the  plaintiff  below  consisting 
of  a  detail  of  his  case,  is  to  be  liberally  construed  so  as,  if  possi- 
ble, to  meet  and  embrace  the  proof.  We  have  never  required  any 
technical  nicety  or  form  in  pleadings,  in  the  justices'  courts,  be- 
cause tiie  pleadings  are  usually  by  parol,  and  managed  by  the  par- 
ties, without  the  aid  of  counsel.  The  plaintiff,  therefore,  declared 
for  money  had  and  received,  and  upon  a  lost  note,  which  he  par- 
ticularly described,  and  as  having  been  given  for  work  and  labor. 
If,  therefore,  the  testimony  will  entitle  him  to  recover,  either  upon 
the  note,  by  proving  its  existence,  loss  and  contents,  or  upon  the 
original  debt,  for  work  and  labor,  the  judgment  ought  to  be  sup- 
ported. We  see  no  reason  why  the  recovery  upon  the  note,  as  a 
lost  note,  was  not  good.  It  does  not  appear  that  the  note  was 
negotiable,  or,  if  negotiable,  that  it  had  ever  been  indorsed,  and 
the  existence  and  contents  of  the  note,  were  fully  proved,  and  the 
circumstances  were  enough  to  authorize  a  conclusion  that  it  had 
been  lost  or  destroyed.  The  cases  which  have  not  permitted  a  re- 
covery at  law,  upon  negotiable  paper  which  was  merely  lost  and 
not  destroyed,  were  those  in  which  the  paper  had  been  indorsed 
before  it  was  lost.  Pierson  v.  Hutchinson,  2  Camp.  N.  P.  211, 
and  note  ;  and  the  cases  cited  by  Lord  Eldon  in  6  Ves.  812.  The 
Court  below  went,  perhaps,  upon  the  ground  of  the  existence  of  the 
previoiis  debt ;  and  that  the  recovery  upon  that  was  to  be  sup- 
ported, notwithstanding  the  giving  of  the  note.  The  better 
opinion  on  this  point  seems  to  be,  that  the  acceptance  of  negoti- 
able paper,  on  account  of  a  prior  debt,  is  prima  facie  evidence  of 
satisfaction,  and  that  you  cannot  recover  upon  the  old  debt  with- 
out some  explanation,  or  giving  some  account  of  the  note.  Kear- 
slake  V.  Morgan,  5  T.  R.  515  ;  Richardson  v.  Rikeman,  cited  in 
5  T.  R.  517  ;  Holmes  and  Drake  v.  D'Camp,  1  Johns.  34.  But  this 
was  not  shown  to  be  negotiable  paper,  and  if  that  was  the  intend- 
ment, in  the  first  instance,  as  seems  to  have  been  the  conclusion 
of  the  Court  in  Angel  v.  Felton,  8  Johns.  149,  yet  the  plaintiff 
below  cave  as  sufficient  an  account  as  the  nature  of  the  case,  and 
1  Kknt,  C  J.,  Thompson,  Spencer,  Van  Ness,  and  Yates,  JJ. 


PINTARD    V.    TACKINGTON.        ^  673 

the  condition  of  the  parties  would  well  admit,  of  the  loss  of  the 
note,  without  i^s  hciiig  ne<rotiatcd  and  indorsed.  On  either  ground 
therefore,  wo  think  tiie  judgment  ought  to  l)e  supixjrted. 

Juchjmeyit  affirmed. 

There  is  no  conflict  upon  this  subject.  See  Story,  Prouiissory  Xotes,  §  451, 
and  authorities  cited.  But  in  respect  to  paper  negotialile  and  negotiated,  the 
cases  are  not  in  harmony.     See  Rowley  v.  Ball,  post,  080,  and  cases  following. 

Even  in  the  case  of  destruction  of  negotiable  paper,  the  plaintiff  will  not  be 
allowed  to  recover,  if  he  voluntJirily  destroyed  it  himself.  Vanauken  v.  Ilurn- 
beck,  2  Green  (X.  J.)  17H;  Fisher  i'.  Mershon,  3  Bibb,  .">27  ;  Blade  v.  Noland, 
12  Wend.  173.  jNIr.  Justice  Nelson,  in  this  last-named  case,  said:  "I  concede 
the  rule  insisted  on  by  the  counsel  for  the  plaintiff  below  to  the  fullest  e.xtent 
borne  out  by  the  authorities,  and  they  are  numerous ;  and  still  am  of  opinion 
that  the  plaintiff  did  U'Jt  give  such  jjroof  of  the  loss  of  the  note  to  justify  the 
secondary  proof  of  its  contents,  or  to  entitle  him  to  resort  to  the  original  con- 
sideration. \i  tliere  had  been  satisfactory  proof  of  the  loss  or  destruction  of  the 
notf',  the  omission  to  give  a  bond  of  indemnity  under  the  statute  (2  Rev.  Sts.  406, 
§§  Ih,  70),  would  not  have  interfered  with  the  recovery;  for  the  provisfon  of 
the  statute  on  this  subject  is  limited  to  negotiable  pajyo:  There  is  no  evidence 
that  the  note  in  question  was  negotiable,  and  it  seems  to  be  settled  that  the 
Court  will  not  ]) resume  a  lost  note  to  be  negotiable.    10  Johns.  104  ;  3  Wend.  344. 

"The  proof  is,  that  the  plaintiff  deliberately  and  voluntarily  destroyed  the 
note  before  it  fell  due  ;  and  there  is  nothing  in  the  case  accounting  for  or  afford- 
ing any  explanation  of  the  act,  consistent  with  an  honest  or  justifiable  purpose. 
Such  explanation  the  plaintiff  was  bound  to  give  affirmatively,  for  it  would  be  in 
violation  of  all  the  principle^!  upon  which  inferior  and  secondary  evidence  is  tol- 
erated, to  allow  a  party  the  benefit  of  it,  who  has  wilfully  destroyed  the  higher 
and  better  testimony.  The  danger  of  this  very  abuse  of  a  relaxation  of  the  gen- 
eral rule  greatly  retarded  its  introduction  into  the  law  of  evidence,  and  it  was  for 
a  long  time  confined  to  a  few  extreme  cases,  such  as  burning  of  houses,  robbing, 
or  some  unavoidable  accident.  It  was  contended  by  Chancellor  Lansiny,  in  the 
case  of  Livingston  v.  Rogers,  2  Johns.  Cas.  488,  after  an  examination  of  all 
the  leading  cases  on  the  subject,  that  secondary  evidence  was  not  admissible  to 
])rov(!  the  contents  of  a  pa[)er,  where  the  original  had  been  lost  by  the  neijligence 
or /acZ/e*' of  the  party  or  his  attorney.  He  failed  to  convince  the  Court  of  Er- 
rors to  adopt  his  views  in  a  case  where  the  negligence  was  not  so  great  as  to 
create  suspicion  of  design.  Further  than  this  I  could  not  consent  to  extend  the 
rule.  I  have  examined  all  the  cases  decided  in  this  Court  where  this  evidence 
has  been  admitted,  and  in  all  of  them  the  original  deed  or  writing  was  lost,  or 
destroyed  by  time,  mistake,  or  accident,  or  was  in  the  hands  of  the  adverse  party. 
Where  there  was  evidence  of  the  actual  destruction  of  it,  the  act  was  shown  to 
have  taken  place  under  circumstances  that  repelled  all  inference  of  a  fraudulent 
design.  2  Johns.  Cas.  38S ;  2  Caines,  303 ;  lU  Joims.  303,374;  11  id.  446  ; 
8  id.  14y;  3  Cow.  303;  8  id.  77;  3  Wend.  344;  Peake's  Ev.  972,  Am.  ud.;  10 
Co.  b8 ;  Leyfield's  Case ;  3  T.  R.  151 ;  8  East,  288,  289  :  Gilb.  Ev.  'J7. 

"In  Leyfield's  Case,  Lord  Coke  gives  the  obvious  reasons  why  the  deed  or 

43 


674  LOST   BILLS    AND   NOTES. 

instrument  in  writing  sboukl  be  produced  in  Court.  1 .  To  enable  the  Court  to 
give  a  right  construction  to  it  from  the  words ;  2.  To  see  that  there  are  no  ma- 
terial erasures  or  interlineations  ;  3.  That  any  condition,  limitation,  or  power  of 
revocation  may  be  seen  ;  for  these  reasons  oyer  is  required  in  pleading  a  deed. 
But  he  says  in  great  and  notorious  extremities,  as  by  casualty  by  fire,  &c.,  if  it 
shall  appear  to  the  judges  that  the  paper  is  burnt,  it  may  be  proved  by  witnesses 
so  as  not  to  add  aiiliction  to  ailliction. 

"  The  above  is  in  brief  the  foundation  of  the  rule  in  these  cases  of  secondary 
proof  of  instruments  in  writing,  and  it  has  been  much  relaxed  and  extended  in 
modern  times  from  necessity,  and  to  prevent  a  failure  of  justice ;  yet  I  believe 
no  case  is  to  be  found  where,  if  a  party  has  deliberately  destroyed  the  higher  evi- 
dence without  explanation  showing  affirmatively  that  the  act  was  done  with  pure 
motives,  and  repelling  every  suspicion  of  a  fraudulent  design,  that  he  has  had 
the  benefit  of  it.  To  extend  it  to  such  a  case  would  be  to  lose  sight  of  all  the 
reasons  upon  which  theTule  is  founded,  and  to  establish  a  dangerous  precedent. 
We  know  of  no  honest  purpose  for  which  a  party,  without  any  mistake  or  mis- 
apprehension, would  deliberately  destroy  the  evidence  of  an  existing  debt;  and 
we  will  not  presume  one. 

"  From  the  necessity  and  hardship  of  the  case,  courts  have  allowed  the  party 

to  be  a  competent  witness  to  prove  the  loss   or  destruction  of  papers ;  but  it 

would  be  an  unreasonable  indulgence,  and  a  violation  of  the  just  maxim,  that  no 

one  shall  take  advantage  of  his  own  wrong  to  permit  this  testimony,  where  he 

has  designedly  destroyed  it. 

^^  Judgment  reversed.'''' 

See  also  Bank  of  Louisville  v.  Summers,  14  B.  Mon.  306 ;  Wade  v.  New 
Orleans  Canal,  &c.,  Co.,  8  Rob.  La.  140;  Des  Arts  v.  Leggett,  16  N.  Y.  (2 
Smith),  582;  s.  c,  5  Duer,  156;  McGarr  v.  Lloyd,  3  Penn.  State,  474;  Tower 
V.  Appleton  Bank,  infra,  674,  and  note. 

As  to  the  presumption  respecting  negotiability,  see  Dean  v.  Speakman,  7 
Blackf.  317  ;  Chaudron  v.  Hunt,  3  Stew.  31 ;  Hough  v.  Barton,  20  Vt.  455. 


Thomas  T.  Tower  v.  The  President,  Directors,  &c.,  of 
THE  Appleton  Bank. 

(3  Allen,  387.     Supreme  Court  of  Massachusetts,  January,  1862.) 

Bank-bills.  Circumstantial  evidence  of  destruction.  —  The  owner  of  bank-bills  wliich  can- 
not be  identified  or  distinguished  from  other  similar  bills,  cannot  maintain  an  action 
against  the  bank  which  issued  them,  upon  circumstantial  evidence  that  they  have 
been  destroyed,  and  a  tender  of  indemnity. 

Contract  against  a  banking  corporation,  to  recover  the  amount 
of  sundry  bank-bills  issued  by  it,  and  alleged  to  have  been  destroyed 
by  fire. 


TOWER    V.    APPLETON    BANK.     "  675 

At  the  trial  in  the  Superior  Court,  there  was  evidence  tending 
to  sliow  that  t^ie  plaintiff  left  the  bills  in  question  in  his  trunk,  in 
his  room  in  a  house  in  Chicago,  Avhich  was  burnt  witliin  an  hour 
afterwards,  and  that  no  person  entered  the  room  after  ho  left  it, 
and  that  the  trunk  and  its  contents  were  l>nrnt  with  Ibo  house. 
There  was  no  other  evidence  of  the  destruction  of  the  l)ills.  Upon 
this,  and  other  evidence  which  is  not  necessary  to  be  stated  here, 
Putnam,  J.,  instructed  the  jury  that  if  the  plaintiff  was  the  owner 
of  the  bills,  and  they  were  destroyed  by  fire,  and  the  plaintiff 
notified  the  defendants  and  demanded  the  amount  thereof,  and 
tendered  a  bond  of  indemnity,  he  was  entitled  to  recover ;  and  the 
jury  returned  a  verdict  for  the  plaintiff.  The  defendants  alleged 
exceptions. 

Hoar,  J.  The  reasons  upon  which  it  has  been  held  that  the 
owner  of  a  negotial)le  promissory  note,  which  is  lost  or  destroyed, 
may  maintain  an  action  upon  it  against  the  maker,  although  it 
may  have  been  indorsed  in  blank,  and  therefore  made  transferable 
by  delivery,  were  stated  in  the  case  of  Fales  v.  Russell,  10  Pick. 
315.^  The  general  doctrine  is,  that  where  a  writing  is  evidence  of 
a  contract,  the  loss  or  destruction  of  the  writing  does  not  destroy 
the  cause  of  action,  and  that  secondary  evidence  of  the  contract  is 
admissible.  The  objection  to  the  application  of  this  doctrine  to 
the  case  of  a  negotiable  bill  or  note,  payable  to  bearer,  or  payable 
to  order  and  indorsed  in  blank,  is  given  in  Hansard  v.  Robinson, 
7  Barn.  &  C.  90.  Lord  Tenterden  there  says :  "  The  general  rule 
of  the  English  law  does  not  allow  a  suit  by  the  assignee  of  a  chose 
in  action.  The  custom  of  merchants,  considered  as  part  of  the 
law,  furnishes,  in  this  case,  an  exception  to  the  general  rule. 
What,  then,  is  the  custom  in  this  respect  ?  It  is,  that  the  holder 
of  the  bill  siuill  present  the  instrument,  at  its  maturity,  to  the 
acceptor,  demand  payment  of  its  amount,  and  upon  receipt  of  the 
money  deliver  up  the  bill.  The  acceptor,  paying  the  bill,  has  a 
right  to  the  possession  of  the  instrument  for  his  own  security,  and 
as  his  voucher  and  discharge  pro  tanlo  in  his  account  with  the 
drawer.  If,  upon  an  offer  of  payment,  the  holder  should  refuse 
to  deliver  up  the  bill,  can  it  be  doubted  that  the  acceptor  might 
retract  his  offer  or  retain  his  money?"  This  was  the  case  of  an 
indorsee  against  the  acceptor  of  a  lost  bill  of  exchange  ;  and  the 
judgment  of  the  Court  was,  that  the  plaintiff's  only  remedy  was 

1  Post,  683. 


676  LOST   BILLS    AND   NOTES. 

ill  equity,  where  the  Court  could  provide  for  an  adequate  indemnity 
to  the  defendant,  as  a  condition  of  payment.  And^such  lias  been 
the  rule  in  England,  in  tlie  case  of  lost  notes,  niitil  it  was  modified 
by  statute.  The  statute  of  9  &  10  W.  3,  c.  17,  §  3,  provided  in 
the  case  of  inland  bills  expressed  to  be  for  value  received,  and 
payable  after  date,  "  that  in  case  any  such  inland  bill  or  bills  of 
exchange  sliall  happen  to  be  lost  or  miscarried  within  the  time 
before  limited  for  payment  of  the  same,  then  the  drawer  of  the  said 
bill  or  bills  is  and  shall  be  obliged  to  give  another  bill  of  the  same 
tenor  with  those  first  given  ;  the  person  or  persons  to  whom  they 
are  and  shall  be  so  delivered  giving  security,  if  demanded,  to  the 
said  drawer,  to  indemnify  him,"  &c.  The  statute  of  17  &  18  Vict, 
c.  125.  §  87,  contains  the  more  extensive  provision,  that  "in  case 
of  any  action  founded  upon  a  bill  of  exchange  or  other  negotiable 
instrument,  it  shall  be  lawful  for  the  Court  or  a  judge  to  order 
that  the  loss  of  such  instrument  shall  not  be  set  up,  provided  an 
indemnity  is  given  to  the  satisfaction  of  the  Court  or  judge,  or  a 
master",  against  the  claims  of  any  other  person  upon  such  nego- 
tiable instrument." 

But  without  any  statute  provision,  the  case  of  Fales  v.  Russell 
*is  an  authority  to  show  that  in  this  Commonwealth  the  plaintiff,  in 
the  case  of  a  note  lost  or  destroyed,  will  not  be  required  to  resort 
to  a  court  of  chancery  for  a  remedy  ;  but  that  a  court  of  law,  while 
it  fully  recognizes  the  right  of  the  defendant  to  the  security  which 
the  production  and  giving  up  of  the  negotiable  instrument  declared 
on  would  afford,  has  authority  to  prescribe  an  equivalent  security, 
by  a  sufficient  and  reasonable  indemnity.  Almy  v.  Reed,  10  Cush. 
421.  It  has  been  held  otherwise  in  New  York.  Rowley  v.  Ball, 
3  Cow.  303.1 

Whether  the  same  rule  is  applicable  to  bank-notes,  intended  to 
circulate,  and  actually  circulated  as  currency,  is  the  question  pre- 
sented by  the  case  at  bar  ;  and  we  believe  it  has  never  been  decided 
in  this  Commonwealth.  Although  a  bank-note  is  the  promissory 
note  of  a  corporation,  it  differs  in  some  important  respects  from 
other  promissory  notes.  It  is  intended  not  merely  as  the  evidence 
of  a  single  contract,  to  become  worthless  when  that  contract  is 
performed,  but  to  be  issued  repeatedly,  and  to  pass  from  hand  to 
hand  with  the  utmost  freedom.  They  are  commonly  made  upon 
paper  of  a  peculiar  quality,  embellished  and  distinguished  by 
vignettes  and  other  ornamental  engraving ;  and  are  of  some  value 

1  Post,  680. 


TOWER   V.    APPLETON    BANK.  677 

to  the  bank  which  issues  them.  In  The  People  v.  Wiley,  3  Hill 
(N.  Y.),  194,  it  was  held  that  bank-notes  jirepared  for  issue,  but 
still  in  the  possession  of  the  bank,  were  the  subject  of  larceny. 
It  was  said  by  Mr.  Justice  Wilde,  in  Hinsdale  v.  Larned,  IG  Mass. 
68,  that  "  there  can  be  no  ^reat  doubt  tliat  the  statute  of  limita- 
tions is  not  aj)plicable  to  demands  on  bank-notes,  where  the  action 
is  brought  aj^ainst  the  corporation  ;  because  the  circulation  of  such 
notes  is  daily  renewed  ;  and  because  lapse  of  time  is  no  presump- 
tion of  payment,  these  notes  never  being  paid,  unless  given  up  by 
the  holder  at  tiie  time  of  payment."  This  was  so  fixed  by  statute 
afterward.  Rev.  Sts.  c.  120,  §  4.  Whether  payment  can  be  en- 
forced without  a  previous  demand  at  the  bank,  if  no  place  of 
payment  be  stipulated  in  the  note,  is  a  question  which  we  believe 
has  never  been  determined  in  this  Commonwealth.  In  Maine,  it 
has  been  decided  that  they  do  not  differ  in  this  respect  from  other 
promissory  notes  payable  on  demand,  and  that  the  commencement 
of  the  action  is  a  sufficient  demand.  Bryant  v.  Damariscotta 
Bank,  18  Me.  240.  The  same  opinion  was  given  in  tlie  STipreme 
Court  of  New  York  by  Wood  worth,  J.,  in  Bank  of  Niagara  v. 
M'Cracken,  18  Johns.  493 ;  but  in  Jefferson  County  Bank  v.  Chap- 
man, 19  Johns.  322,  the  same  judge  observed  that  this  was  only^i^ 
his  individual  opinion,  and  was  not  decided  by  the  Court.  In 
Haxtun  v.  Bishop,  3  Wend.  9,  21,  Chief  Justice  Savage  expressed 
thfe  same  opinion  ;  but  the  point  was  not  essential  to  the  decision 
of  the  case. 

Some  implication  that  the  legislature  regard  the  right  of  a 
bank  to  the  possession  of  its  bills,  as  a  condition  of  paying  them, 
to  be  different  from  that  of  .the  maker  of  an  ordinary  promissory 
note,  may  perhaps  be  found  in  the  provision  in  St.  1859,  c.  116, 
§  1,  "  that  banks  may  replevy  their  bills  upon  payment  or  tender 
of  the  amount  due  upon  them."  Gen.  Sts.  c.  oT,  §  05.  And  a 
similar  inference  might  be  drawn  from  the  provision  that  banks 
shall  be  subject  to  a  penalty  for  not  paying  bills  presented  at 
their  banking-house  in  business  hours  ;  as  if  this  were  regarded 
as  the  breach  of  the  contract  with  the  bill  holders.  Gen.  Sts. 
c.  57,  §  59. 

The  case  of  Hinsdale  v.  Bank  of  Orange,  G  Wend.  378,'  was  an 
action  to  recover  upon  bank-notes  which  had  been  cut  in  two,  for 
the  purpose  of  transmission  through  the  mail,  and  one-half  of 
them  lost.     The  plaintiff"  was  allowed  to  recover, on  the  ground 

1  Post,  706. 


678  LOST   BILLS   AND   NOTES. 

that  by  severing  the  notes  their  negotiability  was  destroyed.  But 
Mr.  Justice  Marcij  took  a  distinction  between  the  loss  and  the 
destruction  of  a  note,  and  said :  "  If  the  owner  of  a  bill  loses  it, 
he  cannot  recover  ;  but  if  he  can  prove  that  it  is  actually  destroyed, 
he  may." 

In  Bullet  V.  Bank  of  Pennsylvania,  2  Wash.  C.  C.  172,  a  similar 
decision  was  given  by  Mr.  Justice  Washington;  and  again,  upon  a 
very  full  discussion,  in  Martin  v.  Bank  of  United  States,  4  Wash. 
C.  C.  253.  In  each  of  the  two  latter  cases,  no  distinction  is  made 
between  a  bank-note  and  any  other  promissory  note  payable  to 
bearer  ;  but  the  general  principle  is  asserted,  first,  that  the  note 
is  only  the  evidence  of  the  contract,  the  loss  or  destruction  of  which 
may  be  supplied  by  secondary  evidence  ;  and  secondly,  that,  if 
upon  any  other  ground  than  fraud  or  perjury  the  maker  might  be 
subject  to  be  twice  charged,  the  plaintiff  should  not  be  allowed  to 
recover,  except  upon  furnishing  an  adequate  indemnity,  which 
could  only  be  provided  by  a  court  of  equity. 

But  aside  from  any  specific  distinction  applicable  to  all  bank- 
bills  issued  as  currency,  there  is  a  difficulty  in  the  plaintiff" 's  case 
as  presented  upon  the  facts  reported.  The  evidence  of  the  de- 
fstruction  of  the  bills  is  merely  circumstantial,  and  not  positive. 
Upon  the  doctrine  of  Pales  v.  Russell,  the  plaintiff",  by  his  own 
negligence  or  misfortune,  is  unable  to  do  what  it  was  the  right  of 
the  defendants  to  require,  for  their  own  security,  namely,  to  give 
up  the  bills  when  paid.  If  the  bills  were  shown  to  be  actually 
destroyed,  beyond  all  question  or  controversy,  the  case  might  be 
different ;  as,  for  instance,  if  the  destruction  were  admitted  by  the 
pleadings.  But  upon  the  mere  preponderance  of  proof,  which  is 
sufficient  to  authorize  a  jury  to  find  a  fact  in  issue,  we  think  it 
is  not  to  be  assumed  conclusively  that  the  bills  are  destroyed, 
without  further  provision  for  the  defendants'  security  against  their 
reappearance.  If,  then,  it  is  sought  to  provide  this  security  by  a 
bond  of  indemnity,  how  can  such  a  bond  be  given  ?  There  is 
nothing  to  distinguish  or  identify  the  bills  which  the  plaintiff  says 
have  been  destroyed.  Against  a  second  payment  of  what  bills 
are  the  defendants  to  be  indemnified  ?  How  could  they  show  that 
any  bills  already  redeemed,  or  hereafter  to  be  redeemed,  were  or 
were  not  the  bills  in  question  ?  Clearly  there  could  be  no  mode 
of  determining  the  fact,  until  their  whole  circulation  of  bills  of 
the  same  denojnination  should  be  called  in.      But  suppose  that 


TOWER  V.    APPLETON  BANK.  679 

several  parties  should  sue  upon  bills  alleged  to  have  been  de- 
stroyed, and  should  recover,  each  giving  a  bond  of  indemnity. 
If  it  should  afterward  appear  that  all  the  bills  had  not  been 
destroyed,  upon  which  bond  would  the  defendants  have  a  rem- 
edy? 

The  answer  given  to  this  ol>jection  by  the  plaintiff's  counsel  is, 
that  the  defendants  issue  bills  in  such  form  as  they  choose, 
and  that  the  plaintiff  should  not  be  prejudiced  because  they  are 
issued  in  such  a  form  as  not  to  be  distinguished  from  each  other. 
But  this  is  not  a  satisfactory  answer.  The  defendants  have  not 
contracted  to  redeem  their  bills,  except  upon  their  production  and 
delivery  ;  and  it  is  the  negligence  or  misfortune  of  the  plaintiff 
that  they  cannot  be  produced.  The  plaintiff  is  then  bound  to 
furnish  an  equivalent ;  to  put  the  defendants  in  as  good  a  con- 
dition as  if  the  bills  were  produced.  If  he  cannot  do  this,  he  has 
no  right  to  shift  the  consequences  of  the  loss  upon  a  party  h\  no 
wise  answerable  for- it.  It  is  deserving  of  consideration,  also,  that 
the  defendants  do  not  stand  upon  any  equality  with  the  plaintiff 
in  the  trial  of  the  question  whether  the  bills  are  really  destroyed. 
The  plaintiff  is  a  competent  witness  for  himself ;  and  the  pro- 
duction by  the  defendants  of  any  number  of  bills  exactly  like 
those  said  to  be  destroyed  would  be  no  defence,  unless  the  whole 
issue  of  such  bills  were  accounted  for. 

Upon  the  whole  matter,  the  Court  are  of  opinion  that  to  permit 
a  plaintiff  to  recover  upon  such  proof  as  this  case  presents,  upon 
bills  circulating  as  currency,  and  available  to  any  one  taking  them 
bona  fide,  without  such  means  of  distinguishing  the  particular 
bills  as  would  admit  of  an  adequate  indemnity,  would  ojien  a  wide 
door  to  fraud,  would  be  incompatible  with  the  reason'able  security 
and  rights  of  the  defendants,  and  is  not  required  by  law. 

Exceptions  sustained. 

It  was  at  one  time  thoujiht  in  England  that  not  even  proof  of  destruction  of  a 
negotiable  note  or  bill  was  sudicient  ground  for  an  action  at  law.  Han:<ard  v. 
Robinson,  7  Barn.  &  C.  90  (1^27).  And  this  doctrine  has  the  sanction  of  Judge 
Story,  Promissory  Notes,  §  449.  But  the  opinion  expressed  in  Hansard  v.  Rob- 
inson was  only  a  dictum  ;  and  the  more  recent  cases  hold  a  different  doctrine. 
See  Wright  v.  Maidstone,  1  Kay  &  J.  701  (1.S55)  ;  Blackie  r.  Pidding,  6  Com. 
B.  196  (184S);  Woo.lford  v.  Whiteley,  Moody  &  M.  517  (18;Ut).  And  it  is 
now  the  accepted  rule  both  in  Eiijiland  and  America,  that  an  action  is  maintain- 
able at  law  on  a  bill  or  note  which  has  been  destroyed  without  the  volition  of  the 
holdeV.     See  Clarke  v.  Quince,  3  Dowl.  2G ;  Moore  v.  Fall,  42  Me.  450;  Des 


680  LOST    BILLS    AND    NOTES. 

Arts  V.  Leggett,  16  N.  Y.  (2  Smitli),  582;  Aborn  v.  Boswortli,  1  R.  I.  401; 
Wade  V.  Wade,  12  111.  89;  Thayer  v.  King,  15  Ohio,  242;  Bank  of  the  United 
States  V.  Sill,  post,  699  ;  Pintai^d  v.  Tackington,  ajite,  671  and  note. 


Rowley  v.  Ball. 

(3  Cowen,  803.     Supreme  Court  of  New  York,  October,  1824.) 

No  action  at  law  o)i  lost  negotiable  note. — An  action  at  law  cannot  be  sustained  on  a 
negotiable  promissory  note  payable  to  bearer,  by  the  owner,  on  proof  that  the  note 
was  lost,  though  he  siiow  that  it  was  lost  after  it  became  due. 

When,  the  owner  may  sue  at  law. 

Error,  from  the  Common  Pleas  of  the  county  of  Munroe.  The 
cause  was  originally  commenced  by  Rowley  against  Ball,  before  a 
justice  of  that  county,  who.  gave  judgment  against  Ball,  who  ap- 
pealed to  the  Common  Pleas,  where  the  cause  was  tried  January 
10th,  1822. 

Rowley  declared  against  Ball  upon  a  promissory  note  given  by 
the  latter  to  one  William  Huxley,  payable  to  him  or  bearer,  for 
$30,  dated  on  or  about  the  middle  of  June,  1819,  and  transferred 
to  the  plaintiff ;  and  the  declaration  averred  that  the  note  had 
since  been  stolen,  lost,  or  destroyed,  or  taken  from  the  plaintiff 
without  his  consent  or  knowledge. 

Plea,  the  general  issue. 

Upon  the  trial,  J.  D.  Bailis  testified,  that  he  had  seen  a  note  in 
Rowley's  possession,  purporting  to  have  been  given  by  Ball,  for 
$30,  dated  some  time  in  June,  1819.  The  precise  time  when  it 
was  payable  he  could  not  tell ;  but  recollected  that  it  was  payable 
to  William  Huxley  or  bearer,  and  whe]i  he  saw  the  note,  which 
was  in  April,  1821,  it  was  due.  It  was  admitted  by  Rowley's 
counsel,  that  Ball  could  neither  read  or  write,  but  signed  by  his 
mark  ;  and  that  there  was  no  subscribing  witness  to  the  note. 
Rowley,  the  appellee,  swore  that  he  put  the  note  into  his  pocket- 
book,  and  sometime  after  made  diligent  search'  for  it,  both  in  his 
pocket-book  and  desk,  but  could  not  find  it ;  that  the  note  was 
either  lost,  stolen,  or  destroyed  ;  that  he  had  reason  to  believe  that 
the  note  had  been  taken  from  his  pocket-book,  and  given  to  Ball ; 
for  the  story  of  his  having  lost  the  note  came  to  him  from  -Ball 


ROWLEY    V.    BALL.  681 

before  he  knew  or  suspected  the  loss.  On  being  cross-examined, 
be  stated  that  it  was  first  suf^gested  to  him  that  tl»e  note  was 
lost  by  Samuel' Darling,  his  own  brotfler-in-law.  Hiram  Huxley 
swore  that  he  came  to  Ball's  in  company  with  his  brother,  John 
Huxley,  who  told  Ball  that  he  had  a  note  against  him,  which  was 
given  to  William  Huxley.  Ball  rej)lied,  that  whoever  held  the 
notes  must  pay  for  keeping  William  Huxley's  wife ;  ))ut  requested 
John  Huxley  to  take  a  gun  of  him,  and  apply  it  on  the  notes  ;  and 
it  was  agreed  between  them  tliat  John  Huxley  should  take  the 
gun  upon  trial,  and,  if  he  liked  it,  he  should  allow  $14  on  the 
notes.  If  he  did  not  like  it,  he  was  to  return  it.  John  Huxley 
testified  that  he  received  of  William  Huxley,  two  notes  against 
Ball,  in  the  State  of  Ohio,  one  for  $30,  and  one  for  $20,  as  they 
were  read  to  him  ;  that  be  could  neither  read  nor  write  ;  that 
he  went  to  Ball's  as  stated  by  Hiram  Huxley,  in  company  with 
him,  and  told  Ball  that  he  had  notes  against  him,  which  were 
given  to  William  Huxley,  one  for  $30,  and  one  for  $20,  and 
he  answered,  that  whoever  held  the  notes  must  pay  him  for 
keeping  William  Huxley's  wife.  The  witness  requested  Ball 
to  pay  him  some  money ;  but  Ball  said  he  could  not.  He 
then  requested  him  to  let  the  witness  have  some  leather ;  but  Ball 
answered  that  he  had  none  to  spare.  The  conversation  then  fol- 
lowed about  the  gun,  as  stated  by  Hiram  Huxley.  The  witness 
took  the  gun,  but  afterwards  returned  it,  and  sold  the  8')0  note  to 
one  Clarke. 

The  counsel  for  Ball  insisted,  that  he  ought  not  to  be  put  upon 
his  defence,  till  Rowley  had  proved  the  actual  destruction  of  the 
note.  The  counsel  for  Rowley  insisted,  that  there  was  already 
suflicient  evidence  of  the  destruction  of  the  note,  or,  at  least, 
sufficient  to  entitle  him  to  go  to  the  jury,  upon  the  ground  that  he 
had  i)roved  the  loss  of  the  note  after  it  fell  due.  This  was  op- 
posed by  Ball's  counsel ;  and,  — 

The  judges  gave  their  opinion,  that  the  several  matters  proved 
and  given  in  evidence,  were  not  sufficient  to  entitle  Rowley's  coun- 
sel to  go  to  the  jury,  inasmuch  as  an  actual  destruction  of  the 
note  had  not  been  proved  ;  that  Rowley  could  not  recover  on  a 
negotiable  note,  although  it  was  lost  after  it  became  due,  unless 
this  was  followed  by  proof  of  its  destruction  ;  and  gave  judgment 
of  nonsuit.  To  this  opinion,  Rowley's  counsel  excepted  ;  and  the 
cause  came  to  this  Court  upon  a  bill  of  exceptions,  containing  the 
above  matters. 


682  LOST   BILLS   AND   NOTES. 

WooDwoRTH,  J.  No  exception  was  taken  to  the  proof  given 
as  to  the  execution  of  the  note.  Were  it  necessary,  liowever, 
to  express  an  opinion,  I  should  consider  the  evidence  prima 
facie  sufficient.  The  witness  stated  to  the  defendant  that  he 
held  two  notes  against  hiin,  given  to  William  Huxley  ;  one  for 
$30,  the  other  for  $20.  The  defendant,  in  reply,  admitted  the 
notes,  and  offered  to  make  part  payment.  The  identity  of  the 
note  to  which  the  confession  related  is  established  with  reasonable 
certainty.  The  case  of  Shaver  v.  Ehle,  16  Johns.  201,  is  clearly 
distinguishable  from  the  present. 

Tlie  remaining  question  is,  whether  an  action  at  law  can  be  sus- 
tained on  a  negotiable  promissory  note,  payable  to  bearer,  by 
a  person  who  was  the  holder,  on  his  proving  that  the  note  was 
lost. 

If  the  note  had  not  been  negotiable,  or,  if  negotiable,  had  not 
in  fact,  been  negotiated,  the  plaintiff  would  be  entitled  to  recover. 
Pintard  v.  Tackington,  10  Johns.  104.^  The  cases  which  have  not 
permitted  a  recovery  at  law  upon  negotiable  paper  lost,  but  not  de- 
stroyed, were  those  in  which  the  paper  had  been  indorsed  before 
it  was  lost.  Pierson  v.  Hutchinson,  2  Camp.  211  ;  Ex  parte 
Greenway,  6  Yes.  811.  In  this  case,  the  note  being  payable  to  the 
bearer,  the  holder  could  make  out,  prima  facie,  a  cause  of  action, 
and  although  the  note  was  due  at  the  time  it  was  lost,  the  maker 
v^ould  be  exposed  to  the  hazard  of  showing  that  fact  by  legal  evi- 
dence. It  would,  therefore,  seem  to  be  a  hard  doctrine,  which 
should  place  the  maker  in  this  situation,  without  requiring  an  in- 
demnity. In  Such  cases,  it  is  better  to  leave  the  party  to  his 
remedy  in  equity,  where  a  suitable  indemnity  will  be  provided 
against  any  subsequent  recovery.  This  subject  peculiarly  belongs 
to  equity  jurisdiction.  In  Ux  parte  Greenway,  Lord  Eldon  ob- 
serves :  "  I  never  could  understand  by  what  authority  courts  of 
law  compelled  parties  to  take  the  indemnity."  In  Pierson  v. 
Hutciiinson,  Lord  Ellenborough  held,  that  whether  an  indemnity 
be  sufficient  or  insufficient,  is  a  question  of  which  a  court  of  law 
cannot  judge ;  and  although  there  are  dicta,  that,  upon  the  offer 
of  an  indemnity,  the  indoi'see  of  a  lost  bill  may  recover  at  law, 
they  are  so  contrary  to  the  principles  upon  which  the  judicial  sys- 
tem rests,  he  could  not  venture  to  proceed  upon  them.  Chitty,  in 
his  Treatise  on  Bills,  p.  173,  ed.  of  1817,  is  of  opinion  that  where 
the  bill  lias  been  lost  after  it  became  due,  there  is  no  reason  why 

1  Ante,  671. 


PALES   V.    RUSSELL.  683 

the  person  who  lost  it  should  not  be  permitted  to  proceed  at  law, 
without  oflering  an  indemnity,  inasmuch  as  the  law  would,  in  such 
case,  secure  all  the  j)arties  to  the  bill  against  future  liability  to  a 
person  who  becomes  the  holder  of  it  after  itJftills  due.  This  is 
undoubtedly  correct,  ))rovided  the  maker  of  the  note,  or  acceptor 
of  the  bill,  could  prove  that  it  came  to  the  liands  of  the  holder 
after  due.  If,  in  the  present  case,  the  plaintiff  recovers  against 
the  defendant,  and  subsequently  a  suit  is  commenced  on  the  note 
by  another,  claiming  to  l)e  a  hoim  fide  holder,  the  recovery  had 
would  not  alone  be  a  sufficient  defence.  The  defendant  must  also 
prove  the  fact,  that  it  was  due  when  it  was  lost  by  the  present 
plaintiff".  If  he  could  not,  then  the  subsequent  holder  would  re- 
cover, on  the  ground  that  it  did  not  appear  he  received  the  note 
after  it  became  due. 

It  is  not  necessary  that  the  plaintiff"  should  have  a  remedy  at 
law  in  such  a  case.  His  redress  is  ample  in  equity,  where  the 
defendant  can  be  protected  against  subsequent  liability.  I  have 
not  found  any  adjudged  case  on  this  precise  point ;  but,  from  the 
reason  of  the  thing,  and  the  analogy  to  cases  where  notes  have 
been  lost  after  they  were  indorsed,  I  think  the  action  cannot  be 
sustained,  without  proving  that  the  note  was  destroyed. 

Judgment  affirmed. 

A  different  rule  from  that  declared  in  the  above  case  prevails  in  several 
States.     See  Fales  v.  Russell,  infra. 


Elisha  F.  Fales  et  ah  v.  William  O.  Russell  et  al. 

(16  Pickering,  315.     Supreme  Court  of  Massachusetts,  March,  1835.) 

Actio7i  at  law  mainlainable  on  lost  negotiable  jHijKr.  —  Wliere  a  negotiable  promissory  note, 
indorsed  in  blank,  was  stolen  from  the  holder  before  it  was  due,  Juld,  that  he  might 
recover  the  amount  from  the  maker,  in  an  action  at  law,  on  filing  a  bond  sufficient 
for  the  maker's  indemnification. 

Assumpsit  upon  two  joint  and  several  promissory  notes,  dated 
June  29,  1882,  made  by  the  defendants,  and  payable  to  E.  W. 
Calef  or  order,  in  nine  months  from  the  date,  one  note  being  for 


684  LOST   BILLS   AND   NOTES.' 

the  sum  of  $313.56,  and  the  otlier,  for  the  sum  of  $300.  The 
declaration  contained  the  general  counts  ;  but  there  tvas  no  count 
declaring  upon  the  notes. 

By  an  agreed  stjgjeraent  of  facts  it  appeared,  that  the  notes, 
which  had  been  indorsed  in  blank  by  the  payee,  were  on  Septem- 
ber 10,  1832,  stolen  fgom  the  plaintiffs,  who  were  then  the  iiolders, 
that  the  notes  had  never  been  paid  or  heard  of  since  the  theft,  to 
the  knowledge  either  of  the  plaintiffs  or  of  the  defendants  ;  that 
immediately  after  the  notes  were  stolen,  the  plaintiffs  informed  the 
defendants  of  the  fact,  requesting  them  not  to  pay  the  notes  to  any 
person  but  to  the  plaintiffs  themselves,  or  to  their  order  in  writing, 
separate  from  the  notes  ;  that  notice  of  the  theft  was  given  imme- 
diately in  the  newspapers,  cautioning  all  persons  against  buying 
them  ;  and  that  the  plaintiffs  had  offered  to  indemnify  the  defend- 
ants against  any  loss,  if  they  would  pay  to  them  the  amount  due 
upon  the  notes. 

Upon  these  facts,  the  Court  were  to  enter  up  such  judgment 
for  the  plaintiffs  or  for  the  defendants,  as  should  be  conformable  to 
the  law  of  the  case,  and  to  order  a  default  or  a  nonsuit,  according 
as  they  should  determine  that  the  plaintiffs  had  sustained  or  failed 
to  sustain  their  action. 

Shaw,  C.  J.  There  is  little  doubt,  that  according  to  the  law  as 
now  administered  in  England  and  New  York,  it  would  be  held  upon 
the  facts  of  this  case,  that  the  plaintiffs  could  not  recover.  But 
we  think  it  would  be  on  the  ground  taken  originally,  that  in  such 
cases  it  is  much  better  for  parties  to  go  into  chancery,  where  all 
the  circumstances  of  the  loss  of  the  securities  can  be  better  inves- 
tigated, and  the  suitable  indemnities  for  the  defendants  better  esti- 
mated and  adjusted ;  and  having  been  so  held  in  many  instances, 
the  rule  has  become  established  by  precedent,  that  an  action  at  law 
will  not  lie.  If  this  rule  is  adopted  for  convenience,  and  is  not 
founded  upon  principles  which  exclude  the  action  of  a  court  of 
law,  then  it  will  not  apply  where  there  is  no  such  remedy  in  chan- 
cery. Considering  the  question  in  this  view,  we  think  that  with- 
out usurping  the  powers  of  a  Court  of  Equity,  and  upon  well- 
established  common-law  principles,  we  can  afford  the  plaintiffs  a 
remedy. 

The  objection  to  the  plaintiffs'  recovery  is,  that  they  cannot 
produce  and  file  the  notes.     Is  this  conclusion  correct  ?     The  de- 


FALES   V.    RUSSELL.  685 

livery  up  of  notes  and  other  negotialjlc  securities,  upon  payment 
of  them,  and 'the  filing  of  them  in  court,  on  obtaining  judgment, 
are  not  conditions  [)recedent  of  the  right  to  recover  in  either  case. 
Tliat  riglit  depends  upon  other  grounds.  Th^  delivery  up  of  the 
note  in  tiie  one  case,  and  the  filing  it  in  the  cither,  is  only  that  rea- 
sonable acquittance  and  discharge,  adapted  «to  the  nature  of  the 
obligation  performed,  which  any  man,  upon  making  satisfaction  of 
a  demand  against  him,  is  reasonaldy  entitled  to  have.  Inasmuch 
as  it  is  payable  to  any  holder,  the  actual  surrender  of  the  security 
upon  payment  is  the  proper  and  suitable  acquittance. 

I  have  said  that  the  right  to  receive  depends  upon  other  grounds  ; 
to  wit,  that  the  note  was  made  by  the  defendants,  payable  to  the 
payee  or  order,  that  it  was  duly  indorsed  by  him  to  the  plaintiff, 
who  became  the  bo7ia  fide  holder.  All  these  must  appear,  and  in 
general  the  presence  of  the  note  is  necessary  to  enaljle  the  ]ilain- 
tiff  to  prove  them  ;  but  they  may  be  proved  without  producing  the 
note,  and  in  the  present  case  they  are  admitted.  The  plaintiffs 
having  proved  title  in  themselves,  by  a  well-known  rule  of  evi- 
dence, such  title  will  be  presumed  to  continue,  till  a  transfer,  re- 
lease, or  satisfaction  is  shown.  Upon  a  case  like  tliis,  where  a 
note  has  been  lost  after  it  was  due,  it  has  often  been  held,  that  a 
plaintiff  is  entitled  to  recover  without  the  note.  Jones  v.  Fales,  5 
Mass.  101.  But  the  title  is  in  fact  the  same  ;  the  only  difference 
is,  that  the  defendants  are  exposed  to  greater  risk  in  the  one  case 
than  in  the  other,  because,  if  lost  before  it  was  due,  there  is  a  pos- 
sibility that  it  may  have  been  negotiated  to  a  bona  fide  holder  in 
the  ordinary  and  regular  course  of  business  before  it  was  due. 
But  as  this  does  not  affect  the  plaintiff's  title  or  his  actual  and 
real  interest  in  the  debt  and  in  the  security  according  to  its  tenor, 
but  only  leaves  the  defendant  exposed  to  a  hazard  which,  accord- 
ing to  mercantile  law  and  the  usage  of  trade,  it  is  not  understood 
that  he  is  to  take,  we  think  he  ought  to  be  protected  ;  and  this 
Court,  as  a  court  of  law  holding  a  just  regulating  power  over  the 
judgments  and  proceedings  before  them,  have  authority  to  jire- 
scribe  an  equivalent  security  to  the  defendants,  by  a  sufficient  and 
reasonable  indemnity. 

To  illustrate  this  view,  let  us  consider  a  suggestion  made  by 
one  of  the  Court,  at  the  argument,  in  the  form  of  a  query,  whether 
it  would  not  be  competent  for  the  Court,  in  the  exercise  of  a  just 
judicial  discretion,  to  continue  this  action  from  term  to  term,  until 


686  '  LOST   BILLS   AND   NOTES. 

the  statute  of  limitations  should  become  a  bar  to  any  action  by  any 
■  other  holder.  It  cannot  admit  of  any  reasc^iable  doubt,  that  this 
would  be  within  the  power  of  the  Court ;  and  cases  may  be  imag- 
ined in  which  this  would  be  a  proper  remedy.  But  what  would 
this  imply  ?  Not  that  the  production  of  the  note  is  a  condition 
precedent  to  the  right  of  recovery  ;  because  at  the  end  of  six 
years  the  plaintiff  must  recover  upon  the  legal  right  of  action 
which  he  had  when  the  suit  was  commenced,  or  not  at  all.  But  it 
must  be  on  the  ground  that  the  lapse  of  time  and  the  statute  of 
limitations,  would  afford  to  the  defendants,  on  rendering  judg- 
ment against  them,  a  security  against  the  reappearance  of  the  note, 
equivalent  to  that  usually  obtained  by  the  production  and  surren- 
der of  the  note.  Still  it  would  not  be  the  same  identical  security, 
which  the  general  rule  of  law  requires.  If  that  can  be  done,  it 
seems  difficult  to  conceive  any  good  legal  reason  why  other  ample 
and  equivalent  security  may  not  be  substituted. 

Considering  it  in  this  view,  that  the  production  of  the  note  is 
not  essential  to  the  plaintiff's  title,  but  only  to  the  defendant's 
reasonable  security,  it  appears  to  us  that  the  objection  that  a 
court  of  law  has  no  jurisdiction  to  order,  or  to  judge  of  the 
sufficiency  of  an  indemnity,  is  rather  ideal  tlian  solid,  and  ought 
not  to  prevail  when  the  consequence  would  l)e  an  entire  failure  of 
justice.  On  the  whole,  the  Court  are  of  opinion,  that  on  filing  a 
sufficient  bond  of  indemnity,  with  sureties,  the  plaintiffs  will  be 

entitled  to  recover. 

Defendants  defaulted. 

The  cases  which  have  considered  the  subject  of  the  two  preceding  and  con- 
flicting decisions  are  very  numerous,  and  about  equally  balanced.  They  are  col- 
lected in  2  Parsons,  Notes  and  Bills,  297,  298,  notes  A-,  I,  and  m. 

An  intermediate  rule  is  adopted  in  Ohio,  and  supported  with  strong  reasons. 
The  rule  in  that  State  is  that  an  action  at  law  will  lie  if  the  paper  was  lost  after 
maturity ;  but  if  lost  before  maturity,  the  remedy  must  be  in  chancery.  Thayer 
V.  King,  15  Ohio,  242.  Read,  J.,  in  pronouncing  the  opinion  of  the  Court,  said  : 
"  This  case  was  reserved  for  the  determination  of  the  single  question,  whether  a 
recovery  could  be  had  upon  lost  negotiable  paper,  at  law,  or  whether  the  remedy 
in  such  case  was  in  equity. 

"  Upon  this  question,  there  is  a  conflict  of  decisions,  both  in  England  and 
the  United  States.  In  the  decisions  which  have  been  made,  diflerent  and  various 
reasons  have  been  assigned  in  support  of  either  side ;  but  from  a  careful  review 
of  the  authorities,  and  a  full  comprehension  of  the  principles  of  law  controlling 
the  transfer  and  fixing  the  right  of  holders  of  negotiable  paper,  it  would  seem 
that  the  only  difiiculty  in  the  case  grows  out  of  the  question  of  indemnity.     AH 


FALES   V.    RUSSELL.  687 

other  matters,  and  the  rights  of  i)arties,  can  l>e  governed,  controlled,  and  modi- 
fied in  a  court  oi'  law  as  well  as  eiiuitv. 

"It  is  anecesftary  and  fundamental  principle  of  negotiable  paper,  that  the  inno- 
cent holder  receiving  it  before  due,  is  entitled  to  its  |ik>ceed8.  Tliis  is  the 
essence  and  life  of  its  negotiability.  Hence,  if  the  maker  should  be  compelled 
to  pay  in  case  of  negotiable  paper  lost  before  due,  such  payment  would  be  "no 
bar  to  the  recovery  in  the  hands  of  an  innocent  holder,  who  had  received  it  Ijefore 
due ;  and  in  such  case  a  double  recovery  might  be  had  upon  the  same  instrument. 
But  if  former  payment  or  recovery  would  l)e  a  complete  bar  to  any  subsetjuent 
papnent  or  recovery,  the  reason  of  the  rule  ceases,  and  the  objection  to  a  recov- 
ery by  the  owner,  no  longer  exists.-  Hence,  if  the  circumstances  of  the  case  are 
such  that  the  negotialjle  paper  can  never  be  produced  for  payment  a  second  time, 
or  if  produced  would  permit  no  right  of  recovery  in  tlie  hands  of  the  holder,  no 
indemnity  in  such  case  being  re(|uired  to  guard  against  a  second  payment,  re- 
covery may  be  had  in  a  court  of  law.  Thus,  if  the  instrument  be  totally  de- 
stroyed, or  if  it  pass  into  the  hands  of  the  holder,  charged  with  all  the  e<^uities 
•which  exist  against  the  original  holder,  the  action  may  be  at  law.  Now,  it  is  a 
well-recognized  principle,  that  negotiable  paper  received  after  it  is  due,  is 
charged  with  all  the  equities  existing  between  the  original  parties.  So,  if  pay- 
ment be  made  to  the  original  holder,  ami  a  recovery  be  had  by  him,  it  would 
constitute  a  complete  bar  to  another  action  brought  by  any  person  who  should 
receive  it  after  due.  But  if  it  be  lost  before  due,  and  the  original  holder  com- 
mence suit,  there  is  a  possibility  that  the  paper  may  be  outstanding  in  the  hands 
of  an  innocent  holder  —  upon  which  recovery  could  be  had  ;  and  hence  the  law 
will  not  permit,  in  such  case,  a  recovery  to  be  had  until  complete  indemnity  is 
furnished  against  such  possibility.  Now  a  court  of  law  has  not  the  power  to 
compel  this  indemnity  ;  and  hence  is  forbidden  to  give  judgment  or  to  entertain 
jurisdiction  of  the  case.  A  court  of  law  proceeds  upon  fixed  principles,  and  if 
the  party  is  entitled  to  judgment,  he  is  entitled  to  execution  without  limit  or 
restraint.  But  a  court  of  equity  being  called  upon  to  give  its  aid,  will  guard  the 
rights  of  all  parties,  and  will  not  permit  a  recovery  until  the  party  seeking  it  will 
guard  the  opposite  party  from  a  danger  which  exists  by  the  misfortune  of  the 
very  person  seeking  its  aid.  It  will  say,  'You  have  been  unfortunate  in  the  loss 
of  your  instrument ;  we  will  relieve  you  from  this  dilliculty,  provided  you  will 
fully  guard  the  other  party  from  all  harm  which  may,  by  possibility,  result  from 
what,  except  from  our  aid,  would  be  a  misfortune  to  you.'  It  has  the  power  to 
determine  the  nature  of  the  indemnity  and  the  security.  Hence,  in  those  cases 
in  which  indenniity  Is  to  be  given,  relief  must  be  had  in  ecjuity.  A  court  of  law, 
it  is  true,  might  do  the  same  thing,  if  it  had  the  power;  and  there  is  no  direct 
impossibility  to  prevent  its  having  such  powers ;  yet,  as  such  is  not  the  case  in 
the  distribution  of  law  and  equity  jurisdiction,  as  the  systems  now  stand,  relief 
can  only  be  liad  in  eijuity. 

"  In  the  case,  however,  before  the  Court,  no  such  difliculty  exists,  as  those 
notes  were  lost  after  they  were  due. 

"  Judgmmt  for  jilaiiUiJ's.^^ 


688  LOST   BILLS    AND    NOTES. 

*  *f 

Pete^  Chewning  v.  Louisa  Singleton. 

(2  Hill,  Chancery,  371.     Court  of  Appeals  of  South  Carolina,  December,  1835.) 

Remedy  in  eqniti/.  —  A  party  who  has  lost  a  note  payable  to  bearer,  altliough  past  due, 
may  come  into  equity  for  relief.  The  ground  of  jurisdiction  is  not  only  that  he 
may  give  indemnity  to  the  defendant,  but  th-at  he  must  swear  to  the  loss. 

This  jdIU  was  filed  against  the  defendant,  as  executrix  and  sole 
legatee  of  Mrs.  Anne  Chewning,  alleging  that  the  testatrix,  in  her 
lifetime,  for  a  valuable  consideration,  gave  the  plaintiff  her  prom- 
issory note  for  $650,  payable  to  him  or  bearer,  at  ten  days  after 
date,  and  dated  in  September,  1832.  That  the  note  was  seen  by 
divers  persons  in  his  possession,  and  that  in  October,  1832,  (after 
the  testator's  death),  he  lost  his  pocket-book  and  in  it  the  nT3te. 
That  he  has  (through  her  agent)  given  the  defendant  notice  of 
the  note  and  its  loss,  and  demanded  payment,  which  has  been 
refused.  The  bill  prays  that  defendant  may  answer  its  allegations, 
and  that  the  payment  of  the  amount  of  the  note  with  interest  may 
be  decreed,  on  such  terms  of  indemnity  to  the  defendant  against 
any  future  liability,  as  the  Court  may  think  proper  to  impose, 
and  for  general  relief.  , 

The  bill  was  sworn  to  loth  January,  183.4,  and  filed  the  same 
day.  ^ 

The  answer  of  the  defendant  denies  any  knowledge  of  her  tes- 
tatrix's indebtedness  to  the  plaintiff,  or  of  the  note,  or  of  any 
transaction  by  which  such  a  debt  could  have  been  created.  That 
shortly  before  the  testatrix's  death,  she  heard  her  say  she  owed 
the  plaintiff  nothing  ;  and  the  defendant  does  not  believe  that  any 
such  note  ever  existed.  She  submits  that  the  plaintiff  has  an 
adeqnate  remedy,  if  any,  at  law. 

Johnson,  Chancellor.  This  case  was  heard  upon  bill  and  an- 
swer. A  motion  was  made  to  dismiss  the  bill  for  want  of  equity. 
'The  motion  is  granted  and  the  bill  dismissed  with  costs.  The 
note  alleged  to  be  lost,  and  which  the  bill  seeks  to  set  up  was,  by 
the  plaintiff's  own  showing,  past  due  when  it  was  lost;  and  thus 
the  necessity  for  indemnity  no  longer  exists.  The  bill  is  not  a  bill 
for  discovery ;  and  if  it  was,  all  evidence  on  the  plaintiff's  part  is 


CHEWNING    V.    SINGLETON.  ^89 

excluded,  inasmuch  as  the  answer  gives  no  discovery,  but  denies 
that  such  a  note  ever  qxisted  ;  and  the  plaintilf  has  adequate  rem- 
edy at  law. 

Tlje  plaintiff  appealed,  and  now  moved  to  reverse  the  decree  on 
the  following  grounds  :  — 

1.  That  tiic  chancellor  erred  in  supposing  that  the  necessity  for 
indemnity  is  the  ground  of  equity  jurisdiction  ;  whereas  it  is  sub- 
mitted that  the  indemnity  is  the  condition  which  the  Court  an- 
nexes ;  and  that  the  fact  that  no  necessity  exists  to  require  the 
plaintiff  to  give  it,  cannot  affect  his  claim  to  relief. 

2.  That  there  is  no  adequate  relief  at  law,  and  chancery  will 
afford  it. 

Harper,  J.  My  views  of  this  case  may  be  gathered  from  what 
has  been  said  by  me  in  the  case  of  Davis  and  Tarleton  v.  Benbow,  2 
Bail.-  427.  I  have  again  looked  into  the  authorities  on  the  subject, 
and  find  no  reason  to  change  any  of  the  views  there  expressed.  It 
is  not  questioned  but  that  in  some  cases  a  party  may  come  into 
equity  to  be  relieved,  when  a  bill  or  note  has  been  lost  or  de- 
stroyed. The  cases  of  Walmsley  v.  Cliild,  1  Ves.  Sr.  341 ;  Ex 
parte  Grecnway,  G  Ves.  812,  and  many  others,  are  sufficient  to 
establish  this.  The  chancellor  seems  to  have  decided  chiefly  on  the 
authority  of  Mossop  v.  Eadon,  16  Yes.  430.  The  master  of  the  rolls, 
in  that  case,  went  upon  the  ground  that  the  only  purpose  of  com- 
ing into  equity  is  to  offer  an  indemnity,  and  as  I  jjather  from  the 
argument  in  the  case,  it  appeared  that  the  note  was  not  payable  to 
order,  so  that  it  could  not  have  been  negotiated,  and  as  no  action 
could  be  maintained  upon  it  by  any  one  into  whose  hands  it  might 
come,  indemnity  was  unnecessary.  He  therefore  dismissed  the 
bill.  So  the  chancellor  supposes  that  as  the  note  in  this  case,  as 
appears  from  the  plaintiff's  own  statement  was  lost  after  it  was 
due,  there  was  no  need  of  indemnity.  Hut  with  deference,  this 
seems  to  me  to  be  founded  in  misconception.  Tiie  plaintiff  does 
indeed  state  that  the  note  was  lost  after  due  ;  but  who  shall  assure 
the  defendant  of  the  truth  of  that  statement  'i  Plaintiff  states 
that  he  has  no  proof  of  the  loss.  It  is  for  defendant's  benefit  that 
the  party  is  required  to  come  into  equity.  If  an  action  had  been 
brought  at  law,  she  might  well  have  said  to  the  plaintilf, ''  How  can 
you  assure  me  that  you  yourself  have  not  negotiated  the  note 
before  it  became  due,  and  that  it  may  not  now  be  in  the  iiands  of 

41 


690  LOST   BILLS   AND   NOTES. 

a  ^l>o7ia  fide  holder  ?  "  The  right  to  indemnity  would  have  been 
apparent. 

But  the  case  of  Mossop  i\  Eadon,  seems  to  have  been  overruled 
by  subsequent  decisions.  In  the  case  of  Hansard  v.  Robinson,  7 
Barn.  &  C.  00,  the  bill  was  lost  after  due.  Lord  Tenterden,  speak- 
ing of  the  defendant,  says :  "  But  how  is  he  to  be  assured  of  the 
loss  or  destruction  of  the  bill  ?  Is  he  to  rely  on  the  assertion  of 
the  holder,  or  to  defend  the  action  at  the  peril  of  costs  ?  And  if 
the  bill  should  afterwards  appear,  and  a  suit  be  brought  against 
him  by  another,  a  fact  not  absolutely  improbable  in  the  case  of  a 
lost  bill,  is  he  to  seek  for  the  witnesses  to  prove  the  loss  and  to 
prove  tliat  the  new  plaintiff  obtained  it  after  it  became  due  ?  Has 
the  holder  the  right,  by  his  own  negligence  or  misfortune,  to  cast 
the  burden  upon  the  acceptor,  even  for  not  discharging  the  bill 
on  the  day  it  became  due  ?  We  think  that  the  custom  of  merchants 
does  not  authorize  us  to  say  that  this  is  the  law.  Is  the  holder, 
then,  without  remedy  ?  Not  wholly  so.  He  may  tender  sufficient 
indemnity,  and  if  it  be  refused  he  may  enforce  payment  thereupon 
in  a  court  of  equity."  In  Macartney  v.  Graham,  2  Simons,  285, 
the  bill  had  been  indorsed  specially  to  the  plaintiff,  so  that  no 
other  holder  could  maintain  a  suit  upon  it,  and  it  was  argued,  on 
the  authority  of  Mossop  and  Eadon,  that  as-  no  indemnity  was 
needed,  the  remedy  was  at  law.  But  the  Court  said  that  Mossop 
V.  Eadon  had  been  overruled  by  Hansard  and  Robinson. 

Sir  William  Grant,  in  Mossop  v.  Eadon  seems  to  have  overlooked 
a  ground  of  equity  on  which  the  greatest  stress  is  laid  by  Lord 
Eldon  —  a  still  higher  authority.  This  is  the  necessity  imposed 
on  the  party  coming  into  equity  to  make  affidavit  of  the  loss.  In 
Ex  parte  Greenway,  speaking  of  the  decision  of  the  court  of  law, 
in  Read  v.  Brookman,  3  T.  R,  151,  that  in  case  of  a  lost  deed, 
profert  may  be  dispensed  with,  he  says:  "It  is  questionable 
whether  sufficient  attention  was  paid  to  the  consideration,  that  in 
equity  the  conscience  is  ransacked,  and  the  party  alleging  that  the 
instrument  is  lost,  must  make  an  affidavit  that  it  is  not  in  his 
possession  or  power."  And  in  Bromley  v.  Holland,  7  Yes.  20, 
"  The  protection  this  Court  gives  in  that  case,  is  most  essential  to 
the  iiiterest  of  justice.  Here  the  party  pledges  his  conscience  by 
his  oath  that  the  instrument  is  lost."  East  India  Company  v. 
Boddam,  9  Ves.  464,  was  a  case  of  a  lost  bond.  Lord  Eldon 
says,  that  "  if  the  bond  was  by  a  single  obligee,  the  party  sued  in 


CHEWNING   V.    SINGLETON.  691 

this  Court,  stating  in  his  bill  that  tho.bond  was  lost,  and  accc^n- 
panying  his  l)ill  with  an  affidavit  that  it  was  lost,  not  as  evidence 
of  tlie  loss,  but  as  a  security  for  the  propriety  of  jurisdiction." 
Instances  are  put  in  the  cases  of  frauds  which  might  be  practised 
by  the  wilful  suppression  or  destruction  of  the  instrument,  similar 
to  what  is  suggested  in  Davis  and  Tarlcton  v.  Benbow.  It  may  be 
observed  that  this  apj)lies  still  more  strongly  in  the  case  of  a  lost 
bill  or  note  than  in  that  of  a  bond  or  deed,  as,  in  addition  to  the 
danger  of  fraudulent  suppression  or  destruction,  there  is  addi- 
tional danger  of  tiie  instrument's  having  been  fraudulently  nego- 
tiated. There  is  no  doubt,  however,  but  that  it  was  intended  to 
apply  in  all  similar  cases.  Such  is  the  view  taken  by  Fonblanque 
in  his  notes  to  tiic  Treatise  of  Equity.  1  Fonb.  15,  IG,  17,  n.  /, 
and  by  Lord  Bedesdale,  Mitf.  PL  105, 106. 

It  is  ordered  and  decreed  that  the  chancellor's  decree  be  re- 
versed, and  the  cause  remanded  for  hearing. 

Johnson,  J.,  and  0''Neall,  J.,  concurred. 

If  the  note  or  bill  lost  was  negotiable  but  not  negotiated,  no  offer 
of  indemnity  need  be  made  as  a  ground  of  equity  jurisdiction.  A  prayer 
for  discovery  is  sufficient.  Hopkins  v.  Adams,  20  Yt.  407.  The  facts  in  this 
case  will  sufficiently  appear  in  the  opinion  of  the  Court  pronounced  by 

Redfield,  J.  This  is  a  bill  to  obtain  relief,  as  well  as  discovery,  in  regard 
to  a  negotiable  promissory  note,  alleged  to  have  been  lost  when  overdue,  and 
not  indorsed ;  annexing  to  the  bill  an  affidavit  of  loss,  but  no  indemnity  being 
tendered  to  the  defendants,  either  before  or  at  the  time  of  bringing  the  bill,  the 
plaintiH  insisting  all  the  time  that  none  is  necessary,  though  he  offi^red  a  release 
of  the  note.  The  defendants  have  answered  the  bill,  testimony  has  been 
taken,  the  case  has  been  heard  in  the  court  of  chancery,  and  a  decree  entered 
for  the  orator,  requiring  him  to  give  an  indemnity,  and  to  pay  the  defendants'  costs. 
The  case  has  been  argued  in  this  Court  mainly,  on  the  part  of  defendants,  upon 
the  ground  that  the  jurisdiction  of  the  court  of  chancery,  in  cases  like  the  pres- 
ent, depends  exclusively  upon  the  offer  in  the  bill,  of  an  indemnity  to  the  de- 
fendants, and  that,  while  the  orator  resists  this,  he  is  not  entitled  to  a  decree. 

Mr.  Justice  Story,  (1  Eq.  Jur.  p.  103),  seems  to  lay  down  the  rule  in  the 
very  terms  contended  for  by  the  defendants'  counsel.  *'  In  such  a  case 
(that  of  a  lost  instrument),  a  court  of  equity  will  entertain  a  bill  for  relief  and 
payment,  upon  an  offer  in  the  bill  to  give  a  proper  indemnity,  under  the  direc- 
tion of  the  Court,  an  not  icithout.^''  And  he  farther  says,  that  "  siicii  an  offer 
founds  a  just  jurisdiction ;  "'  citing  for  the  two  last  propositions,  Walmsley  r. 
Child,  1  Yes.  Sr.  342,  345 ;  Teresy  v.  Gorey,-  Finch,  301.  He  also  cites  Glynn 
r.  Bank  of  England,  2  Yes.  Sr.  38;  Mossop  »»  Eadon,  IG  Yes.  430,  434; 
Bromley  v.  Holland,  7  Yes.  19-21 ;  Davies  v.  Dodd,  4  Trice,  176. 

Upon  the  slightest  examination  of  these  cases,  it  is  apparent  that  they  estab- 
lish no  such  proposition*  as  that  cited  from  the  text.      All,  except  the  first,  seem 


692  LOST   BILLS   AND   NOTES. 

to  have  no  bearing  whatever  upon  the  point.  Teresy  v.  Gorey,  as  reported  by 
Lord  Ilardwiclce,  in  Walmsley  v.  Child,  is  only  the  case  of  a  bill  of  exchange 
properly  negotiated,  and  where,  by  the  custom  of  merchants,  no  holder  is  enti- 
tled to  require  payment,  until  he  surrenders  the  bill ;  and  if  it  be  lost,  he  cannot 
do  this,  and  of  course  can  maintain  no  action  whatever  at  law.  So  that  the  only 
remedy  in  such  case  is  in  equity,  and  an  indemnity  should,  no  doubt,  be  required 
in  all  cases  of  that  character.  This  is  precisely  the  rule  laid  down  in  Hansard 
r.  Robinson,  7  Barn.  &  C.  901  [14  E.  G.  L.  20],  where  it  was  held,  that  upon 
such  a  bill  no  action  at  law  could  be  maintained,  although  the  bill  was  lost  when 
overdue.  The  same  rule  has  been  adopted  in  this  State.  Lazell  v.  Lazell,  12 
Vt.  443.  In  Glynn  v.  The  Bank  of  England,  Lord  Ilardwicke  does  make  an 
incidental  remark  to  the  effect,  that  one  is  not  ordinarily  entitled  to  come  into  a 
court  of  equity  for  relief  on  a  lost  note,  but  that  he  may  come  for  a  discovery, 
and  then  must  seek  his  relief  at  law.  But  the  case  is  decided  altogether  upon 
the  ground  of  defect  of  proof,  that  the  testator  had  the  notes  in  his  possession  at 
the  time  of  his  decease  (the  bill  being  for  the  benefit  of  the  estate) .  Mossop 
V.  Eadon  is  the  case  of  a  bill  cut  in  halves,  and  one  part  only  lost.  In  such  a 
case,  I  understand,  there  has  never  been  any  difficulty  in  recovering  at  law,  even 
where  the  bill  or  note  is  strictly  negotiable,  and  had  been  negotiated.'  This  case 
was  tried  by  the  master  of  the  rolls,  who  seemed  to  suppose,  as  almost  all  the 
elementary  writers  upon  the  subject  do,  that  Walmsley  v.  Child  had  settled  the 
law,  that  the  court  of  chancery  had  no  jurisdiction  in  the  oase  of  a  lost  note  to 
grant  relief,  except  where  an  indemnity  was  necessary.  Bromley  v.  Holland  is 
upon  a  totally  different  subject ;  that  is,  whether  a  court  of  equity  will  sustain  a 
bill  to  decree  the  surrender  of  an  impeached  bill  or  note,  to  be  cancelled.  The 
decision  is  in  favor  of  the  jurisdiction.  The  subject  of  equity  jurisdiction  in 
regard  to  lost  instruments  is  introduced  in  the  opinion  arguendo,  merely  to  illus- 
trate the  subject  in  hand.  The  case  of  Davies  v.  Dodd  is  a  mere  dictum,  at 
most.  In  that  case  the  only  indemnity  tendered  was  the  bond  of  the  plaintiff, 
and  he  confessedly  irresponsible.  Still,  the  jurisdiction  was  entertained,  and  the 
case  referred  to  the  deputy  remembrancer  to  determine  upon  the  sufficiency  of 
the  indemnity  offered,  and  if  any  other  were  requisite,  what  was  sufficient.  .... 
And  first,  in  regard  to  the  case  of  Walmsley  v.  Child.  Mr.  Justice  Story 
says  (Eq.  Jur.  p.  100,  in  note),  "  The  passage  is  singularly  obscure,  and  of  diffi- 
cult interpretation;  and  I  have  not  been  able  to  satisfy  my  mind,  what  Lord 
nardicicJce's  real  doctrine  was,  or  what  were  the  three  cases  to  which  he  alluded." 
The  three  cases  of  Lord  Hardickke  are  very  apparent.  1.  "If  the  deed, 
or  instrument,  concede  the  title  of  land,  and  possession  prayed  to  be  estab- 
lished." 2.  "  Another  case  is  of  a  personal  demand,  where  loss  of  a  bond,  a 
bill  in  equity  on  that  loss,  to  be  paid  the  demand."  3.  "  Another  case,  in  which 
you  may  come  into  this  Court  on  a  loss,  is,  to  pray  satisfaction  and  payment  of 
it  upon  terms  of  giving  security."  But  this  case  is  put  mainly  upon  the  ground 
of  the  want  of  an  affidavit  of  the  loss  accompanying  the  bill.  Lord  Hardickke 
more  than  once  says  that  such  an  affidavit  is  indispensable  to  the  jurisdiction. 
The  same  course  of  reasoning, is  pursued  in  Whitefield  v.  Fausset,  1  Ves.  388. 
In  Walmsley  v.  Child  there  was  neither  an  affidavit  of  loss,  nor  offer  of  indem- 
nity ;  but  the  affidavit  is  no  doubt  indispensable.  Without  that,  the  whole  pro- 
ceeding may  be  a  mere  contrivance  to  change  the  jurisdistion,  while  the  plaintiflF 
1  See  Bank  of  the  United  States  v.  Sill,  jwst,  699. 


CHEWNING  V.   SINGLETON.  693 

all  the  while  has  his  note  in  his  pocket.  With  this  safeguard,  there  seems  to  me 
to  be  no  difficulty  in  maintaining  the  jurisdiction,  upon  grounds  well  recognized 
in  courts  of  equity. 

It  is  obvious,  there  will  be  two  classes  of  cases,  where  a  court  of  ofjuity  will 
be|Called  upon  to  interfere  in  the  case  of  lost  instruments;  perhaps  tiiree.  1. 
The  holder  or  loser  of  such  instruments  will  ai)ply  fur  a  decree  of  payment. 
2.  If  the  loser  choose  to  proceed  at  law,  the  maker  may  apply  to  a  court  of 
equity  to  decree  him  a  suitable  indemnity.  3.  The  loser  may  apply  to  a  court 
of  equity  for  a  discovery,  merely,  in  aid  of  a  court  of  law. 

In  regard  to  tiie  first  case,  so  far  as  relates  to  promissory  notes  not  negotia- 
ble, or  not  pegotiated,  where  the  loser  may  sue  at  law,  the  principal  ground  of 
the  jurisdiction  must  be  tiie  necessity  of  a  discovery  and  llie  accident,  by  which 
that  which  the  parties  have  constituted  the  evidence  of  their  contract,  has  become 
incapable  of  performing  its  destined  office.  A  court  of  equity  will  grant  relief 
in  all  cases  of  accident  or  mistake  where  one  party  has  thereby  put  it  out  o 
his  power  to  obtain  what  it  was  intended  he  should  enjoy.  So,  too,  according  to 
the  English  equity  practice  before  the  time  of  Lord  Thurlow,  and  which  has  been 
adopted  as  the  standing  rule  of  practice  in  this  country,  the  plaintiff  may,  in 
every  case  of  a  bill  for  discovery,  pray  relief  if  he  choose ;  and  if,  upon  ob- 
taining the  discovery,  the  case  seems  to  be  one,  not  specially  requiring  to  be 
heard  in  a  court  of  law,  for  the  purpose  of  a  jury  trial,  or  some  other,  then  the 
court  of  equity  will,  in  their  discretion,  proceed  and  determine  the  case.  In 
practice,  in  this  country,  the  case  is  almost  uniformly  determined  in  the  court  of 
equity,  when  once  carried  there,  even  for  a  discovery.  And  for  this  purpose,  all 
that  seems  necessary,  to  found  a  jurisdiction  for  relief,  is  a  bill  for  discov- 
ery, alleging  a  defect  of  proof  at  law,  by  reason  of  the  loss  of  the  note,  with 
a  prayer  for  relief,  and  an  affidavit  of  the  loss.  The  offer  of  indemnity  seems 
to  be  a  matter,  in  which  the  defendant  is  solely  interested,  and  not  to  form  any 
just  basis  of  an  equity  jurisdiction  on  the  part  of  the  plaintiff,  unless  it  is  wliolly 
to  oust  the  legal  forum,  —  which  it  has  not  yet  done,  except  in  the  case  of  paper 
negotiated.  The  indemnity  is  a  matter  in  which  it  seems  to  us  safe  to  suffer  the 
defendant  to  move. 

2.  If  the  bill  is  brought  by  the  defendant  to  restrain  the  loser  of  the  note 
from  proceeding  at  law  until  he  give  the  maker  indemnity,  then,  indeed,  the 
necessity  for  indemnity  is  the  sole  ground  of  the  jurisdiction.  The  case  will,  in 
this  view,  turn  exclusively  upon  the  cpiestion  of  the  defendants'  being  entitled  to 
indemnity.  If  that  point  is  made  out,  the  case  will  be  finished  in  the  court  of 
equity  ;  if  not,  the  bill  will  be  dismissed.  But  that  the  plaintiff's  case  should 
be  made  to  rest,  for  its  jurisdiction,  upon  offering  an  indemnity  to  the  defendant, 
which  he  may  or  may  not  be  entitled  to,  is  certainly  not  consistent  with  our 
views  of  sound  chancery  law. 

3.  If  the  party  seek  a  discovery  merely,  he  is  not  required  to  make  affidavit 
of  the  loss.  And  when  he  seeks  relief  also,  and  omits  to  make  allidavit  of  the 
loss  upon  filing  tiie  bill,  he  may,  no  doubt,  amend  in  this  particular;  and  if  the 
defendant  omit  to  demur,  but  answer  admitting  the  loss,  the  want  of  an  affidavit 
is  no  ground  of  dismissing  the  bill.  Findlay  v.  Hinde,  1  Peters,  241-244; 
Livingston  r.  Livingston,  4  Johns.  Ch.  294;  1  Dan.  Ch.  Pr.  449,  450;  and 
notes,  Perkins'  Ed. 


694  LOST   BILLS    AND   NOTES. 

But  in  the  present  case  there  is  an  aflidavit ;  and  we  think  there  is  not  now, 
the  claim  being  barred  by  the  statute  of  limitations,  if  there  ever  was,  any  neces- 
sity of  an  indemnity  to  the  defendant.  The  decree  of  the  chancellor  must  be 
reversed,  and  a  decree  for  the  plaintifi"  without  indemnity  and  without  costs. 

See  Blade  r.  Noland,  12  Wend.  173;  Des  Arts  v.  Leggett,  16  N.  Y.  (2 
Smith)  582;  s.  c,  5  Duer,  156. 


Samuel  B.  Tuttle  v.  Lafayette  F.  Standish  and 
Trustees. 

(4  Allen,  481.     Supreme  Court  of  Massachusetts,  September,  1862.) 

Action  at  law.  Indemnity.  —  The  owner  of  a  lost  note  cannot  maintain  an  action 
at  law  against  an  indorser,  in  a  case  where  a  bond  to  indemnify  tlie  defendant 
against  being  called  on  a  second  time  to  pay  the  note  would  not  afford  to  him  an 
adequate  protection. 

Contract  against  the  indorser  of  a  lost  note  of  $500,  signed  by 
one  Pritchard  and  given  by  him  as  a  business  note  to  the  defend- 
ant, to  whose  order  it  was  payable,  and  by  whom  it  was  indorsed  to 
one  Newell,  who  transferred  it  to  the  plaintiff  before  its  maturity. 
At  the  trial  in  the  Superior  Court,  before  3Iorton,  J.,  various  ques- 
tions arose  which  are  not  now  material.  The  judge  directed  a 
verdict  to  be  returned  for  the  plaintiff,  and  reported  the  case  for 
the  determination  of  this  Court. 

Hoar,  J.  The  principles  upon  which  the  right  to  recover  on  a 
lost  note  depends,  have  been  fully  considered  in  a  case  which  came 
before  us  since  this  case  was  argued.  Tower  v.  Appleton  Bank, 
3  Allen,  387.^  The  general  rule  is,  that  where  the  writing  is  mere- 
ly the  evidence  of  a  contract,  the  loss  or  destruction  of  the  writing 
does  not  destroy  the  cause  of  action,  but  renders  secondary 
evidence  admissible.  But  where,  from  the  nature  of  the  contract, 
the  party  answerable  upon  it  is  entitled  to  have  the  writing  deliv- 
ered up  to  him,  for  his  security,  or  to  enable  him  to  enforce  his 
rights  under  it,  when  he  is  called  upon  to  perform  it,  as  in  the 
case  of  a  negotiable  bill  or  note,  if  it  is  lost  or  destroyed,  an  action 
cannot  be  maintained  upon  it,  unless  his  rights  can  be  fully  secured 
by  a  bond  of  indemnity,  or  other  sufficient  security.  In  the  case 
of  the  maker  of  a  negotiable  promissory  note  payable  to  bearer  or 

1  Ante,  674. 


TDTTLE   V.    STANDISH.  G95 

indorsed  in  blank,  the  maker  being  the  party  ultimately  chargeable, 
the  only  hazard  to  which  he  is  exposed,  is  that  he  may  be  called 
upon  a  second  time  to  pay  it  to  a,  bona  fide  holder  ;  ^nd  ajrahist  this 
risk  a  bond  of  indemnity  seems  to  afford  an  adequate  protection. 
The  acceptor  of  a  bill  of  exchange  is  in  a  similar  position,  except 
that  he  may  want  the  bill  as  a  voucher  in  his  settlement  with  the 
drawer.  But  even  in  these  cases,  the  settled  doctrine  in  England 
and  in  New  York  has  Ijecn,  that  the  only  remedy  was  in  equity,  if 
the  note  or  bill  was  lost ;  their  courts  considering  that  a  court  of  law 
had  no  authority  to  order  an  indemnity  to  a  defendant,  as  a  condi- 
tion of  the  plaintiff's  right  to  recover.  This  doctrine  has  been 
recently  modified  by  statutory  provisions. 

In  the  absence  of  general  equity  powers,  it  was  early  held  in 
this  Commonwealth  that  the  owner  of  a  lost  note  might  recover 
against  the  maker,  upon  giving  a  bond  of  indemnity,  and  that  a 
court  of  law  might  require  such  a  bond  to  be  given.  Jones  v. 
Fales,  5  Mass.  lOl ;  Fales  v.  Russell,  16  Pick.  315  ;i  Almy  v.  Reed, 
10  Cush.  421.  But  all  the  considerations  against  allowing  such 
a  recovery  apply  more  forcil)ly  to  the  case  where  payment  is  de- 
manded of  an  indorser  ;  for  he  is  entitled  to  the  possession  of  the 
note,  in  order  to  have  his  recourse  over  against  the  maker.  Story, 
Notes,  §  108.  And  see  Smith  v.  Rockwell,  2  Hill  (N.  Y.),  482.2 
And  it  is  apparent  that  a  mere  bond  of  indemnity  against  being 
compelled  to  make  a  second  payment  is  usually  no  sufficient  sub- 
stitute to  the  indorser  for  the  production  and  delivery  of  the  note. 
In  pursuing  his  remedy  over,  he  needs  the  instrument  as  the  evi- 
dence of  his  own  right.  When  he  has  received  it  from  the  indor- 
see by  payment,  it  still  retains  its  negotiable  quality.  He  may 
wish  to  dispose  of  it  to  a  purchaser.  If  he  may  do  this  by  an 
indorsement  on  a  coi)y,  when  the  original  is  lost,  how  is  he  to 
transfer  or  preserve  the  evidence  necessary  to  make  it  available  ? 
He  may  have  occasion  to  transmit  it  for  collection  to  distant 
places,  and  the  mass  of  evidence  to  supply  its  place  is  by  no  means 
equally  transmissible,  or  ecjually  permanent.  If  he  sues  the 
maker,  he  is  not  only  put  to  additional  trouble  and  inconvenience 
in  establishing  his  claim,  but  is  obliged  in  his  turn  to  furnish  a 
bond  of  indemnity.  There  are  many  cases  in  which  it  is  difficult 
to  see  how  a  complete  equivalent  for  all  that  he  loses  in  the  loss 
of  the  paper  can  be  secured  to  him. 

1  Ante,  683.  2  Cited  in  full,  p.  G97. 


696  •  LOST   BILLS   AND   NOTES. 

It  is  very  evident  that  if  one  is  bound  by  contract  to  furnish  a 
negotiable  note  to  another,  it  would  be  no  legal  or  equitable  per- 
formance of  th^t  obligation  to  furnish  evidence  that  the  note  has 
been  lost  or  destroyed,  and  to  assign  the  mere  right  of  property 
in  the  contract  of  which  the  missing  paper  was  the  evidence. 

There  was  no  case  cited  at  the  argument  in  which  there  had 
been  a  recovery  at  law  against  an  indorser  on  a  lost  note.  In 
Jones  V.  Fales,  5  Mass.  101,  the  action  was  upon  several  notes  ; 
and  a  part  of  them  were  indorsed  by  the  defendant,  and  on  the 
others  he  was  promisor.  The  Court  in  their  opinion  make  no  dis- 
tinction as  to  his  liability  in  these  different  capacities.  But  it  is 
to  be  observed  of  that  case,  1.  Tliat  no  point  respecting  such  a 
distinction  was  made  or  presented  to  the  Court ;  2.  That  the  notes 
were  lost  from  the  files  of  the  Court,  so  that  one  party  was  no 
more  responsible  for  the  loss  than  the  other  ;  and  3.  That  the 
notes  were  found  before  any  judgment  was  rendered.  It  is  not 
therefore  an  authority  of  much  weight  upon  the  question  now  be- 
fore us.  In  Freeman  v.  Boynton,  7  Mass.  483,  486,  it  was  said  by 
Mr.  Justice  Parker  that  a  demand  on  the  maker  upon  a  lost  note 
would  be  sufficient  to  charge  the  indorser,  if  accompanied  with  a 
tender  of  sufficient  indemnity  ;  whicli  would  seem  to  imply  that  a 
claim  upon  it  might  be  maintained  against  the  indorser;  but  the 
point  was  not  decided. 

In  Renner  v.  Bank  of  Columbia,  9  Wheat.  581,  a  judgment  was 
recovered  against  an  indorser  upon  a  lost  note  ;  but  no  point  was 
made  of  any  distinction  between  his  case  and  that  of  a  promisor. 
In  that  case,  also,  it  appeared  that  there  had  been  a  previous  suit 
against  the  maker,  in  which  the  note  had  been  used. 

Considering  the  point  an  open  one  in  this  Commonwealth,  we  do 
not  mean  to  say  that  the  reasoning  of  the  Court  in  Fales  v.  Russell 
is  not,  in  many  cases,  as  applicable  to  the  case  of  an  indorser  as 
of  a  promisor.  If,  for  example,  the  note  were  proved  to  have 
been  made  for  the  accommodation  of  the  indorser,  a  simple  bond 
of  indemnity  might  be  a  sufficient  protection  to  the  defendant.  If 
the  holder  had  previously  recovered  a  judgment  against  the  maker, 
an  assignment  of  the  judgment,  with  such  a  bond,  might  secure 
his  rights  substantially.  And  these  securities  might  perhaps  be  as 
well  afforded  in  a  suit  at  law,  as  a  condition  of  the  issuing  of  an 
execution,  as  in  a  suit  in  equity.  But  with  the  full  equity  juris- 
diction now  existing  in  Massachusetts,  it  cannot  be  necessary  to 


TUTTLR   V.    STANDISH.  "  697 

attempt  to  extend  the  functions  of  a  court  of  law  to  any  doubtful 
cases,  for  which  Cijuity  atTords  a  more  apjircjpriate  remedy.  Tliat 
jurisdiction  allows  so  much  greater  latitude  in  adapting  its  pro- 
cesses and  decrees  to  the  particular  circumstaiiTies  of  each  case, 
that,  with  its  power  of  emln-acing  and  adjusting  in  one  suit  the 
rights  and  claims  of  all  parties  in  interest,  it  seems  to  furnish 
the  proper  tribunal  for  the  prosecution  of  a  claim  like  that  which 
we  are  now  considering.  A  simple  bond  of  indemnity  would  not 
be  an  adequate  protection  to  the  defendant ;  and  it  would  he  a 
novel,  and  as  it  seems  to  us,  an  impracticalde  course,  to  attempt 
to  devise  and  impose*  an  obligation  on  the  plaintiff  to  do  all 
the  affirmative  and  jiositivc  acts  which  the  assertion  of  the  de- 
fendant's rights  against  the  maker  of  the  note  might  hereafter 
require. 

Whether  even  a  court  of  equity  could  give  relief,  might  depend 
upon  circumstances  not  fully  develoi)ed. 

The  objection  to  the  plaintiff's  recovery  not  being  the  want  of 
an  original  cause  of  action,  nor  that  the  cause  of  action  has  been 
extinguished,  but  that  he  is  unable,  perhaps  by  a  misfortune  only 
temporary,  to  produce  the  paper  necessary  as  the  foundation  of  a 
judgment,  it  seems  to  us  that  he  should  have  the  election  to  be- 
come nonsuit,  if  he  shall  be  so  advised ;  otherwise  the  verdict 
to  be  set  aside  and  judgment  entered  upon  the  report  for  the  de- 
fendant. 

In  Sinitli  V.  Rockwell,  2  Ilill,  482,  it  appeared  that  before  the  note  sued  on 
became  due,  it  was  lost  or  mislaid  by  the  plaintifr;  but  demand  was  made  at 
maturity,  and  notice  of  non-payment  given,  without  any  objection  on  account 
of  the  absence  of  the  note.  No  bond  of  indemnity  was  offered  to  or  requested 
by  the  maker  or  indorser,  who  Avere  jointly  sued  in  this  action ;  and  it  did  not 
appear  that  cither  knew  of  the  loss  till  suit  was  commenced.  The  note  was 
found  before  the  trial,  and  produced  and  proved  as  in  ordinary  cases.  Defend- 
ants moved  for  nonsuit  on  two  grounds:  1.  That  no  bond  of  indemnity 
was  tendered  to  the  defendants  when  the  note  was  protested  for  non-payment. 
2.  That  the  plaintiffs  were  bound  to  prove  that  indemnity  had  been  tendered  to 
the  defendants  before  suit.  The  motion  was  denied,  and  verdict  and  judgment 
given  for  the  plaintiffs.  Defendants  appealed.  The  opinion  of  the  Court  above 
was  pronounced  by 

Nklson,  C.  J.  If  the  makers  had  offered  to  pay  the  note  in  question,  but 
declined  on  finding  that  it  was  lost,  or  if  the  indorser  had  proposed  to  take  it  up 
on  receiving  notice  of  protest,  with  a  view  of  calling  upon  his  principals,  the 
question  would  have  been  different  from  the  one  now  presented.  The  note  being 
negotiable,  neither  was  bound  to  make  payment  without  receiving  it  as  their 


698  LOST   BILLS    AND   NOTES. 

vouclier ;  or  upon  tender  of  ample  indemnity  against  any  future  liability.  This 
has  been  deliberately  settled,  and  for  the  most  satisfactory  reasons.  Hansard  v. 
Robinson,  7  Barn.  &  C.  90;  Rowley  v.  Ball,  3  Cow.  303 ;  '  Chitty.  Bills,  423  ; 
Chitty,  Jr.,  53.  An  indemnity  may  be  required  in  such  cases,  with  a  view  to 
proceedings  in  a  court  of  equity  to  compel  payment  notwithstanding  the  loss. 

Tender  of  indemnity  should  be  made  to  both  maker  and  indorser  at  the  time 
of  demand  and  notice ;  because,  as  tlie  former  is  not  bound  to  make  payment 
without  the  production  of  the  note,  or  indenmity  in  case  of  loss,  for  that  very 
reason  payment  ought  not  to  be  required  of  the  latter  till  the  proper  steps  have 
been  taken  to  secure  his  immediate  recourse  against  his  principal.  Besides,  the 
indorser\s  own  liability  upon  the  paper  demands  indemnity  to  himself,  which 
should  be  given  without  delay,  so  that  he  may  be  in  a  situation  to  pay  the 
demand  at  any  time  after  notice,  and  look  to  the  maker.  Any  prejudice  he 
might  suffer  by  reason  of  neglect  on  the  part  of  the  holder  to  give  the  necessary 
indemnity  in  either  case,  would  no  doubt  afford  ground  for  refusing  to  enforce 
payment  against  him  on  application  to  a  court  of  equity  for  that  purpose.  The 
holder,  therefore,  should  take  the  necessary  steps,  «with  all  reasonable  diligence, 
to  secure  a  speedy  resort  to  that  court  in  behalf  of  the  surety ;  as  the  conse- 
quences of  delay  would  justly  fall  upon  the  holder,  so  far  as  the  indorser  or  any 
other  party  standing  in  that  relation  upon  the  paper  is  concerned. 

The  statute  (2  Rev.  Sts.  327,  §  95,  96,  2d  ed.)  allows  a  remedy  at  law  upon  a 
lost  negotiable  note  and  bill  of  exchange,  upon  giving  a  bond  to  the  adverse 
party  in  a  penalty  of  double  the  amount  of  the  note  or  bill,  with  two  sureties  to 
be  approved  by  the  court  in  which  the  action  is  pending,  conditioned  to  indem- 
nify him,  his  heirs,  and  personal  representatives  against  all  claims  on  account  of 
the  same,  and  against  all  costs  and  expenses  by  reason  thereof.  This  statute, 
however,  only  applies  to  the  remedy,  and  in  no  way  affects  the  rights  or  liabilities 
of  the  parties  arising  out  of  the  proceedings  to  charge  the  drawer  or  indorser. 
These  stand  upon  the  principles  of  commercial  law,  the  same  as  before  the 
enactment ;  and  any  defence  that  might  before  have  been  available  at  law,  if 
the  note  had  not  been  lost,  or  in  equity,  if  lost,  must  be  equally  so  since  the 
statute. 

But  the  note  in  question  does  not  fall  either  under  the  doctrine  that  calls  for 
indemnity  with  a  view  to  proceedings  in  equity,  or  under  the  above  provisions 
of  the  statute.  It  is  not  a  lost  note,  nor  can  it  be  so  regarded  by  either  maker 
or  indorser.  A  copy  was  duly  served  with  the  declaration  according  to  the 
statute,  and  the  original  produced  on  the  trial ;  and  though  it  was  supposed  to 
have  been  lost  by  the  bolder  at  the  time  it  fell  due,  still  it  was  duly  protested 
and  notice  given  in  the  ordinai-y  way,  without  any  exception  being  then  taken 
by  either  party  on  account  of  the  non-production  at  the  time.  Xor  have  their 
rights  been  at  all  affected  one  way  or  the  other  by  the  temporary  loss  of  it.  I  am 
of  opinion,  therefore,  that  the  judgment  is  right,  and  ought  to  be  afBrmed. 

Judgment  affirmed. 
1  Ante,  680. 


BANK   OF   UNITED   STATES   V.    SILL.  699 


The  Bank  or  the  United  States  v.  Sill. 

(5  Cdnnecticut,  lOG.     Supreme  Court,  July,  1823.) 

Commercial  paper  cut  in  halves.  —  If  the  bolder  of  a  bank-bill  voluntarily  cut  it  in  halves, 
for  the  sole  purpose  of  transmitting  it  by  mail  with  greater  safety,  this  will  not 
affect  his  rights  upon  such  bill.  To  entitle  him  to  recover  on  the  production  of  but 
one  of  tiie  parts,  he  must  show  that  he  is  owner  of  the  whole,  and  account  for 
the  absence  of  the  other  part. 

The  parts  of  a  divided  Ijank-bill  are  not  separately  negotiable. 

Notice  1)1/  the  payor  of  cut  bills.  — The  board  of  directors  of  the  Bank  of  the  United  States 
gave  notice  that  the  bank  would  not  hold  itself  responsible  upon  any  of  its  notes 
whicli  should  be  voluntarily  cut  into  parts,  except  on  the  production  of  all  the 
parts  ;  wliich  notice  was  published  in  all  the  newspai)ers  of  the  city  of  Phyadel- 
phia,  at  whicli  place  said  bank  was  located ;  held,  tliat  the  rigiits  of  a  person  in 
Connecticut,  who  subsequently  became  the  owner  of  a  note  so  cut  into  parts,  and 
who  was  in  possession  of  one  of  the  parts,  and  who  had  never  received  the  notice, 
were  not  affected  by  the  same. 

This  cau.se  was  tried  before  the  Superior  Court,  October  term, 
1822,  on  the  plea  of  non-assumpsit ;  when  the  jury  returned  a 
special  verdict,  containing  the  following  statement  of  facts.  On 
the  first  of  January,  1817,  the  defendants,  at  Philadelphia,  made 
and  issued  their  promissory  note,  commonly  called  a  bank-bill, 
signed  by  ^Yilliflm  Jones,  their  president,  and  countersigned  by 
Jonathan  Smith,  their  principal  cashier,  promising  to  pay  to 
C.  S.  West,  or  bearer,  on  demand,  one  hundred  dollars,  of  which 
the  plaintiflf,  on  the  fourth  of  December,  1819,  became  the  lawful 
bearer.  For  the  purpose  of  transmitting  this  bill  safely,  by  mail, 
from  Harpersfield,  in  the  State  of  Ohio,  to  Lyme,  it  was  divided, 
by  Robert  Harper,  the  agent  of  the  plaintiff,  who  held  it  as  the 
plaintiff's  property  ;  and  one-half  was  enclosed  in  a  letter,  directed 
to  the  plaintiff  at  Lyme,  which  was  deposited  in  the  post-office  at 
Harpersfield,  and  was,  on  the  tenth  of  January,  1820,  received  by 
the  plaintiff.  On  the  twelfth  of  February,  1820,  Harper  enclosed 
the  remaining  half  of  the  same  bill,  in  another  letter,  directed  to 
the  plaintiff  at  Lyme,  and  deposited  it  in  the  post-office  at 
Harpersfield.    It  was  forwarded  by  the  postmaster  at  Harpersfield 


700  LOST   BILLS    AND   NOTES. 

but  never  arrived  at  the  post-office  in  Lyme,  nor  was  it  ever 
received  by  tiie  plaintiff,  but  was  lost  to  him.  On  the  fifteenth 
of  May,  1820,  the  plaintiff,  having  in  his  possession  the  first- 
mentioned  half,  and  being  the  lawful  owner  of  ^aid  bill,  presented 
such  half  to  the  defendants,  and  demanded  payment  of  the  bill, 
according  to  its  tenor,  and  gave  notice  and  offered  proof  of  the 
facts  before  stated.  The  defendants  refused  to  pay  the  bill  on 
any  other  terms  than  the  production  of  both  halves  of  it ;  and 
have  never  paid  it. 

On  the  twenty-fourth  of  August,  1819,  the  board  of  directors, 
at  their  legal  and  regular  meeting,  at  their  banking-house  in  Phila- 
delphia, passed  the  following  order :  "  Bank  of  the  United  States, 
August  24,  1819,  The  frequent  demands  made  upon  the  bank, 
for  the  payment  of  its  notes,  on  production  of  half  notes,  alleging 
the  loss  of  the  corresponding  halves,  and  the  liability  to  imposition 
and  fraudulent  practices,  to  which  it  is  exposed,  by  paying  such 
claims ;  from  which,  it  is  advised,  it  cannot  be  duly  protected  by 
any  evidence,  which  may  accompany  such  claims,  or  any  security 
which  may  be  given  to  indemnify  it,  render  it  necessary  to  re-* 
fuse  payment  of  such  demands.  They  grow  out  of  the  voluntary 
act  of  the  party  who  separates  the  parts  of  the  notes  ;  and  he  alone 
ought  to  bear  the  inconveniences  and  losses  consequent  upon  the 
act.  But  as  the  practice,  however  improper,  has  been  a  common 
one,  and  the  bank  is  unwilling,  without  apprising  the  public  of  its 
intention  to  withhold  even  a  questionable  claim  upon  it,  these 
demands  will  be  met  as  usual  heretofore  until  the  first  of  Novem- 
ber next.  But  notice  is  hereby  given,  that  the  Bank  ©f  the  United 
States  will  not,  after  the  first  of  November  next,  hold  itself  respon- 
sible upon  any  of  its  notes,  which  shall  be  voluntarily  cut  into 
parts,  except  on  the  production  of  all  the  parts.  By  order  of  the 
board  of  directors.     Jonathan  Smith,  cashier." 

This  notice  the  bank  caused  to  be  published  in  all  the  public 
newspapers  printed  in  the  city  of  Philadelphia,  for  three  weeks 
successively,  before  the  plaintiff's  bill  was  divided  ;  but  none  of 
such  papers  were  received  by  the  plaintiff,  or  circulated  in  the  town 
of  Lyme. 

Upon  these  facts  the  Superior  Court  rendered  judgment  for  the 
plaintiff  to  recover  the  amount  of  the  bill,  with  interest  from  the 
time  he  demanded  payment  of  the  bank.  The  ^defendants  there- 
upon brought  the  present  writ  of  error. 


UNITED   STATES    BANK    V.    SILL.  701 

Peters,  J.  The  plaintiffs  in  error  contend,  1.  That  the  facts 
alleged  and  found  are  not  a  sufiicient  foundation  for  the  admission 
of  secondary  evidence  to  su)>i>ly  the  want  of  a  jyrofcrt.  2.  That 
the  loss  or  destruction  of  the  bill  proceeded  from  the  voluntary  act 
of  the  defendant  in  error.  3.  That  the  plaintiffs  in  error  are  not 
liable,  in  any  event,  after  the  pul)lication  of  their  determination  not 
to  pay  "  cut  notes,"  unless  all  the  parts  are  produced. 

As  to  the  first  exception,  it  is  a  well-settled  rule,  that  in  declar- 
ing upon  simple  contracts  a  profcrt  is  not  necessary ;  and  its 
omission  is  a  mere  matter  of  form,  and  can  be  taken  advantage  of 
only  by  a  special  demurrer.  1  Swift,  Dig.  675 ;  1  Chitty,  Plead. 
349  ;  Salisbury  v.  Williams,  2  Salk.  497.  An  excuse  for  the 
omission  is  therefore  unnecessary.  But  an  excuse  has  been  alleged 
and  found  ;  was  this  sufficient  to  introduce  secondary  evidence  ? 
If  it  was  improperly  admitted,  the  remedy  is  a  motion  for  a  new 
trial.     It  is  no  ground  for  error.  8  Day,  29. 

But  it  is  said  that  the  bill  is  not  lost  or  destroyed,  but  only  mis- 
laid. In  Beckford  v.  Jackson,  1  Esp.  3o7,  the  plaintiff  counted 
ou  a  deed  as  "  lost  or  mislaid,"  upon  which  issue  was  taken  ;  and 
the  same  was  recognized  by  Lord  Kenyon  as  warranted  by  law  ; 
and  by  the  Court  for  the  correction  of  errors  in  New  York, 
Livingstgjn  v.  Rogers,  1  Caincs  Cas.  in  Error,  27,  proof  by  a 
witness  that  the  paper  in  question  was  thrown  aside  as  useless, 
and  that  he  believes  it  lost  or  destroyed,  will  be  sufficient  to  let  in 
secondary  evidence.  1  Phil.  Evid.  347,  et  seq. ;  Rex  v.  Johnson, 
7  East,  GO  ;  Kensington  v.  Inglis  ct  al.,  8  East,  273. 

2.  It  is  said  that  the  loss  or  destruction  of  the  bill  proceeded 
from  the  voluntary  act  of  the  defendants. 

When  the  holder  of  a  bill  voluntarily  and  intentionally  destroys 
it,  or  alters  it  fraudulently,  he  has  no  remedy  ;  but  if  he  loses, 
cancels,  alters,  or  destroys  it,  by  accident  or  mistake,  his  rights 
are  not  affected;  his  evidence  only  is  impaired.  A  bill  or  note 
is  not  a  debt ;  it  is  only  primary  evidence  of  a  debt ;  and  when 
this  is  lost,  impaired,  or  destroyed  hotia  Jidc,  it  may  be  supplied 
by  secondary  evidence.  Was  this  bill  divided  and  put  into  the 
post-office  with  a  view  to  abandon  or  destroy  it,  or  to  defraud 
the  bank?  The  verdict  expressly  finds  that  this  was  done  solely 
for  the  purpose  of  transmitting  it  from  Ohio  to  Connecticut  by 
mail,  the  most  usual,  safe,  and  expeditious  mode  of  remittance. 
The  act  was  indeed  voluntary  ;  but  the  intent  was  to  preserve. 


702  LOST   BILLS   AND   NOTES. 

Where  then  is  the  evidence  of  voluntary,  negligent,  or  fraudulent 
loss,  or  destruction  of  the  bill  ? 

But  it  is  contended  that  the  bank  is  equally  liable  to  the  bona 
fide  holder  of  the  other  moiety.  This  would  be  true  if  the  moiety 
of  a  bill  were  negotiable.  Cases  innumerable  arc  found  in  the  books, 
where  a  party  may  recover,  who  has  lost  the  primary  evidence  of 
his  chxi  m  ;  but  not  if  it  be  negotiable,  unless  it  be  destroyed. 
1  Phil.'  Evid.  347,  et  seq.,  and  cases.there  cited.  For  the  bo7ia  fide 
receiver  or  holder  of  negotiable  paper  without  notice  is  always  safe. 
Miller  v.  Race,  1  Burr.  452,  But  a  part  of  a  bill  is  not  negotiable  ; 
and  the  holder  cannot  recover  upon  it  without  proving  a  title  to 
all  the  parts.  In  the  present  case,  the  plaintiff  is  the  possessor 
and  bearer  of  one  moiety,  and  proves  himself  the  "owner  of  the 
other  ;  which  the  possessor  or  bearer  of  the  last  moiety  can  never 
do.  He  must  have  received  it  with  notice  that  the  other  moiety 
belonged  to  somebody  else ;  and  taken  it,  not  on  the  credit  of  the 
bank,  but  of  the  bearer,  to  whom  alone  he  can  look  for  indemnity. 
Of  all  the  authorities  which  have  been  cited,  by  the  plaintiffs' 
counsel,  one  only  is  in  point ;  for  the  case  oi«Master  et  al.  v. 
Miller,  4  T.  R.  320,  so  much  relied  on,  has  no  beaming  on  the  case. 
It  was  an  action  by  the  indorsees  against  the  acceptor  of  a  bill, 
the  date  of  which  the  jury  found  had  been  altered  after  acceptance, 
while  in  the  hands  of  the  payees,  so  as  to  accelerate  the  time  of 
payment ;  and  the  Court,  very  properly,  adjudged  it  void.  But 
the  case  of  Mayor  et  al.  v.  Johnson  et  al.,  3  Camp.  324,  is  directly 
in  point.  In  that  case,  judgment  was  rendered  for  the  defendant, 
by  Lord  Mlenborough,  on  the  ground  that  the  last  half  of  a  bank- 
bill  was  negotiable,  and  would  enable  a  bona  fide  holder  to  recover 
of  the  bank  ;  which,  with  all  due  deference  to  an  illustrious  judge, 
I  am  bound  to  say,  is  not  law.  As  well  might  a  vignette,  or  any 
other  fragment  torn  from  a  bill,  be  considered  negotiable.  The 
only  apology  I  can  make  for  his  lordship  is,  that  he  was  on  the 
circuit,  where  business  is  done  in  haste,  without  time  and  means 
for  investigation  and  consideration,  and  where  the  greatest  judges 
frequently  err.     "  Quandoque  bonus  dormitat  Homerus.^^ 

3.  The  last  exception  is  as  extraordinary  as  it  is  novel,  and  is 
probably  the  first  instance  of  a  debtor's  undertaking  to  prescribe 
terms  to  his  creditors.  It  is  a  sufficient  answer  to  this  objection, 
that  their  notice  never  came  to  the  knowledge  of  the  defendant  in 
error,  though  it  was  published  in  the  Philadelphia  newspapers,  at 
the  distance  of  two  hundred  miles. 


BANK   OF   UNITED   STATES   V.    SILL.  703 

All  the  questions  presented  by  this  record  have  been  repeatedly 
decided  by  American  courts  ;  and  the  case  of  Mayor  et  al.  v.  John- 
son et  al.  has  been  expressly  overruled.  In  Patton  v.  State  Bank, 
and  Idem  #  Bank  of  South  Carolina,  on  a  similar  state  of  facts, 
the  Constitutional  Court  of  South  Carolina  decided  that  the  cut- 
ting or  severing  of  a  bank-bill  destroyed  its  negotiability  ;  that  the 
bona  fide  holder  of  a  part,  who  owns  the  whole,  can  enforce  pay- 
ment ;  and  that  the  bearer  of  a  part  only  has  no  claim  on  the 
bank,  because  he  cannot  prove  title  to  all  the  parts,  and  he  receives 
it  with  his  eyes  open.  2  Nott  &  McCord,  404.  In  Armot  v.  Union 
Bank,  1(3  Niles  Reg.  360,  the  Circuit  Court  for  the  District  of 
Columl>ia  decided  that  the  half  of  a  bank-bill  is  not  negotiable ; 
and  that  the 'holder  of  a  part,  owning  the  whole,  is  entitled  to 
recover.  And  in  a  more  recent  case,  Martin  v.  Bank  of  the  United 
States,  Circuit  Court,  Penn.  District,  October,  1821,  upon  the  pre- 
cise statement  of  facts  contained  in  the  verdict  in  question,  Judges 
Washington  and  Peters  rendered  judgment  for  the  plaintiff,  not 
in  the  hurry  of  a  nisi  j/riits  trial,  as  has  been  suggested  in  argu- 
ment, but  upon  a  solemn  review  of  all  the  cases  on  this  subject, 
especially  of  a  previous  decision  of  their  own,  and  of  Patton  v. 
The  State  Bank.  With  these  decisions  I  entirely  concur  ;  and  am, 
therefore,  of  opinion  that  there  is  no  error  in  the  judgment  com- 
plained of. 

Chapman,  Brainard,  and  Bristol,  JJ.,  were  of  the  same 
opinion. 

Mosiiicr,  C.  J.,  declined  giving  any  opinion. 

Judgment  affirmed. 

In  the  case  of  Martin  v.  Bank  of  the  United  States,  4  Wash.  2.j3,  cited  in  the 
opinion,  supra,  Mr.  Justice  Washington  said :  "  I  have  carefully  reviewed  the 
decision  of  this  Court  in  the  case  of  Bullet  r.  The  Bank  of  Pennsylvania. 
[2  Wash.  172]  aided  by  the  light  shed  upon  the  (juestion  involved  in  that  and  in 
the  present  case  by  the  able  arguments  of  the  counsel  on  each  side.  My 
opinion  remains  unchanged,  and  is  indeed  confirmed  by  the  two  American  cases 
cited  at  the  bar,  and  particularly  by  the  luminous  argument  of  Judge  Drayton, 
in  the  case  of  Patton  v.  The  State  Bank. 

"The  principles  upon  which  this  Court  decided  the  case  of  Btdlvt  r.  The  Bank 
of  Pennsylvania  were,  that  a  bank,  or  any  other  promissory  note,  is  the  evidence 
of  a  debt  due  by  the  maker  to  the  holder  of  it,  and  nothing  more.  It  is  also  the 
highest  species  of  evidence  of  such  debt,  and  in  fact  the  only  proper  evidence,  if 
it  be  in  the  power  of  the  owner  of  the  note  to  produce  it.  But  if  it  be  lost  or 
destroyed,  or  by  fraud  or  accident  has  got  into  the  possession  of  the  maker,  the 


704  LOST  BILLS   AND  NOTES. 

owner  does  not  thereby  lose  Iiis  debt,  but  the  same  continues  to  exist  in  all  its 
rigor,  iinafTet'ted  by  the  accident  wliioh  lias  deprived  the  owner  of  the  means  of 
proving  it  by  the  note  itself.  The  debt  still  existing,  the  law,  which  always 
requires  of  a  party  that  he  should  produce  the  best  evidence  of  his  right  of 
which  the  nature  of  the  thing  is  capable,  permits  him,  where  such  better  evidence 
is  lost  or  destroyed,  or  not  in  his  power,  to  give  inferior  evidence,  by  proving 
the  contents  of  the  lost  paper ;  and  if  this  be  satisfactorily  made  out,  he  is 
entitled  to  recover. 

"  If  tlie  evidence  be  not  lost,  but  is  merely  impaired  by  accident,  or  even  by 
design,  if  such  design  be  not  to  injure  the  maker  or  to  cancel  the  debt,  the 
princii)le  of  law  is  the  same.  Cutting  a  bank-note  into  two  parts  does  not  dis- 
charge the  bank  from  the  debt,  of  which  the  note  was  but  the  evidence,  nor 
does  it  even  impair  the  evidence  itself,  if,  by  uniting  the  parts,  the  contents  of 
the  entire  note  can  be  made  out.  If  one  of  the  parts  should  be  lost  or  destroyed, 
the  debt  would  be  no  more  affected  than  if  the  entire  parts  had  been  lost  or 
destroyed.  The  evidence  is  impaired,  indeed,  not  by  the  act  of  cutting  the 
note,  bftt  by  the  same  accident  which  would  have  affected  the  entire  note,  had 
that  been  lost.  In  both  cases,  the  owner  must  resort  to  secondary  evidence, 
and  is  bound  to  prove  that  the  note  did  once  exist,  that  it  is  lost  or  destroyed, 
and  that  he  is  the  true,  bona  fide  owner  of  the  debt.  If  one  part  oVily  of  the 
note  be  lost,  the  difficulty  which  the  real  owner  of  it  has  to  encounter  in  proving 
his  right  to  the  debt  is  diminished.  For  if  the  entire  note  be  lost,  the  owner  of 
it  at  the  time  of  the  accident  may  not  be  entitled  to  the  debt  of  which  it  was  the 
evidence,  at  the  time  he  demands  payment,  because  the  note,  passing  from  hand 
to  hand  by  bare  delivery,  may  have  been  found,  and  have  got  into  the  possession 
of  a  bona  fide  holder. 

"  But  against  the  real  owner  of  one-half  of  the  note,  there  cannot  possibly  be 
an  opposing  right.  The  finder  or  robber  of  the  other  half  part  cannot  assert  a 
right  to  the  debt,  because  he  cannot  prove  that  he  came  fairly  to  the  possession 
of  the  evidence  of  it.  I  speak  judicially,  when  I  say  that  he  cannot  prove  that 
fact,  because  he  cannot  do  it  without  the  aid  of  perjury,  which  the  law  does  not 
presume,  and  can  in  no  instance  guard  against  it.  If  the  lost  half  note  gets 
fairly  into  the  hands  of  a  third  person,  he  takes  it  with  notice  that  there  may  be 
a  better  title  in  the  possession  of  the  other  half,  and  consequently  he  looks  for 
indenniity  to  the  person  from  whom  he  received  the  half  part,  if  it  should  turn 
out  that  he  was  not  the  real  owner  of  the  entire  note.  It  is  impossible,  there- 
fore, that  the  bank  can  be  legally  called  upon  to  pay  the  note  twice ;  and  if  the 
officers  of  the  institution  suffer  themselves  to  be  imposed  upon  by  insufficient  or 
false  evidence,  by  which  means  the  bank  is  brought  into  this  predicament,  she 
must  abide  the  loss  as  being  occasioned  by  an  error  of  judgment  in  the  offuers 
of  the  bank,  or  their  want  of  due  caution.  The  law  cannot  adapt  its  provisions 
to  every  possible  case  that  may  occur,  and  it  therefore  proceeds  from  nccesisity 
upon  general  principles  applicable  to  all  cases. 

"  If  upon  any  other  ground  than  fraud,  or  perjury,  the  maker  of  the  lost  note 
may  by  possibility  be  twice  charged,  the  law  will  not  expose  him  to  that  risk  by 
relieving  the  asserted  owner  of  it ;  not  because  there  may  be  imposition  in  the 
case,  or  because  the  debt  ought  not  to  be  paid ;  but  because  the  proof  that 
the  claimant  is  the  real  owner  of  the  debt  is  defective ;  for  it  by  no  means 


I5ANK   OF   UNITED   STATES   V.    SILL.  705 

follows,  that,  because  the  lost  note  did  belong  to  him,  it  may  not  then  be  the 
property  of  some  other  person.  A  court  of  law  therefore  will,  in  such  a  case, 
dismiss  the  parties  from  a  forum  which  has  no  means  of  securing  the  maker  of 
the  note  against  a  double  charge,  and  leave  hira  to  one  where  those  who  ask 
of  it  etjuity  will  be  compelled  to  do  equity.  The  case  then  resolves  itself  very 
much  into  a  question  of  jurisdiction.  For  it  is  quite  clear  tliat  the  real  owner  of 
a  debt,  the  evidence  of  wliicli  is  lost,  is  entitled  to  supjily  the  want  of  the  better 
evidence  by  that  which  is  secondary,  and  this  rule  of  evidence  is  the  same  in 
equity  as  at  law.  But  whether  the  application  for  relief  shall  be  in  the  one 
court  or  in  the  otlier,  must  depend  upon  the  particular  case,  and  its  fitness  for 
the  one  jurisdiction  or  the  other. 

"  Many  diilieidties  were  stated  by  the  defendants'  counsel,  to  which  the  practice 
of  cutting  the  notes  and  transmitting  them  by  mail  exposes  banking  institutions 
in  identifying  the  part  of  a  note  when  produced  for  payment.  That  these  difTi- 
culties  do  in  a  measure  exist  must  be  admitted.  But  the  bank  knows  that  there 
can  be  but  one  owner  of  the  note,  and  who  that  one  is  must  be  satisfactorily 
proved,  to  entitle  him  to  payment  of  it.  The  bank  has  a  just  right  to  call  for 
such  proof;  and  if  it  be  truly  and  faithfully  given,  there  can  be  no  risk  in  paying 
it.  The  possessor  of  the  other  half  part  of  the  note,  as  already  observed,  by 
whatever  means  he  accpiired  it,  can  never  oblige  the  bank  to  pay  the  money  over 
again  to  him.  But  after  all,  the  rule  of  law  does  not  rest  upon  this  circumstance. 
The  maker  of  the  note  is  bound  to  pay  to  the  person  who  proves  himself  to  be 
the  legal  owner  of  it;  and  the  difficulties  complained  of  are  not  greater  than 
those  which  attend  most  litigated  questions. 

"  It  may  not  be  improper  here  to  observe,  that  the  decision  in  the  case  of  Bullet 
V.  The  Bank  of  Pennsylvania  did  not  proceed  upon  any  usage  applicable  to  the 
case.     Nohe  such  was  stated  in  the  case  agreed  or  alluded  to  by  the  Court. 

"  The  next  question  is  new :  no  case  like  it  was  cited  at  the  bar,  nor  is  there 
any  within  the  recollection  of  the  Court.  It  is"  nevertheless  within  the  range 
of  some  general  principles  of  law,  by  the  light  of  which  I  think  it  may  be 
decided. 

"The  question  is,  whether  it  was  competent  to  the  bank  to  notify  the  holders 
of  her  notes,  that,  in  case  they  should  be  voluntarily  cut  into  parts,  she  would 
not  pay  them,  unless  all  tiie  parts  should  be  brought  together?  I  mean  to' treat 
the  question  as  if  the  notice  were  brought  home  to  the  plaintiff. 

"  It  is  unnecessary,  in  this  case,  to  decide  how  far  parties  to  a  contract  m.iy,  by 
positive  stipulations,  change  the  rules  of  evidence  applicable  to  that  jjarticular 
contract.  If  they  may  do  so,  it  must  be  upon  tiie  basis  of  an  agreement  assented 
to  by  both  parties.  But  upon  what  principle  is  it  that  one  party  to  a  contract 
can  prescribe  terms  to  absolve  himself  from  its  obligations,  without  the  assent  of 
the  other?  I  know  of  none.  If  the  bank  can  dictate  to  the  holders  of  her 
notes  the  condition  stated  in  this  notice,  upon  the  performance  of  which,  and  not 
otherwise,  slie  would  pay  them,  she  might  with  ecpial  authority  prescribe  any 
other  condition,  and  declare  in  what  case  she  would  pay.  and  in  what  case  she 
would  not.  The  note  is  the  evidence  of  an  engagement  by  the  bank  to  pay  a 
certain  sum  of  money  to  the  bearer  of  it ;  and  the  general  law  of  the  land 
declares  that  if  such  note,  or  a  part  of  it,  should  be  lost  or  destroyed,  the  debt 
shall  nevertheless  be  paid,  upon  satisfactory  proof  being  made  of  the  ownership  and 

46 


706  LOST    BILLS    AND    NOTES. 

loss.  Thus  sanctioned,  these  notes  pass  from  hand  to  hand ;  and  if  the  bank 
can  nevertheless  discharge  her»elf  from  her  obligation  to  pay  them,  unless 
both  parts  of  the  note  be  produced,  or  unless  the  note  be  produced  entire  (and 
there  is  no  difference  between  the  two  cases),  then  the  arbitrary  declaration  of 
the  bank  must  be  stronger  than  the  law.  This  observation  applies  with  equal 
force  to  every  other  species  of  contract,  where  one  of  the  parties  to  it  attempts 
to  prescribe  to  the  other  the  rules  of  evidence  by  which  alone  he  will  be  gov- 
erned. 

"  I  thought  the  defendants'  counsel  seemed  unwilling  to  contend  that  the  bank 
could  go  the  length  of  declaring  that  they  would  not  pay  a  lost  note,  or  one 
■which  had  been  torn  or  defaced  by  accident.  But  if  the  Court  be  correct  in 
their  opinion  upon  the  first  point,  it  follows  that  the  law  as  much  compels  the 
bank  to  pay  the  owner  of  half  a  note,  where  the  other  half  is  lost,  as  to  pay  in 
the  two  cases  supposed ;  and  if  so,  the  right  of  the  bank  to  prescribe  terms 
in  the  one  case,  if  admitted,  would  be  equally  valid  in  the  others.  There  can  be 
no  difference,  unless  it  be  that  in  the  one  the  notes  were  voluntarily  cut,  and  in 
the  other  they  were  torn  by  accident.  But  the  owner  of  the  debt  being  also  the 
owner  of  the  paper  which  is  the  evidence  of  it,  he  had  a  legal  right  to  cut  it 
and  by  doing  so,  he  could  not  impair  the  obligation,  unless  he  intended  to  do  so. 
In  all  these  cases,  the  note  is  cut  with  a  view  to  the  security,  not  to  the  destruc- 
tion of  the  debt,  by  doubling  the  chances  of  preserving  part  of  the  evidence  of 
it,  in  case  the  other  part  should  be  lost.  The  defendants  do  not  forbid  or  con- 
demn the  practice,  even  if  it  could  for  a  moment  be  admitted  that  they  had  a 
right  to  do  either.  That  is  not  the  gravamen  stated  in  the  notice ;  it  is  the 
production  of  one  of  the  parts  for  payment,  unaccompanied  by  the  other  part. 
That  is  the  case  in  which  the  bank  declares  she  will  not  pay,  and  in  which  the 
law  pronounces  she  shall  pay. 

"  I  am  of  opinion  that  judgment  should  be  entered  for  the  plaintifi'." 

Hinsdale  v.  Bank  of  Orange,  6  Wend.  378,  was  a  similar  case,  in  which  Mr. 
Justice  Marcy  discusses,  with  much  force,  the  effect  of  cutting  the  paper  upon 
its  negotiability.  He  said:  "It  has  never  been  held,  I  believe,  that  the  actual 
production  of  a  bill  or  negotiable  note  is  indispensably  necessary  to  enable  the 
holder,  or  him  who  last  held  it,  to  recover  on  it.  If  the  owner  of  a  bill  loses  it, 
he  cannot  recover ;  but  if  he  can  prove  that  it  is  actually  destroyed,  he  may. 
The  reason  of  this  distinction  is  very  obvious.  Although  the  note  is  lost  to  the 
rightful  owner,  it  may  yet  be  in  the  hands  of  a  bona  Jide  holder,  or  in  the  hands 
of  one  claiming  to  be  such,  and  the  maker  may  be  called  on  to  pay  it  without 
having  the  means  of  showing  that  the  holder  is  not  entitled  to  payment ;  but  if 
the  note  be  destroyed,  such  cannot  be  the  case.  Let  us  apply  this  principle  to 
the  present  case.  What  is  the  effect  of  severing  the  bills  ?  They  may  not  be 
absolutely  annihilated,  nor  is  their  negotiability  so  effectually  destroyed  as  to 
prevent  its  being  restored ;  for  after  they  have  been  cut  into  two  parts,  the  parts 
may  be  put  together  again,  and  thereby  the  bills  become  as  valid  and  negotiable 
as  they  were  before ;  but  there  is  no  negotiability  in  a  separate  half  of  any  one 
of  the  bills.  The  negotiability  of  these  bills  was  destroyed,  and  so  were  the 
bills  themselves  by  the  severance  of  them,  and  presenting  one-half  of  them  to 
the  defendant,  for  all  the  purposes  for  which  a  destruction  of  negotiable  paper 


BANK    OF   UNITED   STATES   V.    SILL.  707 

is  required  to  enable  him  who  had  the  riglit  to  it  to  recover  on  it.  Lorrl 
KlloihoroiKjli,  8  Caiiij).  :i:j4,  tliuu^lit  an  aelion  could  not  be  maintained  hy  the 
person  who  hail  scivered  a  bill,  and  lost  one-half  of  it ;  because,  if  he  could 
recover  on  the  half  not  lost,  the  oilier  half  might  fall  into  the  hand;)  of  a  honajide 
holder,  who  would  also  be  entitled  to  recover,  and  the  maker  ought  not  to  be 
held  liable  to  two  parties  at  the  same  time.  This  opinion  must  proceed  upon 
the  ground  that  the  lost  half  of  the  bill  was  negotiable ;  for  if  it  was  not,  there 
could  not  be  a  hoiui  J'tiJc  holder  of  it.  This  appears  to  me  to  be  a  mistaken 
notion.  That  half  of  a  bill  by  itself,  and  wholly  separated  from  the  other  half, 
is  not  negotiable,  is  as  clear  to  my  mind  as  the  proposition  is  certain  that  a  part 
is  not  equal  to  the  whole.  When  a  bill  ceases  to  exist  as  a  whole,  it  ceases  to 
have  those  properties  which  belong  to  it  as  an  entirety,  one  of  which  is  negotia- 
bility. If  negotiability  does  not  belong  to  a  separate  half  of  a  bill  or  note,  there 
can  be  no  objection  to  sustaining  this  action  on  account  of  the  non-production 
of  the  lost  halves,  that  would  not  exist  if  those  halves  had  been  actually  destroyed, 
because  they  can  give  to  the  finder  or  holder  no  more  right  to  sustain  an  action 
against  the  defendants  than  he  would  have  by  possessing  the  ashes  of  them  if 
they  were  burned.  The  owner  of  a  lost  negotiable  note  is  entitled,  j)ri>7ia  facie, 
to  recover  against  the  maker  by  making  proof  of  the  instrument,  and  showing, 
as  he  would  be  enabled  to  do,  that  it  was  executed  by  the  defendant.  But  such 
would  not  be  the  case  with  the  holder  of  the  lost  half  bills  ;  he  would  be  obliged 
to  show  what  has  been  required  of  the  plaintiffs  in  this  case ;  that  his  possession 
of  the  half  bills  was  rightful,  and  that  he  was  the  owner  of  the  whole  bills  at 
the  time  they  were  cut  into  two  parts ;  or,  in  other  words,  that  he  owned  them 
at  the  time  of  their  destruction ;  for  I  hold  that  the  cutting  them,  under  the  cir- 
cumstances of  this  case,  amounts  to  a  destruction  of  them  as  negotiable  paper. 
T  would  not  be  understood  to  assert  that  the  cutting  of  the  notes  is  an  absolute 
destruction ;  but,  in  legal  effect,  it  is  a  destruction  where  such  a  disposition  of 
either  of  the  halves  is  made  as  to  prevent  their  being  brought  together  as  whole 
notes,  and  thus  the  payment  of  them  claimed  of  the  makers.  Such  must  certainly 
be  the  case  where  one  part  of  them  is  surrendered  to  the  makers,  as  was  offered 
to  be  done  in  this  instance.  As  to  authorities,  I  would  observe  that  I  consider 
the  decision  of  the  Circuit  Court  of  the  United  States  for  the  District  of  Columbia, 
16  Niles  lleg.  360,  entitled  to  as  much  respect  as  the  niai  pn»A-  opinion  of 
Lord  Ellcnhorouyh.  But  it  is  said  that  the  plaintiffs  do  not  show  that  they  were 
the  owners  of  the  bills  when  they  were  severed.  On  this  point  the  evidence  is  not 
very  full.  It  was  proved  that  the  agent  of  the  plaintiffs,  on  the  thirtieth  of  Sep- 
tember, enclosed  the  right-hand  halves  of  the  bills  in  question  in  a  letter,  which 
was  directed  and  sent  to  Mr.  llossiter  at  New  Haven  ;  and  two  days  after  he,  as 
such  agent,  enclosed  and  forwarded  in  like  manner  the  left-hand  halves,  which 
have  not  since  been  heard  of.  It  would  seem  to  me  like  cavilling,  to  say  that 
this  evidence  does  not  show  that  the  bills,  before  they  were  severed,  or  both 
halves,  afterwards  and  at  the  same  time,  were  in  the  hands  of  the  plaintiffs ;  and 
if  so,  that  fact  is  sufficient  to  entitle  them  to  recover  as  holders.  The  fact  of 
their  being  the  owners  at  the  time  the  bills  were  cut  and  mailed  was  left  to  the 
jury,  and  the  evidence  warranted  their  verdict. 

"  Judgmmt  for  lAainliffs." 


708  LOST   BILLS    AND    NOTES. 

See  also  Commercial  Bank  v.  Benedict,  18  B.  Men.  307;  Farmers'  Bank  of 
Virginia  u.  Reynolds,  4  Rand.  186;  Allen  v.  State  Bank,  1  Dev.  &  B.  Eq.  1. 
But  if  a  bank-note  be  mutilated  in  a  material  part,  for  the  purpose  of  fraudulently 
imposing  it  upon  the  public,  and  defrauding  the  bank  which  issued  it,  it  is  no 
longer  binding  on  the  bank.  Northern  Bank  v.  Farmers'  Bank,  18  B.  Mon, 
506. 

As  to  notice,  see  Matthews  v.  Poythress,  4  Ga.  287 ;  Beltzhoover  v.  Black- 
stock,  3  Watts,  20  ;  Lawson  v.  Weston,  4  Esp.  56  ;  Rowley  v.  Home,  3  Bing.  2 ; 
Snow  i\  Peacock,  ib.  406 ;  Beckwith  v.  Corrall,  2  Car.  &  P.  261 ;  Strange  v. 
Wignev,  4  .Moore  &  P.  470. 


AYMAR   V.    SHELDON.  709 


LAW   OF  PLACE. 


B.  AND  I.  Q.  Aymar  v.  Sheldon  and  Others. 

(12  Wendell,  430.     Supreme  Court  of  New  York,  October,  1»:J4.) 

Bill  draion  in  one  country  and  indorsed  in  another.  —  In  an  action  by  an  indorsee  against 
an  indorser  of  a  bill  of  excliange  drawn  in  a  foreign  country,  and  indorsed  and 
negotiated  to  the  plaintiff  .in  New  York,  the  law  of  New  York  must  determine 
whetlier  the  proper  steps  have  been  taken  to  charge  the  indorser. 

B.  &  I.  Q.  Aymar,  the  defendants  below,  were  indorsers  of  a 
bill  of  exchange  drawn  by  certain  parties  at  St.  Pierre,  in  the 
French  Island  of  Martinique,  on  parties  at  Bordeaux,  France.  It 
was  made  payable  at  twenty-four  days  sight  to  the  order  of  the  de- 
fendants, a  firm  in  New  York,  at  which  place  they  indorsed  it  to 
the  plaintiffs,  they  also  being  citizens  of  the  United  States. 

The  bill  was  presented  for  acceptance  and  dishonored;  where- 
upon due  notice  was  given  the  defendants,  and  this  action  insti- 
tuted. 

The  defendants  insisted  that  they  were  protected  by  the  law  of 
France,  which  is  sufficiently  stated  in  the  opinion  of  the  Court. 
Verdict  and  judgment  for  tlie  plaintiffs,  to  reverse  which  the  de- 
fendants sued  out  this  writ  of  error. 

Nelson,  J.  The  only  material  question  arising  in  this  case  is, 
whether  the  steps  necessary  on  the  part  of  the  holders  of  the  bill  of 
exchange  in  question,  to  subject  the  indorsers  upon  defiiult  of  the 
drawees  to  accept,  must  be  determined  by  the  Frencli  law.  or  the 
law  of  this  State  ?  If  by  our  law,  the  plaintiffs  below  are  entitled 
to  retain  the  judgment ;  if  by  the  law  of  France,  as  set  out  and 
admitted  in  the  pleadings,  the  judgment  must  be  reversed. 

We  have  not  been  referred  to  any  case,  nor  have  any  been  found 
in  our  researches,  in  which  the  point  notv  presented  has  been  ex- 


710  LAW    OF    PLACE. 

amined  or  adjudged.  But  tlierc  are  some  familiar  principles 
belonging  to  the  law  merchant,  or  applicable  to  bills  of  exchange 
and  promissory  notes,  which  we  think  are  decisive  of  it.  The  per- 
sons in  whose  favor  the  bill  was  drawn  were  bound  to  present  it 
for  acceptance  and  for  payment,  according  to  the  law  of  France,  as 
it  was  drawn  and  payable  in  French  territories ;  and  if  the  rules 
of  law  governing  them  were  applicable  to  the  indorsers  and  indor- 
sees in  this  case,  the  recovery  below  could  not  be  sustained,  be- 
cause presentment  for  payment  would  have  been  essential  even 
after  protest  for  non-acceptance.  No  principle,  however,  seems 
more  fully  settled,  or  better  understood  in  commercial  law,  than 
tliat  the  contract  of  the  indorser  is  a  new  and  independent  con-, 
tract,  and  that  the  extent  of  his  obligations  is  determined  by  it. 
The  transfer  by  indorsement  is  equivalent  in  effect  to  the  drawing 
of  a  bill,  the  indorser  being  in  almost  every  respect  considered  as 
a  new  drawer.  Chitty,  Bills,  142  ;  3  East,  482  ;  2  Burr.  674, 675  ; 
1  Str.  441  ;  Selw.  N.  P.  256.  On  this  ground,  the  rate  of  dam- 
ages in  an  action  against  the  indorser  is  governed  by  the  law  of 
the  place  where  the  indorsement  is  made,  being  regulated  by  the 
lex  loci  contractus,  6  Cranch,  21 ;  2  Kent's  Com.  460  ;  4  Johns. 
119.  That  the  nature  and  extent  of  the  liabilities  of  the  drawer 
or  indorser  are  to  be  determined  according  to  the  law  of  the  place 
where  the  bill  is  drawn  or  indorsement  made,  has  been  adjudged 
lx)th  here  and  in  England.  In  Hicks  v.  Brown,  12  Johns.  142,  the 
bill  was  drawn  by  the  defendant  at  New  Orleans,  in  favor  of  the 
plaintiff,  upon  a  house  in  Pliiladelphia ;  it  was  protested  for  non- 
acceptance,  and  due  notice  given  ;  the  defendant  obtained  a  dis- 
charge under  the  insolvent  laws  of  New  Orleans  after  such  notice, 
by  which  he  was  exonerated  from  all  debts  previously  contracted, 
and,  in  that  State,  of  course  from  the  bill  in  question.  He  pleaded 
his  discharge  here,  and  the  Court  say,  "  It  seems  to  be  well  settled, 
both  in  our  own  and  in  the  English  courts,  that  the  discharge  is  to 
operate  according  to  the  lex  loci  upon  the  contract  where  it  was 
made  or  to  be  executed.  The  contract  in  this  case  originated  in 
New  Orleans,  and  had  it  not  been  for  the  circumstance  of  the  bill 
being  drawn  upon  a  person  in  another  State,  there  could  be  no 
doubt  but  the  discharge  would  reach  this  contract ;  and  this  cir- 
cumstance can  make  no  difference,  as  the  demand  is  against  the 
defendant  as  drawer  of  the  bill,  in  consequence  of  the  non-accep- 
tance.    The  whole  contract  or  responsibility  of  the  drawer  was 


.AYMAR   V.    SHELDON.  711 

entered  into  and  incurred  in  New  Orleans."  The  case  of  Potter  v. 
Brown,  5  East,  124,  contains-  a  similar  principle.  See  also  3 
Mass.  81 ;  Van  Raugh  v.  Van  Arsdaln,  -j  Caincs,  154  ;  1  Cowen, 
107  ;  6  Cranch,  221 ;  4  Cowen,  512,  n. 

The  contract  of  indorsement,  was  made  in  this  case,  and  t^e 
execution  of  it  contemplated  by  the  parties  in  this  State ;  and  it  is 
therefore  to  be  construed  according  to  tiie  laws  of  New  York. 
The  defendants  below,  by  it,  here  engage  that  the  drawees  will 
accept  and  pay  the  bill  on  due  presentment,  or,  in  case  of  their 
default  and  notice,  that  they  will  pay  it.  All  the  cases  which  de- 
termine that  the  nature  and  extent  of  the  obligation  of  the  drawer 
are  to  be  ascertained  and  settled  according  to  the  law  of  the  place 
where  the  bill  is  drawn,  arc  equally  applicable  to  the  indorser ; 
for,  in  respect  to  the  holder,  he  is  a  drawer.  Adopting  this  rule 
and  construction,  it  follows  that  the  law  of  New  York  must  settle 
the  liability  of  the  defendants  below.  The  bill  in  this  case  is  pay- 
able twenty-four  days  after  sight,  and  must  be  presented  for 
acceptance  ;  and  it  is  well  settled  by  our  law,  that  the  holder  may 
have  immediate  recourse  against  the  indorser  for  the  default  of 
the  drawee  in  this  respect;  3  Johns.  202  ;  Chitty,  Bills,  231,  and 
cases  there  cited. 

Upon  the  principle  that  the  rights  and  obligations  of  the  parties 
are  to  be  determined  by  the  law  of  the  place  to  which  they  had 
reference  in  making  the  contract,  there  are  some  steps  which  the 
holder  must  take  according  to  the  law  of  the  place  on  which  the 
bill  is  drawn.  It  must  be  presented  for  payment  when  due,  hav- 
ing regard  to  the  number  of  days  of  grace  there,  as  the  drawee  is 
under  obligation  to  pay  only  according  to  such  calculation  ;  and  it 
is  therefore  to  be  presumed  that  the  parties  had  reference  to  it. 
So  the  protest  must  be  according  to  the  same  law,  which  is  not 
only  convenient,  but  grows  out  of  the  necessity  of  the  case.  The 
notice  however  must  be  given  according  to  the  law  of  the  place 
where  the  contract  of  the  drawer  or  indorser,  as  the  case  may  be, 
was  made,  such  being  an  implied  condition.  Chitty,  Bills,  93, 
217,  266  ;  Baylcy,  [Bills,]  28  ;  Story's  Conflict  of  Laws,  298. 

The  contract  of  the  drawers  in  this  case,  according  to  the  French 
law,  was,  that  if  the  holder  would  present  the  bill  for  acceptance 
within  one  year  from  date,  it  being  drawn  in  the  West  Indies,  and 
it  was  not  accepted,  and  was  duly  protested  and  notice  given  of 
the  protest,  he  would  give  security  to  pay  it,  and  pay  the  same  if 


712  LAW    OF   PLACE. 

default  was  also  made  in  the  payment  by  the  drawee  after  protest 
and  notice.  This  is  the  contract  of  the  drawers,  according  to  this 
law,  and  the  counsel  for  the  plaintiffs  in  error  insists  that  it  is  also 
the  implied  contract  of  the  indorser  in  this  State.  But  this  can- 
not be  unless  the  indorsement  is  deemed  an  adoption  of  the  orig- 
inal contract  of  the  drawers,  to  be  regulated  by  the  law  governing 
the  drawers,  without  regard  to  the  place  where  the  indorsement  is 
made.  We  have  seen  that  this  is  not  so  ;  that  notice  must  be 
given  according  to  the  law  of  the  place  of  indorsement ;  and  if, 
according  to  it,  notice  of  non-payment  is  not  required,  none  of 
course  is  necessary  to  charge  the  indorser.  But  if  the  above  posi- 
tion of  the  plaintiffs  in  error  be  correct,  notice  could  not  then  be 
dispensed  with,  the  law  of  the  drawer  controlling.  The  above 
position  of  the  counsel  would  also  be  irreconcilable  with  the  prin- 
ciple that  the  indorsement  is  equivalent  to  a  new  bill,  drawn  upon 
the  same  drawee  ;  for  then  the  rights  and  liabilities  of  the  indorser 
must  be  governed  by  the  law  of  the  place  of  the  contract,  in  like 
manner  as  those  of  the  drawer  are  to  be  governed  by  the  laws  of 
the  place  where  his  contract  was  made.  Both  stand  upon  the 
same  footing  in  this  respect,  each  to  be  charged  according  to  the 
laws  of  the  country  in  which  they  were  at  the  time  of  entering 
into  their  respective  obligations. 

I  am  aware  that  this  conclusion  may  operate  harshly  upon  the 
indorsers  in  this  case,  as  they  may  not  be  enabled  to  have  recourse 
over  on  the  drawers.  But  this  grows  out  of  the  peculiarity  of  the 
commercial  code  which  France  has  seen  fit  to  adopt  for  herself, 
materially  differing  from  that  known  to  the  law  merchant.  We 
cannot  break  in  upon  the  settled  principles  of  our  commercial  law, 
to  accommodate  them  to  those  of  France  or  any  other  country. 
It  would  involve  them  in  great  confusion.  The  indorser,  how- 
ever, can  always  protect  himself  by  special  indorsement,  requiring 
the  holder  to  take  the  steps  necessary  according  to  the  French  law, 
to  charge  the  drawer.  It  is  the  business  of  the  holder,  without 
such  an  indorsement,  only  to  take  such  measures  as  are  necessary 
to  charge  those  to  whom  he  intends  to  look  for  payment. 

Judgment  affirmed. 

The  rule  declared  in  the  principal  case  is  stated  to  be  the  law  in  the  text- 
books. Story,  Promissory  Notes,  §  339,  note;  lb.,  Bills  of  Exchange,  §§  176, 
177,  note ;  C'hitty,  Bills,  456.  A  contrary  doctrine,  however,  seems  to  have 
been  declared  in  Rothschild  v.  Currie,  1  Q.  B.  43.     But  Mr.  Justice  Story  criti- 


.AYMAR   V.    SHELDON.  71S 

•cises  this  case  with  his  usual  learning  and  ability,  and  considers  it  unsound. 
Promissory  Notes,  §  339,  note.  And  the  case  has  been  doubted  in  England. 
See  Gil)b.s  v.  Fremont,  20  Eng.  Law  &  E.  555,  557  ;  Allen  i\  Kemljle,  <i  Moore, 
P.  C.  314.  But  Kotiiscliild  v.  (  urrie  was  cautiously  cited  as  autlnjrity  in  the 
recent  case  of  Ilirschfield  v.  Smith,  Law  Rep.  1  Com.  PI.  340.  In  this  case, 
Eric,  C.  J.,  in  delivering  the  opinion  of  the  Court,  said  :  "  The  facts  were,  that 
the  bill  was  drawn  in  England,  i)ayable  to  the  drawer's  order,  directed  to  and 
accepted  by  the  drawee  in  France,  payable  in  France,  and  was  indorsed  by 
the  drawer  in  blank,  and  delivered  to  the  defendant  in  England,  and  by  him 
indorsed  in  blank  and  delivered  to  the  plaintiff  in  England,  and  indorsed  by  tlie 
plaintiff  and  delivered  to  one  Berle,  in  France.  The  l>ill  was  duly  presented 
in  France,  and  dishonored;  and  the  holder  took  the  stejis  required  by  the  law 
of  France  to  entitle  him  to  recover  from  the  other  parties  to  the  bill ;  that  is 
to  say,  the  bill  was  taken  to  the  proper  office  and  a  due  protest  was  made,  and 
a  copy  of  the  protest  was  transmitted  to  the  consul  for  France  in  the  foreign 
country  where  the  party  to  the  bill  was  residing;  that  is  to  say,  as  respects  the 
defendant,  to  the  French  consul  in  London ;  and  by  that  consul  the  protest  was 
in  due  course,  according  to  the  French  practice,  made  known  to  the  defendant 
without  delay. 

"If  the  action  on  the  bill  had  been  brought  in  France,  upon  an  indorsement 
made  in  France,  these  facts  would  have  amounted  to  such  notice  of  dishonor  as 
the  law  of  France  requires,  and  would  have  entitled  the  plaintiff  to  recover. 
As,  however,  this  action  was  brought  in  England,  against  an  indorser  indorsing 
in  England,  the  present  question  is,  whether  these  facts  are  evidence  of  due 
notice  of  dishonor,  against  the  defendant,  in  an  action  brought  ifl  England. 

"  Our  answer  is  in  the  affirmative,  on  two  grounds:  first,  because  the  point 
has  been  decided  in  Rothschild  v.  Currie,  1  Q.  B.  43,  where  the  bill  was 
drawn,  accepted,  indorsed,  and  dishonored,  under  circumstances  similar  to  those 
relating  to  the  present  bill,  and  the  facts  adduced  to  show  notice  of  dishonor 
were  also  similar,  and  were  decided  to  be  sufficient  because  they  were  sufficient 
according  to  the  law  of  France  ;  secondly,  if  the  reason  assigned  in  that  be  not 
now  adopted,  and  if  the  contract  of  an  indorser  in  England  of  a  bill  accepted 
payable  in  France  be  held  to  be  a  contract  governed  bj-  the  law  of  England,  and 
so  the  holder  be  not  entitled  to  sue  in  England  such  an  indorser  unless  he  has 
given  due  notice  of  dishonor,  according  to  the  law  of  England,  then  the  ques- 
tion is,  what  notice,  under  such  circumstances,  amounts  to  due  notice.  If  the 
parties  lived  in  P^ngland,  and  their  address  was  known,  the  rule  is  that  notice 
should  be  sent  by  the  post  of  the  day  following  the  day  of  dishonor.  But  in 
respect  of  bills  dishonored  in  a  foreign  country,  such  a  rule  cannot  always  have 
a  literal  application,  because,  among  other  reasons,  the  postal  regulations  may 
make  it  impossible. 

"  Due  notice  is  such  notice  as  can  be  reasonably  required  under  the  circum- 
stances ;  and  the  reasonableness  of  the  notice  proved  in  evidence  is  a  (juestion 
of  law  depending  on  the  facts  of  each  particular  case ;  and  such  facts  are  for 
the  jury.  .  .  .  If  by  the  law  of  the  place  where  the  bill  is  payable  there  are  reg- 
ulations for  giving  notice  of  dishonor,  in  order  to  make  indorsers  liable  to  the 
holder,  a  presumption  is  raised  that  notice  according  to  those  regulations  is  all 
that  the  indorser  should  require. 


714  LAW    OF   PLACE. 

"  The  indorser  of  a  bill  accepted,  j)ayable  in  France,  promit^es  to  pay  in  the 
event  of  dishonor  in  France,  and  notice  thereof.  By  his  contract,  he  must  be 
taken  to  know  the  law  of  France  relating  to  the  tyshonor  of  bills ;  and  notice  of 
dishonor  is  a  portion  of  that  law.  Then,  although  his  contract  is  regulated  by 
the  law  of  England  relating  to  indorsement,  and  although  he  may  not  be  liable 
unless  reasonable  notice  of  dishonor  has  been  sent  to  him,  yet  the  notice  of 
dishonor  according  to,  the  law  of  France  may  be,  and  we  think  ought  to  be, 
deemed  reasonable  notice  according  to  the  law  of  England,  and  be  sufhcient  in 
England  to  entitle  the  pkintiff  to  recover  according  to  that  law. 

"  It  is  reasonable  to  hold  that  the  foreign  holder  should  have  time  to  make 
good  his  right  of  recourse  against  all  the  parties  to  the  bill,  in  whatever  country 
they  may  be.  Here  the  holder  was  a  Frenchman,  in  France,  The  indorsement 
to  him  was  by  the  plaintiff,  a  Frenchman,  in  Fi'ance.  The  indorsement  to  the 
plaintiif  was  by  the  defendant,  an  Englishman,  in  England ;  and  the  indorse- 
ment to  that  J^nglishman  by  Lion,  the  payee,  may  have  been  in  any  country.  The 
inconvenience  would  be  great  if  the  holder  was  bound  to  know  the  place  of  each 
indorsement,  and  the  law  of  that  place  relating  to  notice  of  dishonor,  and  to 
give  notice  accordingly,  on  pain,  in  case  of  mistake,  of  losing  his  remedy; 
whereas  there  would  be  great  convenience  to  the  holder  if  notice,  valid  accord- 
ing to  the  law  of  the  place,  should  be  held  to  be  reasonable  notice" for  each  of 
the  countries  of  each  of  the  parties,  unless  an  exceptional  case  should  give  occa- 
sion for  an  exception." 

'There  seems  then  to  be  a  conflict  between  the  English  rule  and  the  American, 
unless  the  difference  of  fact  in  the  cases  may  afford  a  ground  upon  which  to  recon- 
cile them.  Tlie  indorsement  to  the  plaintiff  in  Hirschfield  v.  Smith,  though 
made  in  England  was  made  to  a  foreigner  residing  in  the  country  in  which  the 
bill  was  payable.  The  Court  say  that  there  would  be  serious  inconvenience  in 
requiring  the  holder,  a  Frenchman,  to  know  the  law  relating  to  indorsement  in 
England,  and  so  it  would  without  doubt;  but  in  the  principal  case,  both  the 
plaintiff  and  defendant,  the  holder  and  the  indorser,  resided  in  New  York,  and  it 
was  certainly  reasonable  to  suppose  that  they  contracted  with  respect  to  the  law 
of  New  York,  and  not  that  of  France.  And  on  the  contrary,  to  follow  the 
reasoning  of  Mr.  Chief  Justice  Erie,  it  would  be  quite  inconvenient,  if  not 
wholly  unreasonable,  to  have  required  the  holder  in  the  principal  case  to  know 
the  law  of  France,  and  to  take  the  steps  required  in  that  distant  country  to  ren- 
der his  own  fellow-townsmen  liable  upon  their  indorsement.  It  is  possible  that 
Hirschfield  v.  Smith  may  in  this  way  be  reconciled  with  the  principal  case ;  but 
it  seems  more  difficult  to  harmonize  the  former  with  Allen  v.  Kemble,  6  Moore, 
P.  C.  314,  decided  in  1844.  The  last-named  case  is  a  strong  authority  support- 
ing the  American  rule  in  Aymar  v.  Sheldon.  In  Allen  r.  Kemble  the  Court 
said:  "  It  is  argued  that  this  bill,  being  drawn  [abroad]  payable  in  Loudon,  not 
only  the  acceptor,  but  the  drawer,  must  be  held  to  have  contracted  with 
reference  to  the  English  law.  This  argument  however  appears  to  us  to  be 
founded  on  a  misapprehension  of  the  obligation  which  the  drawer  and  indorser 
of  a  bill  incurs.  The  drawer,  by  his  contract,  undertakes  that  the  drawee  shall 
accept  and  shall  afterwards  pay  the  bill,  according  to  its  tenor,  at  the  place  and 
domicile  of  the  drawee.  If  this  contract  of  the  drawer  be  broken  by  the  drawee, 
either  by  non-acceptance  or  non-payment,  the  drawer  is  liable  for  payment  of 


AYMAR   V.    SHELDON.  715 

the  l)ill,  not  wlioro  tlie  liill  is  to  be  paid  by  the  drawee,  but  where  he,  the  drawer, 
made  his  contraet,  with  his  interest,  damages,  and  costs,  as  tlie  law  of  the 
country  wliere  he  contracted  may  allow.   .   .   . 

"  What  then  is  tiie  conscciuence  of  altering  in  the  bill  itself,  and  by  the 
acceptance,  the  place  at  which  the  acceptor  is  bound  to  pay  P  Can  it  be  more 
than  this,  that  as  to  the  acceptor  the  locwf  nohdionis  is  altered,  and  therefore  as 
to  him,  the  lex  loci  solutionix  is  altered?  But  how  does  this  affect  the  liabilities 
of  the  other  patties?  These  bills  are  addressed  to  Mr.  Mackie,  Stranmaer, 
Scotland;  if  no  place  of  payment  had  been  mentioned,"  they  would  have  been 
payable  by  the  drawee  according  to  tlie  law  of  Scotland.  London  being  fixed 
as  the  place  of  payuient,  they  are  payable  by  the  drawee  according  to  the  law  of 
England ;  a  different  law  is  imported  as  regards  the  acceptor,  but  not  as  affects 
other  parties."  See  also  Robinson  v.  Bland,  1  W.  Black.  234,  2.3G ;  s.  c,  2 
Burr.   1077  ;  Cooper  v.  Waldegrave,  2  Beav.  282. 

But  the  law  of  the  place  of  payment  was  applied  to  an  indorser  in  Ellis  v. 
Commercial  Bank  of  Natchez,  7  How.  (Miss.)  294. 

The  contrary  rule,  and  the  rule  declared  in  Aymar  v.  Sheldon,  has  been 
adopted  or  approved  in  the  following  cases :  Conahan  v.  Smith,  2  Disney,  9,  per 
Storei;  J.;  Hatcher  v.  McMorine,  4  Dev.  122;  Wallace  «.  Agry,  4  Mason, 
336,  344,  per  Stonj,  J.:  Astor  v.  Benn,  1  Stuart  (Canada),  69;  Slacum  v. 
Pomery,  6  Cranch,  221 ;  Hazelhurst  v.  Kean,  4  Yeates,  19;  Crawford  v.  Branch 
Bank  at  IMo!)ile,  G  Ala.  12;  Williams  v.  Wade,  1  Met.  82.  See  also  Allen  v. 
Merchants"  Bank  of  New  York,  22  Wend.  21;3,  overruling  s.  C,  15  Wend.  482; 
Lizardi  v.  Colien,  3*  Gill.  430;  Frazier  v.  Warfield,  9  Sm.  &  M.  220;  Kear- 
ney V.  King,  2  Barn.  &  Aid.  301 ;  Don  v.  Li])pman,  o  Clark  &  F.  1 ;  Andrews 
V.  Ilerriot,  4  Cow.  508,  and  the  very  learned  note  of  the  reporter. 

As  a  corollary  to  the  rule  declared  in  the  principal  case,  it  is  held  that  the 
obligation  of  the  maker  or  acceptor  of  paper  payable  at  no  designated  place,  is 
regulated  by  the  law  of  the  country  where  the  paper  was  made;  or  accepted. 
Story,  Promissory  Notes,  §§  172,  d  seq.  and  cases  cited.  But  where  a  place  of 
payment  is  named,  the  law  of  such  place  will  prevail.     Ibid. 

The  following  addition.il  cases  will  be  found  to  contain  a  further  exposition  of 
the  law  of  place,  in  connection  with  bills  and  notes.  De  La  Chaumette  v.  Bank 
of  England,  2  Barn.  &  Ad.  385;  s.  c,  9  Barn.  &  C.  208;  Milne  j;.  Graham,  1 
Barn.  &  C.  192;  Trimby  r.  Vignier,  1  Bing.  (N.  C.)  151;  Worcester  Bank  ?'. 
Wells,  8  ]\ret.  107;  Rose  i\  Park  Bank,  20  Ind.  94;  Brown  v.  Bunn,  1(J  Ind. 
406;  Bernard?;.  Barry,  1  Greene  (Iowa),  388;  Peck  r.  Hibbard,  26  Vt.  608; 
Wilson  V.  Lazier,  11  Grat.  477,  482 ;  Ory  r.  Winter,  16  Mart.  La.  277 ;  Bur- 
rows V.  llannegan,  1  McLean,  31.'). 


716  CHECKS. 


CHECKS. 


Justin  Morrison  and  Alexander  Morrison  v. 
Bailey  and  Leonard  F.  Burgess. 

(5  Ohio  State,  13.     Supreme  Court,  December,  1855.) 

Fom.  —The  following  draft  is  not  a  check  :  W.  O.  &  B. :  Pay  to  B.  on  the  13th  of 
July,  '53,  or  order,  three  hundred  dollars  ;  it  being  jjayable  on  a  future  day  desig- 
nated.    It  is  one  of  the  essentials  of  a  check  that  it  shall  be  payable  on  demand. 

Days  of  grace  are  not  allowed  on  checks. 

Distinction  between  checks  and  bills  of  exchange. 

The  case  is  stated  in  the  opinion  of  the  Court. 

Bartley,  J.     This  suit  was  brought  against  Bailey,  as  drawer, 
and  Burgess,  as  indorser,  of  a  paper,  of  whicli  the  following  is  a 
copy  :  — 
$300.  Cleveland,  O.,  June  30,  1858. 

Wicks,  Otis,  &  Brownell:  Pay  to  L.  F.  Burgess,  on  the  13th  day  of  July,  '53, 
or  order,  three  hundred  dollars. 

R.  B.  Bailey. 
Indorsed  by  L.  F.  Burgess. 

The  paper  was  presented  to  Wicks,  Otis,  and  Brownell,  for  pay- 
ment on  the  sixteenth  day  of  July,  18';3  ;  payment  refused,  and 
notice  of  non-payment  given  on  that  day. 

It  is  claimed,  on  the  part  of  tlie  defence,  that  presentment  was 
not  made,  and  notice  given,  in  due  time.  And  the  question  for 
determination  is,  whether  this  instrument,  iipon  which  suit  is 
brought,  is,  or  is  not,  entitled  to  days  of  grace  ;  and  this  depends 
upon  the  question  whether  the  instrument  is  a  check  eo  nomine^ 
or  a  bill  of  exchange,  subject  to  the  rules  and  usages  governing 
ordinary  bills  of  exchange. 

The  distinction  between  a  bill  of  exchange  and  a  check, 
although    much   confused   in    some    respects,  by  the  apparently 


MORRISON    V.    BAILEY.  717 

inconsistent  language  of  some  of  tlie  adjudicated  cases,  as  well  as 
of  some  of  the  elementary  writers  bearing  upon  it,  is  founded  in 
the  difference  in  the  nature  of  these  two  classes  of  commercial 
paper.  Checks,  being  drafts  or  orders  for  immediate  payment 
of  money,  have  come  into  such  common  use  as  to  supersede,  in 
frequent  payments  of  considerable  amounts,  not  only  gold  and 
silver  coin,  but  even  hank-notes.  And  with  their  general  use, 
certain  usages  have  grown  up  peculiar  to  that  class  of  instru- 
ments, and  which  have  become  engrafted  on  the  commercial  law 
of  the  country.  A  check  is  subject  to  many  of  the  rules  which 
regulate  the  rights  and  liabilities  of  parties  to  bills  of  exchange, 
and  so  nearly  resembles  the  latter  class  of  instruments,  that  some 
authors  have  defined  a  check  to  be,  in  substance  and  in  legal 
effect,  an  inland  bill  of  exchange,  payable  on  demand.  But,  as 
Judge  Story  well*  said,  in  the  Matter  of  Brown,  2  f^tory,  502, 
althougli  a  check  "  nearly  resembles  a  bill  of  exchange,  yet 
nullum  simile  est  idem.''^  By  statute,  in  Ohio,  all  bills  made 
negotiable  are  entitled  to  three  days  grace  in  the  time  of  pay- 
ment. Rev.  Sts.  576.  But  days  of  grace,  in  the  time  of  pay- 
ment, would  be  inconsistent  with  the  nature  and  purpose  of  a 
check,  which  requires  no  acceptance,  and  is  always  payable 
immediately  on  presentment. 

These  two  classes  of  commercial  paper,  although  in  many 
respects  similar,  are  to  be  distinguished  in  the  following  par- 
ticulars, to  wit :  — 

1.  A  check  is  drawn  upon  an  existing  fund,  and  is  an  abso- 
lute transfer  or  appropriation,  to  the  holder,  of  so  much  money 
in  tlie  hands  of  the  drawee  ;  whereas  a  l»ill  of  exchange  is  not 
always,  or  necessarily,  drawn  \ipon  actual  funds  in  the  hands 
of  the  drawee,  but  very  frequently  drawn  in  anticipation  of  funds, 
or  upon  a  previously  arranged  credit. 

2.  Tlie  drawer  of  a  check  is  always  the  principal ;  whereas 
the  drawer  of  a  bill  frequently  stands  in  the  position  of  a  mere 
surety. 

3.  As  between  the  liolder  of  a  check  and  an  indorscr,  demand 
of  payment  within  due  time  is  essential  to  the  liability  of  the 
latter.  Where  the  parties  reside  in  the  same  place,  the  holder 
should  present  ^tlie  check  on  the  day  it  is  received,  or  within 
business  hours  of  the  following  day  ;  and  when  payable  at  a 
different   place    from    tluit    in  wiiich  it  is  negotiated,  the    check 


718  CHECKS. 

should  b(3  forwarded  by  mail  on  the  same,  or  the  next  succeed- 
ing day,  for  presentment.  B\|t  days  of  grace  being  allowed  to 
bills  of  exchange,  the  time  for  demanding  payment  of  a  bill  is 
different. 

4.  As  between  the  holder  and  drawer,  however,  mere  delay 
in  presenting  a  check  in  due  time  for  payment,  would  not  dis- 
charge the  latter,  unless  he  had  been  injured  thereby,  and  then 
only  to  the  extent  of  his  loss  ;  but  a  different  rule,  in  this  respect, 
prevails  in  case  of  a  bill  of  exchange. 

5.  A  check  requires  no  acceptance,  and,  when  presented,  the 
presentment  is  for  payment. 

6.  It  is  not  protestable,  or  in  other  words,  protest  is  not 
requisite  to  hold  either  the  drawer  or  an  indorser. 

It  is  also  settled,  in  Woodruff  v.  Merchants'  Bank,  and  Bowen 
V.  Newell,  above  referred  to,  that  any  supposed  usage  of  banks 
in  any  particular  'place  to  regard  drafts  upon  them,  payable  at  a 
day  certain  after  date,  as  checks,  and  not  entitled  to  days  of 
grace,  is  inadmissible  to  control  the  rules  of  the  law  in  relation  to" 
such  paper. 

Motion  for  new  trial  overruled  and  judgment  for  the  plaintiffs. 

This  subject  of  the  likeness  of  checks  to  bills,  and  of  the  distinction  between 
them,  is  considered  in  Keene  v.  Beard,  8  Com.  B.  (n.  8.)  372.  The  facts  will 
sufficiently  appear  in  the  opinion  delivered  by 

Erle,  C.  J,  I  am  of  opinion  that  the  plaintiff  is  entitled  to  judgment  on 
this  demurrer.  The  action  is  brought  by  the  holiler  or  bearer  of  a  check  against 
the  payee  and  indorser.  The  declaration  states  that  one  Bodenham  on  a  certain 
day  made  a  draft  or  order  in  writing  for  the  payment  of  money,  commonly 
called  a  check  on  a  banker,  and  directed  the  same  to  certain  persons  trading  as 
bankers,  and  thereby  required  them  to  pay  to  the  defendants  or  bearer  the  sum 
of  £11,  and  then  delivered  the  said  draft  or  order  to  the  defendant,  who  then  in- 
dorsed and  delivered  the  same  to  one  Lewis,  who  transferred  and  delivered  the 
same  to  the  plaintiff,  who  then  became  and  was  and  still  is  the  lawful  bearer  thereof 
It  then  goes  on  to  allege  that  the  said  draft  or  order  was  duly  ^jresented  for  pay- 
ment and  was  dishonored.  The  point  urged  by  Mr.  Grant  on  the  argument  of 
the  demurrer  was,  that  a  check  is  not  to  be  classed  with  bills  of  exchange  so  far 
as  to  be  capable  of  creating  a  liability  in  an  indorser  to  the  person  who  may  be 
the  holder  or  bearer  of  the  instrument.  I  think  he  has  failed  to  establish  that 
proposition.  A  check  is  strongly  analogous  to  a  bill  of  exchange  in  many  re- 
spects. It  is  drawn  upon  a  banker  ;  and,  though  in  practice  the  banker  does  not 
accept  the  draft,  he  might  for  aught  I  know  do  so.  A  check  has  also  some  of 
the  incidents  of  a  bill  of  exchange,  if  not  all,  as,  in  respect  of  its  passing  by  de- 
livery, and  also  in  respect  of  a  hona  fide  holder  taking  it  for  value  having  a 
better  title  than  the  person  from  whom  he  received  it.     Having  these  incidents 


MORRISON    V.    BAILKY.  719 

of  a  bill  of  cxclianjrc,  lias  it  the  further  incident  of  being  capable  of  passing  by 
indorsement  ?  That  is,  where  the  indorsement  is  made,  not  by  merely  placing  the 
name  of  the  party  on  tlie  back  of  the  irlstrumont,  but  doing  so  with  the  inten- 
tion of  passing  the  title  to  it,  and  of  incurring  all  the  usual  liabilities  of  an  in- 
dorser  of  a  negotiable  instrument?  It  is  admitted  here  that  the  defendant's 
name  was  placed  upon  the  check  animo  indorsandi ;  and  therefore  our  judgment 
for  the  plaintiff  is  in  accordance  with  the  real  intention  of  the  parties.  The  in- 
dorser  intended  to  give  to  the  indorsee  the  security  of  his  name  and  liability  on' 
the  instrument.  I  also  think  our  decision  is  in  accordance  with  the  law,  when 
we  hold  that  a  check  is  a  negotiable  instrument,  and  capable  of  indorsement. 

Byi.ks,  J.     I  am  of  the  same  opinion.     I  conceive  that  a  check  is  in  the  na- 
ture of  an  inland  bill  of  exchange  payable  to   the   bearer  on   demand.     It  has 
nearly  all  the  incidents  of  an  ordinary  bill  of  exchange.     In   one  thing  it  dif- 
fers from  a  bill  of  exchange :  it  is  an  appropriation  of  so   much   money  of 
the   drawer's    in    the   hands    of  the    banker   upon  whom    it  is    drawn,  for   the 
purpose  of  discharging  a   debt  or  liability  of  the   drawer   to  a  third  person ; 
whereas,  it  is  not  necessary  that  there   should   be   money  of  the  drawer's    in 
the   hands  of  the  drawee  of  a  bill  of  exchange.     There   is   another  difference 
between  the  two  instruments :  in  the  case  of  a  bill  of  exchange,  the   drawer 
is   discharged   by  default  of  a  due  presentment  to  the  acceptor;    but,  in  the 
case  of  a  check,  the  drawer  is  not  discharged  by  a  delay  in  the  presentment, 
unless  it  be  shown  that  he  has  been  prejudiced  thereby ;  for  instance,  by  the  fail- 
ure of  the  banker  on  whom  it  is  drawn.     In  all  other  respects  a' check  is  pre- 
cisely like  an  inland  bill  of  exchange.     iNIr.  Grant  is  in  error  when  he  supposes 
that  the  negotiability  of  inland  bills  of  exchange  rested  entirely  on  the  statute  9 
&  10  W.  3,  c.  17.     It  reposes  on  the  law  merchant,  as  it  had  been  understood 
and  applied  for  at  least  a  hundred  years  before  the  passing  of  that  statute.    Bills  of 
exchange  indorsed  in  blank,  and  promissory  notes  payable  to  bearer,  were  well- 
known  instruments.     So,  the  bonds  and  notes  of  foreign  States  and  princes  are  all 
treated  in  this  country  as  negotiable  instruments,  and  are  available  in  the  hands 
of  persons  taking  them  for  value.     That  being  so,  it  seems  to  me  to   be  clear 
that  a  check  ftills  within  the  class  of  ordinary  bills  of  exchange ;  and,  if  so,  why 
may  it  not  be  indorsed,  so  as  to  impose  upon  the  indorser  the  ordinary  liabilities 
which  flow  from  the  indorsement  of  a  negotiable  instrument?    No  inconvenience 
can  result  from  our  holding  this  ;  for,  it  was   distinctly  decided  in  Waynam  d. 
Bend,  1  Camp.  175,  that,  in  an  action  against  the   maker  of  a  promissory  note 
payable  to  A  B  or  bearer,  if  J;he  declaration  states  that  A  B  indorsed  the  note 
to  the  plaintiff,  the  indorsement  —  that  is,  an  indorsement  UHimo  indorftamU  — 
must  be  proved.     So,  in  Story  on  Promissory  Notes,  §  132,  it  is   said  that, 
"  Although  a  note  payable  to  bearer  is  transferable  by  mere  delivery,  it  may  also 
be  transferred  by  indorsement  of  the  payee,  or  of  any  other  subsequent  holder. 
In  such  a  case,  the  indorser  incurs  the  same  liabilities  and  obligations  as  the  in- 
dorser of  a  negotiable  note  payable  to  order,  from  many  of  which,  in  the  case 
of  a  mere  transfer  by  delivery,  he  is  exempt."     It  is  true  that  a  man's  name  may 
and  very  often  is  written  on  the  back  of  a  check  or  bill  without  any  idea  of  ren- 
dering himself  liable  as  an  indorser.     Indeed,  one  of  tha  best  receipts  is  the 
placing  on  the  back  of  the  instrument  the  name  of  the  person  who  has  received 
payment  of  it.     Such  an  entry  of  the  name  on  the  instrument  is  not  an  indorse- 


720  CHECKS. 

nient.  So,  a  man  froquently  puts  his  name  on  the  back  of  a  hank-note.  In  all 
these  cases,  the  act  of  writing  ma);  or  may  not  be  an  indorsement,  according  to 
circumstances.  All  that  we  mean  to  decide  on  the  present  occasion  is,  that, 
where  a  man  indorses  an  instrument  of  this  sort,  animo  indorsandi,  and  delivers 
it  so  indorsed  to  a  third  person,  he  renders  himself  liable  to  be  sued  upon  the 
instrument,  as  indorsee,  by  any  subsequent  holder.  I  entertain  no  doubt  what- 
ever upon  the  subject ;  and  I  do  not  tliink  any  mischief  or  inconvenience  can 
result  from  our  so  deciding.  I  may  add  that  I  do  no  injustice  to  the  able  argu- 
ment of  Mr.  Gran  when  I  observe  that  it  would  have  been  deserving  of  more 
attention  if  it  had  been  addressed  to  the  Court  a  hundred  years  ago. 

Keatinc;,  J.  I  also  am  of  opinion,  upon  all  the  authorities,  that  a  check  is 
an  instrument  which  is  capable  of  being  indorsed,  and  that  the  payee,  if  he  in- 
dorses it  with  intent  to  make  himself  liable  as  an  indorser,  as  is  alleged  in  this 
declaration,  is  chargeable  as  such  at  the  suit  of  any  subsequent  bona  fide  holder. 

Judgment  for  tJie  plaintiff. 

In  Harker  v.  Anderson,  21  Wend.  372,  Cotoen,  J.,  maintained  the  doctrine, 
in  an  elaborate,  opinion,  that  checks  were  to  all  intents  and  purposes  bills  of 
exchange  payable  on  demand,  the  particular  point  argued  by  him  being  that 
the  drawer  of  a  check  could  always  require  the  same  diligence  of  the  holder  as 
to  presentment  and  notice,  as  the  drawer  or  indorser  of  a  bill.  But  a  majority 
of  the  Court  expressed  no  opinion  on  the  point  so  extensively  discussed ;  and 
the  weight  of  authority  is  against  the  view  taken  by  that  eminent  judge.  In 
several  later  cases  in  New  York,  the  view  taken  by  Mr.  Justice  Coioen,  has  been 
rejected.  S.ee  Little  v.  Phoenix  Bank,  2  Hill,  425 ;  Woodruff  v.  Merchants' 
Bank,  6  Hill,  174.  In  the  former  case  the  question  was,  whether  mere  delay  in 
presenting  a  check  for  payment  would  discharge  the  drawer.  The  Court  held 
that  it  would  not,  unless  the  drawer  had  been  injured  thereby ;  but  that  it  was 
incumbent  upon  the  holder  to  show  affirmatively  that  no  loss  had  happened  to 
the  drawer.  Mr.  Justice  Coiven,  however,  adhered  to  his  former  opinion  in 
Harker  v.  Anderson,  supra,  that  a  check,  like  a  bill,  must  be  j)resented  within  a 
reasonable  time,  or  both  the  drawer  and  indorser  will  be  discharged. 

This  question  is  also  ably  discussed  in  Matter  of  Brown,  2  Story,  502,  in  which 
Mr.'  Justice  Story  disapproves  the  doctrine  of  Judge  Cowen  in  Harker  v.  Ander- 
son, supra. 


MUSSRY  V.    EAGLE  BANK.  721 


Benjamin  B.  Mussey  v.  President,  Directors,  &c.,  of  the 

Eagle  Bank.  • 

(9  Metcalf,  306.     Supreinc  Court  of  Massachusetts,  March,  184.0.) 

Certification  of  checks.  Inherent  power  of  teller. — Evidence  that  the  teller  of  a  bank, 
during  all  the  time  of  his  holding  office,  whenever  the  convenience  of  the  bank  or 
of  its  customers  required  it,  certified  that  checks  were  "  good,"  which  were  drawn 
on  the  bank  by  its  customers,  when  funds  to  the  amount  of  such  checks  were  to 
the  credit  of  the  drawers,  and  tliat  his  so  doing  was,  in  some  instances,  known  to 
the  bank,  and  was  not  forbidden,  and  that  it  was  the  usage  of  the  tellers  of  otlier 
banks  to  do  the  same  thing,  does  not  warrant  a  jury  to  infer  that  the  power  of  so 
doing  was  an  original,  inherent,  implied  power  of  the  teller,  as  such. 

Usage.  The  usage  of  issuing  certificates  of  deposit,  by  a  teller  of  a  bank,  is  not 
evidence  to  prove  a  usage  of  certifying  checks. 

A  teller  of  a  b.ank,  as  such,  has  no  authority  to  certify  that  a  check  is  "good,"  so  as 
to  bind  the  bank  to  pay  the  amount  thereof  to  any  person  who  may  afterwards 
present  it ;  and  a  usage  for  him  so  to  certify  a  check,  to  enable  the  holder  to  use  it 
at  his  pleasure,  is  bad. 

Assu.MPSiT  to  recover  the  amount  of  a  check  drawn  on  the  Eagle 
Bank  by  G.  F,  Cook  &  Co.,  for  $4000,  payable  to  the  drawers  or 
bearer,  and  on  which  the  following  words  were  written  by  the  teller 
of  the  bank :  "  Good.     H.  B.  Odiorne,  Teller." 

Hubbard,  J.  It  is  proved  that  Cook  &  Co.  had  no  deposit  to 
their  credit,  in  the  Eagle  Bank,  at  the  time  tbe  check  was  drawn, 
nor  when  it  was  presented  for  payment ;  and  it  is  admitted  that 
the  action  cannot  be  maintained  against  the  defendants,  unless  the 
word  "  good,"  written  by  tlicir  teller,  and  certified  by  iiis  signa- 
ture, binds  the  bank.  It  is  also  agreed,  or  proved,  that  the  teller 
had  no  direct  authority  conferred  upon  him  to  certify  checks  as 
good.  Unless,  therefore,  a  teller  has  power,  by  virtue  of  his  office, 
thus  to  bind  the  bank  ;  or  a  custom  thus  to  certify  checks  exists 
among  banks,  for  the  purpose  of  giving  them  currency  with  third 
persons,  on  the  credit  of  the  bank  ;  or  the  defendants  have  sanc- 
tioned the  practice  of  the  making  of  such  certificates,  by  their 
knowledge  of  its  use,  which  they  have  not  forbidden  ;  this  action, 
it  is  admitted,  cannot  be  sustained. 

These  several  propositions  emljrace,  substantially,  the  subjects 
which  have  been  discussed,  and  upon  which  the  plaintitr  grounds 
his  motion  for  a  new  trial.     One  of  the  propositions  of  the  plain- 

46 


722  CHECKS. 

tiff's  counsel  is  stated  thus  :  That  the  jury  should  have  been 
instructed,  that  if  the  pro»f  should  warrant  the  inference  that 
Odiorne,  while  teller,  certified  the  checks  of  the  customers  of  the 
bank,  and  this  was,  in  any  instance,  known  to  the  bank,  and  was  not 
forbidden  ;  and  that,  during  the  same  period,  it  was  the  custom  of 
all  the  tellers  of  other  banks  so  to  certify  checks  ;  the  jury  would  be 
at  liberty  to  infer  an  original,  inherent,  implied  power  in  Odiorne, 
as  such  teller,  thus  to  certify  checks.  But  certain  facts  are  stated, 
in  this  proposition,  as  furnishing  evidence  of  inherent  power, 
which  are  rather  applicable  to  the  question  and  binding  nature 
of  a  usage.  They  may  prove  the  latter,  while  they  by  no  means 
establish  the  former.  The  question  of  inherent  power,  and  that 
of  usage,  should  be  separately  considered,  in  order  to  arrive  at  a 
correct  conclusion. 

1.  And  first,  has  the  teller  of  a  bank  an  original,  inherent, 
implied  power  to  certify  checks  as  good,  by  virtue  of  his  office  ? 
Or,  in  other  words,  has  the  teller  of  a*  bank  an  inherent  power  to 
bind  the  bank  to  the  payment  of  any  given  sum  of  money,  at  a 
future  time,  to  any  person  who  shall  produce  a  check,  which  he 
has,  by  writing  upon  it  the  word  "  good,"  in  fact  accepted  to  pay  ? 
Because,  unless  the  word  "  good  "  carries  with  it  binding  evidence 
of  the  fact  that  the  money  is  in  the  bank  to  meet  that  particular 
check,  and  that  it  will  be  paid  to  the  bearer  at  any  time  when  it  is 
presented,  it  is  of  no  practical  utility.  It  will  amount  to  no  more 
than  this;  viz.,  that,  at  the  moment  of  presentment,  the  check  is 
good,  and  will  be  paid,  if  then  handed  in  ;  but  not  that  it  will 
continue  good  two  hours  after,  if,  not  being  offered,  other  checks 
of  the  same  drawer  are  presented,  to  the  amount  of  his  deposit  in 
the  bank. 

The  office  of  the  teller  is  implied  in  the  word  used  to  designate 
it,  —  to  tell  or  count  the  moneys  of  the  bank,  which  are  received 
or  paid  out.  The  office  is  often  divided  into  two  branches  :  that 
of  receiving  teller  and  of  paying  teller,  where  the  business  of  the 
bank  is  large,  and  the  duties  cannot  conveniently  be  united  in  one 
person.  When  united,  the  duty  of  the  teller  is,  to  receive  all 
moneys  offered  at  the  bank  in  payment  of  notes  and  bills  pre- 
viously discounted  or  lodged  for  collection,  as  they  severally  fall 
due,  and  all  moneys  offered  by  customers  of  the  bank,  to  be 
deposited  to  their  credit  in  account,  whether  arising  from  moneys 
brought  by  them  to  the  bank,  or  the  proceeds  of  discounts  made 


MUSSEY    V.    EAGLE   BANK.  T28 

for  them  ;  to  pay  tlie  checks  of  depositors,  as  the  money  is,  from 
time  to  time  drawn  out,  or  for  notes  discounted  ;  and  to  redeem 
the  bills  of  the  bank  with  specie,  when  the  same  is  demanded. 
Tills  is  his  official  employment;  and,  in  the  discharge  of  these 
duties,  l>e  is  regularly  to  account  for  the  moneys  he  has  received 
and  paid  out,  not  only  to  prevent  mistakes,  but  to  charge  him 
when  short  or  delinquent ;  and  he  is  also  made  responsible  for  the 
payment  of  a  check,  when  the  drawer  has  not  a  like  amount  to  his 
credit,  unless  he  applies  to  the  book-keeper  for  information  as  to 
the  state  of  the  drawer's  account ;  and  then,  if  an  over-payment 
is  made,  through  the  mistake  or  fault  of  the  book-keeper,  he,  and 
not  the  teller,  is  responsible  for  the  loss.  And  when  checks  on 
other  banks  are  received  in  payment,  or  on  deposit,  (as  is  tlie 
usage  among  the  banks  in  the  city),  it  is  made  his  duty  to  attend 
to  their  collection  by  a  given  hour  of  the  day.  These  are  the 
powers  and  duties  usually  assigned  to  the  office  of  the  teller ;  and 
they  are  plain  and  explicit.  They  relate  to  the  direct  receipt  or 
payment  of  moneys,  and  to  a  true  and  accurate  accounting  for 
such  receipts  and  payments.  His  duties  respect  the  daily  cash 
transactions  of  the  bank,  and  they  do  not  relate  directly  to  the 
credits  given  by  the  bank  to  its  customers,  or  borrowers,  on  the 
loan  of  its  funds.  His  office  is  not  confounded  with  that  of  the 
discount  clerk,  or  the  book-keeper  ;  but  his  daily  minutes,  and 
the  checks  paid  or  received  by  him,  are  handed  to  the  book- 
keeper, for  him  to  make  the  proper  entries,  by  which  the  con- 
cerns of  the  bank  may  be  known  when  tested  by  the  teller's  cash 
on  hand. 

In  these  powers  and  duties,  thus  conferred  upon  the  teller," 
and  to  be  exercised  by  him  in  the  discharge  of  the  appropriate 
functions  of  his  office,  there  is  no  inherent,  original  power, 
expressly  conferred,  to  enable  him  to  certify  that  the  checks 
of  the  depositors  at  the  bank  will  be  good,  when  presented  for 
payment,  at  some  future  time ;  nor  is  such  power  incident  to,  or 
necessary  to,  the  faithful  discharge  of  any  of  his  duties.  Powers 
which  are  neither  incidental  nor  necessary  are  not  to  be  implied, 
when  the  rights  of  others  are  thereby  involved.  The  power  in 
question  is,  in  fact,  not  only  not  implied  as  incidental  to  the 
proper  performance  of  the  duties  of  the  office,  but  the  teller  is 
not  a  regular  certifying  officer,  as  to  the  state  of  any  depositor's 
account ;  for  he  has  not  the  means  of  certifying  it.  Nor  is  he 
responsible    for   the    book-keeper's    statement.      Nor    does    such 


724  CHECKS. 

power  exist  in  the  book-keeper ;  for,  during  the  business  hours 
of  tlie  day,  he  is  not  the  receiver  of  all  the  checks  drawn  by  the 
depositors,  as  they  are  paid  at  the  bank,  nor  is  he  answerable 
for  the  amount,  nntil  handed  to  him  for  entry  in  his  books.  Such 
certificate  would,  in  fact,  require  the  names  of  l)oth  the  officers, 
that  the  drawer's  account  was  good  for  the  face  of  the  check, 
before  either  of  them  could  have  evidence  of  the  fact  to  be 
certified.  Nor  could  they  be  secure  from  difficulty  arising  out 
of  the  constant  pressure  of  business,  without  actually  charging 
the  check  thus  certified ;  and  even  if  charged,  they  would  be 
without  a  voucher  till  the  check  should  be  handed  in  for  pay- 
ment. 

Such  a  power  of  certifying  is,  in  fact,  a  power  to  pledge  the 
credit  of  the  bank  to  its  customers  ;  a  power  which,  by  the  consti- 
tution of  a  bank,  can  alone  be  exercised  by  its  president  and 
directors,  unless  specially  delegated  by  them  ;  and  consequently, 
it  cannot  be  implied  as  a  resulting  duty  or  authority  in  any 
individual  officer.  Evidence  of  usage,  therefore,  can  imply  no 
original,  inherent,  and  implied  power  in  tellers  thus  to  certify, 
however  it  may  bear  on  the  question  of  binding  a  bank  by  the 
allowance  of  such  a  usage. 

2.  It  is  contended  that  a  usage  for  tellers  of  banks  thus  to 
certify  that  checks  are  good,  and  such  usage  being  known  to 
the  business  community,  is  a  usage  binding  on  banks,  and  that 
the  holder  of  a  check  so  certified  may  recover  it  from  the  bank 
on  which  it  is  drawn  ;  and  that  proof  of  a  usage,  on  the  part 
of  this  bank  and  the  other  banks  of  the  city,  to  allow  certificates 
of  deposit  to  be  certified  by  their  respective  tellers,  is  evidence  in 
support  of  a  usage  of  such  tellers  to  certify  checks,  or  of  their 
authority  so  to  do. 

Upon  this  point,  the  judge,  at  the  trial,  instructed  the  jury, 
that  if  any  such  general  usage  existed,  and  if  it  was  a  good 
usage,  the  defendants  would  be  bound  by  it ;  but  whether  the 
usage  was  good  or  not,  was  matter  of  law  for  the  Court  to  decide, 
and  was  not  a  question  for  the  jury  ;  and  that  a  usage  to  issue 
certificates  of  deposit  was  not  evidence  to  prove  a  usage  of  certi- 
fying checks. 

In  examining  the  evidence  which  was  offered  to  the  jury,  and 
which  is  reported  at  some  length,  we  are  well  satisfied  that  no 
such  general  usage  has  been  proved ;  but  that,  in  some  of  the 
banks  a  practice  has  existed  for  one  of  the  officers  of  the  bank, 


MUSSEY   V.    EAGLE   BANK.  725 

and  generally  the  teller,  to  certify  that  the  check  of  a  depositor 
is  good,  when  it  was  necessary  for  him  to  use  his  check  at 
another  bank,  after  bank  hours,  to  prevent  the  protest  of  a  note ; 
in  which  case  his  check  would,  of  course,  be  presented  for  pay- 
ment, the  next  morning,  by  the  bank  receiving  the  same  ;  or 
occasiojially,  when  a  remittance  was  to  be  made  to  a  correspondent 
at  a  distance  ;  and  sometimes,  for  the  convenience  of  the  officers, 
where  the  money  was  needed,  to  be  paid  at  another  bank,  and 
the  amount  of  the  check  was  large,  to  save  the  labor  of  count- 
ing the  bill's.  The  cases  vary  from  the  one  at  bar.  They  were 
evidently  those  of  special  convenience  for  a  particular  occasion, 
and  which,  from  the  uprightness  of  the  officers  and  the  solvency 
of  the  parties,  worked  no  mischief.  But  even  these  cases  were 
neither  proved  to  be  general,  nor  applicable  to  all  the  banks,  so 
as  to  establish  a  usage.  The  case  at  bar,  on  the  other  hand,  was 
the  giving  of  large  credits  to  the  persons  drawing  the  checks, 
to  enable  them  to  borrow  money  on  the  strength  of  the  certifi- 
cates. In  some  banks,  checks  were  occasionally  certified  for 
customers,  to  be  used  by  them,  at  their  convenience,  where  the 
funds  were  in  the  bank  to  meet  them ;  but  the  practice,  as 
proved,  was  of  such  limited  extent  as  not  to  bear  on  the  question 
of  usage. 

But  if  a  usage  had  been  proved  of  the  certifying,  by  the 
teller,  that  the  clieck  is  good,  to  enable  a  holder  to  use  it  after- 
wards, at  his  pleasure,  we  are  clearly  of  opinion  that  such  a 
usage  would  be  bad,  and  could  not  be  upheld.  It  would  give  to 
bank-checks,  which  are  intended  for  immediate  use,  and  are  the 
substitutes  for  specie,  in  the  ordinary  transactions  of  business, 
the  character  of  bills  of  exchange,  payable  to  the  bearer,  the  bank 
being  acceptor,  and  payable  at  an  indehnite  time.  It  would  lead 
to  loans  to  favored  individuals,  without  the  usual  security ;  it 
would  substitute  checks  for  cash,  in  the  hands  of  tellers  who 
receive  them,  and  would  confer  the  power  upon  a  single  officer  to 
pledge  the  credit  of  the  bank  by  the  mere  writing  of  his  name ; 
a  power  never  contcmi»hited  by  the  legislature,  nor  intended  to 
be  conferred  by  the  stockholders.  It  would  expose  the  teller  to 
the  frauds  of  a  book-keeper,  and  both  of  them  to  the  temptations 
of  unprincipled  and  greedy  men,  who  might,  under  various  ])re- 
tences,  procure  their  checks  to  be  thus  certified,  in  the  lirst 
instances,  when  their  deposits  were  good,  and  afterwards,  when 


726  CHECKS. 

there  was  no  balance  to  their  credit  ;  allowing  interest,  as  a 
bonus  for  the  certificate,  to  the  certifying  officer,  who  would 
afterwards  receive  such  checks  as  cash.  And  the  present  case 
well  illustrates  the  hazards  and  the  evils  to  which  banking  com- 
panies and  their  officers  are  exposed  by  the  allowance  of  such  a 
practice. 

It  has  been  pressed,  in  the  argument  on  the  subject  of  usage, 
that  this  certificate  of  "  good,"  on  the  check,  is  but  another  form 
of  the  exercise  of  a  usage,  so  common  in  banks,  to  grant,  by  the 
teller,  a  certificate  of  deposit  of  money  to  the  credit  of  a  third 
person.  But  we  are  of  opinion,  with  the  judge  before  whom  the 
trial  was  had,  that  usage  of  the  one  will  not  support  the  practice 
of  the  other.  The  two  practices,  while  having  the  appearance 
of  resemblance,  and  although  one  may  be  used  for  the  same  pur- 
pose as  the  other,  in  the  form  of  a  remittance,  are,  in  their 
character,  essentially  distinct.  A  certificate  of  deposit  is  regu- 
larly issued  only  when  money  is  actually  paid  into  a  bank,  for 
the  benefit  of  a  third  person,  and  is  placed  to  his  credit ;  by 
means  of  which  certificate,  and  on  the  return  thereof,  he  can  draw 
for  the  money  deposited ;  or,  if  the  money  is  not  actually 
deposited,  but  the  check  of  the  party  procuring  the  certificate  is 
given,  such  check  is  immediately  charged  to  the  account  of  the 
drawer.  This  is  a  transaction  in  which  money  is  actually  paid 
for  the  certificate ;  and  the  certificate  is  no  more  than  entering 
the  amount  in  the  depositor's  bank-book.  The  difference  is,  that 
the  credit  is  given  to  the  correspondent  of  the  depositor,  and 
not  to  the  depositor  himself.  But  where  a  check  is  cei-tified,  as 
in  the  case  at  bar,  no  money  is  deposited,  no  check  is  received, 
and  the  teller  can  only  rely  on  the  declaration  of  the  book-keeper 
that  the  check  is  good.  The  transaction  enters  not  into  the 
books  of  the  bank ;  is  not  necessarily  known  by  its  higher 
officers  ;  and  yet,  it  is  contended,  the  bank  is  bound  by  the  trans- 
action. 

In  examining  the  evidence,  it  is  apparent  that  the  defendants 
have  never  sanctioned  the  practice  of  authorizing  their  teller  to 
certify  checks  as  good,  in  order  to  their  being  used,  by  the 
drawer,  to  raise  a  credit  with  third  persons.  And,  admitting  it 
to  be  proved  (though  of  that  we  are  not  satisfied),  that  the  cashier, 
in  one  instance,  knew  that  the  teller  certified  a  check  of  Cook 
&  Co.  as  good,  and  did  not  prohibit  him,  still,  the  teller  having 


THE  farmers'  bank  V.    BUTCHERS'  BANK.         727 

no  legal  right,  either  express  or  implied,  thus  to  obligate  the 
bank^  the  knowledge  of  thg  easliier  could  not  affect  the  defend- 
ants. Such  an  aciniiescence  on  the  part  of  the  cashier,  whether 
the  consequoncc  of  haste,  or  ignorance,  or  improper  motive,  or  a 
mistaken  view  of  his  own  powers,  could  not  create  a  contract 
between  the  bank  and  the  holder  of  any  other  check  thus  certified. 

What  the  legal  consequence  would  be,  if  the  check  was  good 
at  the  time  of  such  certificate,  and  was  certified  with  the  knowl- 
edge and  acquiescence  of  the  cashier,  and  was  taken,  bo7ia  fide, 
on  the  faith  of  such  certificate  so  approved,  we  are  not  now  called 
upon  to  express  an  opinion. 

The  view  taken  of  the  case  makes  it  unnecessary  to  decide  on 
that  part  of  the  instructions  of  the  presiding  judge,  whether 
Drake  took  the  check  under  such  suspicious  circumstances  that 
he  was  bound  to  make  inquiry.  Leaving  this  subject,  therefore, 
for  future  consideration,  if  the  point  should  hereafter  arise,  we 
are  satisfied  that  the  instructions  w^ere  sufficiently  favorable  to 
the  plaintiff,  and  that  there  is  no  just  cause  for  disturbing  the 
verdict.  Judgment  on  the  verdict. 

But  see  the  following  case  and  note. 


The  Farmers'  and  Mechanics'  Bank  of  Kent  County, 
Maryland,  vi.  The  Butchers'  and  Drovers'  Bank. 

(16  New  York  [2  Smith],  125.     Court  of  Appeals,  September,  1857.) 

Certification  of  checks.  —  Kbonaful'  hoklcT,  for  value,  of  a  negotiable  check  certified 
to  be  good  by  tlie  paying  teller  of  tlic  bank  on  which  it  is  drawn,  whose  author- 
ity to  certify  is  limited  to  cases  where  the  bank  has  funds  of  the  drawer  to  meet 
the  check,  can  recover  of  the  bank  the  amount  of  the  check,  though  tlie  drawer 
had  no  funds  in  the  bank,  and  though  the  certification  by  the  teller  was  in  viola- 
tion of  liis  duty,  and  for  the  drawer's  accommodation. 

The  action  in  this  case  was  to  recover  the  amount  of  five  cheeks 
drawn  upon  the  defendants,  by  one  Green,  and  certified  to  be  good 
by  the  paying  teller  of  the  defendants.  The  checks  were  not 
drawn  on  funds,  and  the  teller  had  no  authority  to  certify  checks 
unless  the  drawer  had  funds  in  the  bank  to  cover  them. 

The  plaintiffs  were  bona  fide  holders  for  value,  and  had  judg- 
pient  in  the  Court  below. 


728  CHECKS. 

Selden,  J.  The  jury  in  this  case  have  found,  upon  sufficient 
evidence  and  under  proper  instruction^  from  the  Court,  that  the 
plaintiffs  were  holders,  for  value,  of  the  cliecks  in  question.  Each 
of  these  checks,  if  duly  certified,  imposes  upon  the  bank  an  obliga- 
tion to  retain  the  amount  for  which  the  check  is  drawn,  and  which, 
by  the  certificate,  it  admits  it  has  in  hand  to  the  credit  of  the 
drawer  to  meet  the  check  when  presented,  and  to  pay  the  same  to 
the  holder  on  demand.  This  obligation  is  substantially  the  same 
as  that  assumed  by  the  acceptor  of  an  ordinary  bill  of  exchange ; 
and  the  certificates  in  this  case,  if  authorized,  may  with  propriety 
be  regarded  as  virtual  acceptances  of  bills,  and  the  bank  as  liable, 
if  at  all,  as  acceptor. 

The  first  ground  upon  which  this  liability  is  resisted  is  based, 
not  upon  any  want  of  authority  in  the  particular  agent  by  whom 
the  checks  were  certified,  but  upon  a  want  of  power  in  the  bank  to 
bind  itself  by  the  contract  sought  to  be  enforced.  It  is  insisted 
that  the  bank  was  not  authorized  by  its  charter  to  engage  in  trans- 
actions purely  fictitious,  having  no  connection  with  its  legitimate 
business,  or  to  pledge  its  credit  for  tlie  mere  accommodation  of 
third  persons. 

The  defendant  is  a  banking  corporation,  organized  under  the 
general  banking  law  of  this  State  ;  and  it  is,  I  think,  a  sound 
position,  that  such  a  corporation  exceeds  its  powers  when  it  becomes 
the  mere  surety  for  another,  upon  a  contract  in  which  it  has  no 
interest,  or  lends  its  credit  in  any  form  for  the  exclusive  benefit 
of  other  parties.  Such  a  contract  is  ultra  vires,  and  cannot  be 
enforced  against  the  bank  by  any  person  cognizant  of  the  facts. 
But  it  by  no  means  follows,  when  the  unauthorized  contract  is  in 
the  form  of  a  negotiable  instrument,  that  the  bank  can  avail" itself  of 
the  defence,  as  against  one  who,  without  notice,  has  become  the 
holder  of  the  paper  for  value.  This  question  appears  to  have 
arisen  in  the  case  of  Stoney  v.  The  American  Life  Insurance  Com- 
pany, 11  Paige,  635,  and  the  decision  of  the  Court  upon  the  point 
is  thus  stated  by  the  reporter :  "  A  negotiable  security  of  a  cor- 
poration, which  upon  its  face  appears  to  have  been  duly  issued  by 
such  corporation,  and  in  conformity  with  the  provisions  of  its 
charter,  is  valid  in  the  hands  of  a  bona  fide  holder  thereof,  without 
notice,  although  such  security  was  in  fact  issued  for  a  purpose 
and  at  a  place  not  authorized  by  the  charter  of  the  corporation, 
and  in  violation  of  the  laws  of  the  State  where  it  was  actually 
issued." 


THE    FARMKIIS'    HANK    V.    HUTCH EUs'    BANK.  729 

There  is  a  dictum  of  the  chancellor,  to  the  same  effect,  in  the 
case  of  Safford  v.  Wyckoff,  4  Ilill,  442,  whore  the  defence  set  up 
was,  that  the  act  of  the  hank,  in  issuing  the  hill  upon  which  the 
action  was  brought,  was  iilfro  vires.  The  chancellor  there  says : 
"  A  l)ill,  or  any  other  negotiable  security,  which  is  not  upon  its 
face  illegal  and  unauthorized,  is  valid  in  the  hands  of  a  bona  fide 
holder,  without  notice,  who  has  paid  a  valuable  consideration 
therefor,  except  in  those  cases  in  which  the  security  is  made  void 
by  statute."  So  in  the  case  of  The  Genesee  Bank  v.  The  Patchin 
Bank,  3  Kern.  309,  recently  decided  by  this  Court,  a  similar  doc- 
trine is  distinctly  asserted  by  Denio^J.,  although  the  point  was  not 
passed  upon  by  the  Court. 

I  have  uo  hesitation  in  concurring  with  these  learned  judges  in 
the  principles  thus  asserted,  and  am  not  aware  that  a  contrary 
opinion  has  ever  been  judicially  expressed.  A  citizen  who  deals 
directly  with  a  corporation,  or  who  takes  its  negotiable  paper,  is 
presumed  to  know  the  extent  of  its  corporate  power.  But  when 
the  paper  is,  upon  its  face,  in  all  respects  such  as  the  corporation 
has  authority  to  issue,  and  its  only  defect  consists  in  some  extrin- 
sic fact,  such  as  the  purpose  or  object  for  which  it  was  issued,  to 
hold  that  the  person  taking  the  paper  must  inquire  as  to  such 
extraneous  fact,  of  the  existence  of  which  he  is  in  no  way  apprised, 
would  obviously  conflict  with  the  whole  policy  of  the  law  in  regard 
to  negotiable  paper.  I  pass,  therefore,  to  the  consideration  of  that 
branch  of  the  defence  which  rests  upon  the  want  of  authority  in 
Pe1;k,  the  teller,  to  bind  the  bank. 

In  the  case  of  Mussey  v.  Eagle  Bank,  9  Met.  300,^  the  Supreme 
Court  of  Massachusetts  held  not  only  that  such  a  teller  had  no 
original  inherent  power  to  certify  checks,  but  that  a  general  custom 
to  that  effect  among  banks  would  conflict  with  the  public  interests, 
and  would  be  bad.  I  am  not  entirely  satisfied  with  the  reasoning 
of  the  Court  in  that  case.  The  act 'of  certifying  a  check  is  simply 
answering  the  supposed  inquiry  of  one  about  to  take  the  check, 
whether  the  bank  has  funds  of  the  drawer  to  meet  it ;  and  no 
other  officer  or  agent  of  the  bank  would  seem  to  be  so  competent 
to  give  the  answer  as  the  paying  teller.  His  duties  impose  upon 
him  the  necessity  of  knowing  the  state  of  every  depositor's  account, 
lie  is  charged  with  all  he  pays  out,  and  if  he  jiays  a  check,  with- 
out funds  in  hand,  he  is  responsible  to  the  bank  for  the  amount. 
His  knowledge  exceeds  that  of  the  book-keeper,  because,  to  tiie 
information  obtained  from  the  latter,  he  adds  a  knowledge  whether 

Ante,  721. 


730  CHECKS. 

any  deposits  have  been  made  or  checks  paid  since  the  last  entry  in 
the  books.  N'o  doubt  the  cashier,  by  virtiie  of  his  general  powers, 
and  his  presumed  knowledge  of  all  the  affairs  of  the  bank,  would 
be  competent  to  answer  the  question  ;  but  he  could  only  do  so  by 
first  inquiring  of  the  book-keeper  and  teller.  Why  should  the 
applicant  be  compelled  to  seek  the  information  through  this  cir- 
cuitous channel,  instead  of  going  directly  to  the  ultimate  source 
of  knowledge  on  the  subject  ?  The  teller  is  put  in  the  place  of 
the  cashier,  to  perform  a  portion  of  his  duties.  His  appointment 
is  virtually  a  division  of  the  office  of  cashier  ;  and  that  branch  of 
the  office  which  the  teller  fills  embraces  those  duties  which  par- 
ticularly require  a  knowledge  of  the  state  of  the  accounts  of  the 
depositors.  Why  then  should  he  not  be  the  organ  of  communica- 
tion on  that  subject  ? 

But  it  is  unnecessary  in  the  present  case  to  decide  this  question, 
as  it  clearly  appears  not  only  that  the  teller,  Peck,  was  in  the 
liabit  of  certifying  the  checks  of  customers,  with  the  knowledge  of 
the  officers  of  the  bank,  but  that  he  was  furnished  with  a  book 
for  the  express  purpose  of  keeping  a  memorandum  of  such  checks. 
His  authority  to  certify,  therefore,  in  a  proper  case,  cannot  be 
disputed.  But  it  is  insisted  that  his  power  extended  only  to  cases 
where  the  bank  had  funds  in  hand,  he  having  been  expressly  pro- 
hibited from  certifying  in  the  absence  of  funds,  and  hence  that  the 
bank  is  not  bound. 

It  may  be  doubted  whether  such  a  prohibition  adds  any  thing  to 
the  restrictions  which  would  otherwise  exist  upon  the  powers  of 
the  agent.  A  teller,  acting  under  a  general  power  to  certify  checks, 
would  be  guilty  of  an  excess  of  authority,  and  a  clear  violation  of 
duty,  if  he  certified  without  funds. 

The  powers  of  the  cashier  himself,  or  other  principal  financial 
officer  of  the  bank,  would  no  doubt  be  subject  to  the  same  limita-. 
tion.  To  certify  a  check,  when  the  bank  has  no  funds  to  meet  it, 
is  to  make  a  false  representation  ;  and  neither  the  incidental  power 
of  the  cashier,  nor  a  general  power  conferred  upon  any  other 
officer,  could  be  construed  to  authorize  that.  Hence,  if  a  bank  is 
holden,  in  any  case,  upon  a  certificate  of  its  cashier  that  a  check 
is  good,  when  it  has  no  funds  of  the  drawer,  it  is  not  because  the 
cashier  is  deemed  authorized  to  make  such  a  certificate,  but  because 
the  bank  is  bound  by  his  representation,  notwithstanding  it  is  false 
and  unauthorized. 

It  would  seem,  therefore,  that  the  defence  insisted  upon  here 


THE  farmers'  bank  V.    BUTCHERS*  BANK.         731 

would  liave  been  equally  available  if  the  checks  in  question  had 
been  certified  by  the  cashier  himself.  It  might  then  have  been 
urged,  with  truth,  tliat  tlie  cashier  had  violated  his  duty  and 
exceeded  the  proper  limit  of  his  powers  in  making  the  certificate  ; 
and  if  the  argument  be  sound,  that  the  principal  is  in  no  case 
bound,  unless  the  act  of  the  agent  is  within  the  powers  either 
actually  or  apparently  conferred  upon  him,  the  bank  would  not  be 
liolden  in  such  a  case.  It  is  no  more  within  the  apparent  power  of 
a  cashier  to  certify  that  the  bank  has  funds,  when  it  has  none,  than 
it  is  within  that  of  a  teller  expressly  authorized  to  certify  only  when 
the  bank  has  funds.  p]very  person  would  be  bound  to  take 
notice  of  the  limitation  imposed  by  law  vipon  the  powers  of  the 
casliier,  or  other  general  agents,  no  less  than  of  that  which  is  in 
terms  imposed  upon  the  powers  of  the  teller  as  special  agent. 
Hence,  it  cannot  be  pretended  that  a  person  who  should  take  and 
pay  value  for  a  check,  with  knowledge  that  the  bank  had  no  funds 
of  the  drawer  to  meet  it,  would  acquire  any  valid  claim  against 
the  bank,  although  such  check  was  certified  by  the  cashier  himself. 
He  would  be  presumed  to  know  that  it  was  contrary  to  the  duty 
of  the  cashier  to  certify  without  funds,  and  this  knowledge  would 
have  the  same  effect  as  that  which  every  one  who  should  take  a 
check,  certified  by  the  teller,  would  be  presumed  to  have  of  any 
express  restriction  upon  his  powers. 

It  will  be  seen  that,  if  these  views  are  correct,  the  present  case 
does  not  turn  in  any  degree  upon  the  rules  applicable  to  special 
agencies,  but  that  the  question  would  have  been  precisely  the  same  if 
the  check  had  been  certified  by  the  cashier  or  other  principal  financial 
officer  of  the  bank.  As  they  may,  however,  admit  of  doubt,  I  shall 
treat  the  case  as  one  of  an  agency  specially  restricted,  and  shall 
simply  inquire  whether  a  bona  fide  holder,  for  value,  of  a  negotiable 
check,  certified  by  a  special  agent  whose  authority  is  limited  to 
cases  where  the  bank  has  funds  of  the  drawer  in  hand,  can  enforce 
payment  of  the  check,  provided  the  bank  has  no  such  funds. 

This  is  a  complex  question,  depending  partly  upon  the  law  of 
principal  and  agent,  and  partly  upon  that  of  negotiable  or  com- 
mercial paper.  The  defence  assumes  that  principals  are  bound 
only  by  the  authorized  acts  of  their  agents,  and  admits  of  no  quali- 
fication of  this  general  rule,  except  where  the  agent  has  been 
apparently  clothed  with  an  authority  beyond  that  actually  con- 
ferred. But  this  proposition  is  too  broad  to  be  sustained.  Principals 
have  been  repeatedly  held  responsible  for  the  false  representations 


732  CHECKS. 

of  their  agents,  not  on  tlic  ground  that  the  agents  had  any  authority, 
either  real  or  apparent,  to  make  such  representations,  but  for 
reasons  entirely  different.  In  Hern  v.  Nichols,  1  Salk.  289,  the 
leading  case  on  the  subject,  where  an  agent  authorized  to  sell  a 
quantity  of  silk  had  made  certain  fraudulent  representations,  by 
which  the  purchaser  was  deceived,  the  principal  was  held  liable. 
Lord  Sblt  there  said :  "  Seeing  somebody  must  be  a  loser  by  this 
deceit,  it  is  more  reasonable  that  he  that  employs  and  puts  a  confi- 
dence in  the  deceiver  should  be  a  loser,  than  a  stranger."  The 
principle  of  this  case  has  never,  I  think,  been  overruled,  but,  on 
the  contrary,  has  been  repeatedly  approved  and  confirmed.  It  will 
be  found  directly  applicable  to  the  present  case.  The  certificate 
of  the  teller  is  a  positive  representation  that  the  bank  has  funds 
to  meet  the  check.  If  that  representation  is  false,  who  ought  to 
bear  the  loss  ? 

The  reasoning  of  Lord  Holt,  in  the  case  of  Hern  v.  Nichols, 
applies  here  with  peculiar  force.  The  bank  selects  its  teller,  and 
places  him  in  a  position  of  great  responsibility.  The  trust  and  con- 
fidence thus  reposed  in  him  by  the  bank  leads  others  to  confide  in 
his  integrity.  Persons  having  no  voice  in  his  selection  are  obliged 
to  deal  with  the  bank  through  him.  If,  therefore,  while  acting  in 
the  business  of  the  bank,  and  within  the  scope  of  his  employment, 
so  far  as  is  known  or  can  be  seen  by  the  party  dealing  with  him, 
he  is  guilty  of  misrepresentation,  ought  not  the  bank  to  be  held 
responsible  ?  It  is  worthy  of  consideration  that  the  fact  misrepre- 
sented in  this  case  is  not  only  one  peculiarly  within  the  knowledge 
of  the  agent,  but  one  with  which  he  is  made  acquainted  by  means 
of  the  position  in  which  he  is  placed  by  the  bank,  and  which  it  is 
his  especial  province  and  duty 'to  know,  and  which  could  scarcely 
be  definitively  ascertained  except  by  application  to  him.  These 
circumstances  would  seem  to  bring  the  case  decidedly  witliin  the 
principles  adopted  in  Hern  v.  Nichols,  and  in  the  subsequent 
decisions  based  upon  that  case. 

Tliis  conclusion  is  in  no  respect  in  conflict  with  that  doctrine  of 
tiie  law  of  agency  which  makes  it  the  duty  of  all  persons  dealing 
with  a  special  agent  to  ascertain  the  extent  of  his  powers.  It  is 
conceded  that  every  one  taking  the  checks  in  question  would  be 
presumed  to  know  that  the  teller  had  no  authority  to  certify  with- 
out funds.  But  this  knowledge  alone  would  not  apprise  him  that 
the  certificate  was  defective  and  unauthorized.  To  discover  that, 
he  must  not  only  have  notice  of  the  limitations  upon  the  powers 


THE  FARMKRS'  BANK  V.    HUTCHERS'  BANK.  733 

of  the  teller,  but  of  the  extrinsic  fact  that  the  bank  had  no  funds ; 
and  as  to  this  extrinsic  fact,  which  he  cannot  justly  be  presumed 
to  know,  he  may  act  upon  the  representation  of  the  agent.  There 
is  a  plain  distinction  between  the  terms  of  a  power  and  facts 
entirely  extraneous,  upon  which  the  right  to  exercise  the  authoiity 
conferred  may  depend.  One  who  deals  with  an  agent  has  no  riglit 
to  confide  in  the  representation  of  the  agent  as  to  the  extent  of 
his  powers.  If,  tliorofore,  a  person,  knowing  that  the  bank  has  no 
funds  of  the  drawer,  should  take  a  certified  check,  upon  the  repre- 
sentation of  the  cashier  or  other  officer  by  whom  the  certificate 
was  made,  that  he  was  authorized  to  certify  without  funds,  the 
bank  would  not  be  liable.  But  in  regard  to  the  extrinsic  fact, 
whether  the  bank  has  funds  or  not,  the  case  is  different.  That  is 
a  fact  which  a  stranger,  who  takes  a  check  certified  by  the  teller, 
cannot  be  supposed  to  have  any  means  of  knowing.  Were  he 
held  bound  to  ascertain  it,  the  teller  would  be  the  most  direct 
and  reliable  source  of  knowledge,  and  he  already  has  his  written 
representation  upon  the  face  of  the  check.  If,  therefore,  one  who 
deals  witli  an  agent  can  be  permitted  to  rely  upon  the  representa- 
tion of  the  agent  as  to  the  existence  of  a  fact,  and  to  hold  the 
princi[)al  responsible  in  case  the  representation  is  false,  this  would 
seem  to  be  such  a  case. 

■  It  is,  I  think,  a  sound  rule,  that  where  the  party  dealing  with 
an  agent  has  ascertained  that  the  act  of  the  agent  corresponds  in 
every  particular,  in  regard  to  which  such  party  has  or  is  presumed 
to  have  any  knowledge,  witli  the  terms  of  the  power,  he  may  take 
the  representation  of  the  agent  as  to  any  extrinsic  fact  which  rests 
peculiarly  within  the  knowledge  of  the  agent,  and  which  cannot 
be  ascertained  by  a  comparison  of  the  power  with  the  act  done 
under  it.  The  familiar  case  of  the  giving  of  a  negotiable  partner- 
ship note,  by  one  of  the  partners,  for  his  own  individual  benefit, 
affords  an  apt  illustration  of  this  rule.  Each  of  the  partners  is 
the  agent  of  the  partnership,  as  to  all  matters  within  the  scope 
of  the  partnershi])  l)usiness,  and  can  bind  the  firm  by  making, 
indorsing,  and  accepting  bills  and  notes  in  such  business ;  but  he 
has  no  more  authority  than  a  mere  stranger  to  execute  such  paper 
in  his  own  business,  or  for  the  accommodation  of  others.  If  he 
gives  the  partnership  note  or  acceptance  for  his  own  debt,  it  is 
void  in  the  hands  of  any  party  having  knowledge  of  the  consider- 
ation for  which  it  is  given  ;  but  when  negotiated  to  a  bona  fide 


734  CHECKS. 

holder,  the  firm  is  precluded  from  questioning  the  authority  of  the 
partner,  and  is  effectually  bound.  The  cases  in  this  State  by 
which  this  doctrine  is  illustrated  and  established  are  numerous 
and  uniform.  Livingston  v.  Hastie,  2  Caines,  246  ;  Lansing  v. 
Gaine,  2  Johns.  300 ;  Laverty  v.  Burr,  1  Wend.  529  ;  Williams 
V.  Walbridge,  8  id.  415  ;  Boyd  v.  Plumb,  7  id.  309;  Gansvoort  v. 
Williams,  14  id.  133  ;  Joyce  v.  Williams,  id.  141  ;  AVilson  v.  Wil- 
liams, id.  146  ;  Catskill  Bank  v.  Stall,  15  id.  364  ;  s.  c,  18  id.  466. 

It  will  be  found  difficult  to  distinguish  these  cases,  in  principle, 
from  that  now  before  the  Court.  Every  person  taking  the  nego- 
tiable note  or  acceptance  of  a  partnership,  executed  by  one  of  the 
partners  in  the  name  of  the  firm,  is  bound  to  know  the  extent  of 
the  partner's  authority  to  bind  the  firm;  but  this  obligation  does 
not  extend  to  the  consideration  for  which  the  note  or  acceptance 
was  given.  If  given  for  the  private  debt  of  one  of  the  partners, 
or  for  the  accommodation  of  third  persons,  all  the  cases  agree  that 
the  burden  of  proving  the  holder's  knowledge  of  that  fact  rests 
upon  the  partnership.  That  the  execution  is  by  an  agent  is  as 
apparent  upon  the  face  of  the  paper,  in  such  cases,  as  in  that  of  a 
certified  check ;  because  a  partnership  can  only  act  in  its  partner- 
ship name  through  agents. 

The  argument  resorted  to  here,  therefore,  that  parties  are  only 
bound  by  the  authorized  acts  of  their  agents,  and  that  paper  issued 
by  an  agent  without  authority  is  no  more  obligatory  upon  the  prin- 
cipal than  if  it  had  been  forged,  is  just  as  applicable  to  partnership 
notes  given  by  a  partner  for  his  individual  debts  as  to  these  cer- 
tified checks.  The  question  is  not,  in  such  cases,  whether  the 
principaljis  bound  by  the  unauthorized  act  of  the  agent,  but 
whether  he  is  estopped  by  the  representation  of  the  agent,  from 
disputing  facts  which  show  that  the  act  was  authorized.  There  is 
no  analogy  between  these  partnership  cases,  or  the  case  before  the 
Court  and  cases  where  the  paper  is  forged.  The  fact  of  the 
agency,  and  the  trust  and  confidence  reposed  by  the  principal  in 
the  agent,  create  a  broad  line  of  distinction  between  them  ;  and  it 
is  this  trust  and  confidence  which  constitute  the  foundation  of  the 
liability,  and  which  justify  the  party  dealing  with  the  agent  in  re- 
lying upon  his  representation  in  respect  to  facts  especially  within 
the  agent's  knowledge.  The  giving  of  a  note  in  the  partnership 
name,  by  one  of  the  partners,  is  a  virtual  representation  that  it  is 
given  in  the  partnership  business,  and,  if  negotiable,  this  repre-' 


THE  farmers'  bank  V.    BUTCHERS*  BANK.         735 

sentatiou  is  deemed  in  law  to  have  been  made  to  every  subsequent 
bona  fide  holder  of  the  note.  The  State  oi"  Illinois  v.  Delafield,  8 
Paige,  527  ;  s.  c.  in  error,  2  Hill,  15i»,  is  another  illustration  of 
the  same  principle.  An  agent  of  that  State  was  authorized  to  dis- 
pose of  certain  bonds,  but  was  not  to  sell  them  below  jjar  or  on 
credit.  He  sold  them  to  Delafield  on  time  and  at  a  sacrifice.  The 
State  filed  a  bill  against  Delafield  for  relief,  and  applied  to  the  Court 
of  Chancery  for  an  injunction  to  restrain  the  defendant  from  nego- 
tiating the  bonds,  on  the  ground  that  if  negotiated  the  State  would 
be  liable  to  pay  them.  The  defendant's  counsel  insisted  that  if 
the  bonds  were  void  in  the  hands  of  Delafield  they  would  be  equally 
so  in  the  hands  of  any  person  to  whom  he  might  transfer  them. 
The  chancellor,  nevertheless,  granted  the  injunction,  saying  that, 
if  the  securities  should  pass  into  the  hands  of  a  bona  fide  holder, 
the  State  would  be  equitably  and  legally  bound  to  pay  them.  On 
appeal  to  the  Court  for  the  correction  of  errors,  the  decision  of 
the  chancellor  was  affirmed  by  a  nearly  unanimous  vote. 

It  would  be  difficult,  I  think,  to  discover  any  valid  distinction, 
in  principle,  between  this  case  and  the  one  we  are  considering. 
The  purchaser. of  the  bonds  from  Delafield  would,  equally  with 
Delafield  himself,  be  presumed  to  know  the  limits  of  the  authority 
conferred  upon  the  agent ;  but  it  must  have  been  held  that  he 
would  not  be  bound  to  inquire  as  to  the  extrinsic  facts  attending 
the  sale  or  negotiation  of  the  bonds. 

The  principle  is  well  stated  in  the  following  proposition,  sub- 
mitted to  and  approved  by  the  Court,  in  the  case  of  The  North 
River  Bank  v.  Aymar,  3  Hill,  262:  "  Whenever  the  very  act  of 
the  agent  is  authorized  by  the  terms  of  the  power,  that  is,  when- 
ever, by  comparing  the  act  done  by  the  agent  with  the  words  of 
the  power,  the  act  is  in  itself  warranted  by  the  terms  used,  such 
act  is  binding  on  the  constituent,  as  to  all  persons  dealing  in  good 
faith  with  the  agent.  Such  persons  are  not  bound  to  inquire  into 
facts  aliunde;  the  apparent  authority  is  the  real  authority." 

The  opinion  of  Mr.  Justice  Ne/son,  who  dissented  from  the  ma- 
jority of  the  Court  in  this  case,  cannot  be  reconciled  with  the 
principle  maintained  by  the  same  judge  in  Boyd  v.  Plumb  and 
Gansvoort  v.  Williams,  supra.  The  cases  are  strictly  parallel. 
In  that  of  Aymar,  the  power  of  the  attorney  was  limited  to  the 
giving  of  notes,  for  the  use  of  the  principal ;  in  the  others,  the 
authority  of  the  partner  was  limited  to  the  execution  of  paper,  for 


736  .      CHECKS. 

the  use  and  benefit  of  the  partncrsliip  ;  in  both,  tlie  plaintiffs  were 
regarded  by  the  judge  as  equally  cognizant  of  the  limitations  of 
the  power ;  and  yet,  in  the  cases  of  Boyd  v.  Plumb,  and  Gans- 
voort  V.  Williams,  he  held  that  the  burden  rested  upon  the  defend- 
ants to  prove  notice  to  the  plaintiff  that  the  paper  was  not  given 
in  the  business  of  the  partnership ;  while  in  the  case  of  Ay  mar  he 
held  that  the  plaintiffs  were  presumed  to  know  that  the  notes  were 
not  given  for  the  benefit  of  the  principal,  and  that  the  burden  of 
proving  the  contrary  rested  upon  them.  These  two  positions  are 
diametrically  opposed  and  cannot  be  made  to  harmonize ;  that 
taken  in  Boyd  v.  Plumb  and  Gansvoort  v.  Williams  accords  with 
many  other  cases  in  this  State,  and  with  all  the  English  cases  ou 
the  subject. 

It  is  true  that  the  decision  in  the  case  of  The  North  River  Bank 
V.  Aymar  was  reversed  in  the  Court  of  Errors ;  but  the  opinions 
pronounced  in  that  Court  have  never  been  published,  and  conse- 
quently the  views  there  expressed  upon  the  point  in  question  are 
unknown.  Under  these  circumstances  the  principal  reason  against 
the  reconsideration  of  a  question,  which  has  been  passed  upon  by 
the  Court  of  last  resort ;  viz,,  that  the  public  needs  a  fixed  and 
definite  rule  upon  which  it  can  rely  in  the  transaction  of  business, 
loses  most  of  its  force.  The  opinion  of  the  Supreme  Court,  which 
is  published  at  large  in  the  reports,  is  more  likely  to  be  taken  as 
the  rule  than  that  of  the  Court  of  Errors,  to  which  attention  is 
rarely  directed.  The  question,  therefore,  should,  I  think,  be  con- 
sidered as  still  open  for  examination  ;  and  I  have  little  hesitation 
in  holding  that  it  was  properly  decided  by  the  Supreme  Court. 

It  is  supposed  that  the  cases  of  Attwood  v.  Mannings,  7  Barn. 
&  C.  278,  and  Alexander  v.  McKenzie,  6  Mann.  Gr.  &  S.  766,  are 
in  conflict  with  the  doctrine  liere  advanced ;  but,  upon  a  careful 
scrutiny  of  the  first  of  these  cases,  it  will  be  seen  that,  if  the 
point  we  are  examining  was  involved,  it  received  no  consideration 
from  the  Court.  The  general  principle  laid  down  in  that  case  is 
in  perfect  accordance  with  the  views  here  expressed.  It  is,  sim- 
ply, that  where  an  agent  accepts  a  bill,  in  a  form  which  imports 
that  he  acts  by  virtue  of  a  special  power,  any  person  taking  the 
bill  is  bound  to  inquire  into  and  is  chargeable  with  knowledge  of 
the  terms  of  the  power.  This  is  not  denied.  But  the  question  is„ 
whether,  after  inquiring  into  the  terms  of  the  power,  and  ascer- 
tahiing,  so  far  as  can  be  done  by  comparison,  that  the  act  of  the 


THE  farmers'  bank  V.    BUTCHERS'  BANK.         737 

agent  is  within  tlie  power,  he  is  chargeable,  without  proof,  with  a 
knowledge  of  extrinsic  facts,  which  show  the  act  to  be  unautlior- 
ized. 

This  question,  which  is  the  only  one  which  arises  here,  was  not 
decided,  or  even  adverted  to,  in  Attwood  ^.  Munnings.  The  report 
of  that  case  shows  that  the  plaintiffs  neglected  even  to  call  for  the 
production  of  the  power,  to  which  they  were  expressly  referred  by 
the  terms  of  the  acceptance,  and  for  this  culi)al)le  negligence  they 
are  held  responsible  by  the  Court.  Justice  Bailey  says :  "  A  per- 
son taking  such  a  bill  ought  to  exercise  due  caution,  for  he  must 
take  it  upon  the  credit  of  the  party  who  assumes  the  authority  to 
accept,  and  it  would  be  only  reasonable  prudence  to  require  the 
production  of  that  authority." 

It  seems  to  have  been  taken  for  granted  that,  if  the  i)laintiffs 
had  informed  themselves  as  to  the  terms  of  the  power,  they  would 
of  course  have  ascertained  the  object  for  which  the  bill  was  drawn, 
and  the  relation  existing  between  the  drawer  and  the  defendant. 
Indeed,  for  aught  that  appears  in  the  report  of  the  case,  it  may 
have  been  shown  upon  the  trial  that  they  were  actually  apprised 
of  these  facts.  The  case  therefore  is  no  authority,  except  for  the 
undeniable  proposition  that  one  who  deals  with  an  agent,  knowing 
that  he  acts  by  virtue  of  a  special  power,  is  bound  to  inquire  into 
and  ascertain  the  precise  terms  of  such  power. 

The  case  of  Alexander  v.  McKenzie  has  even  less  bearing  upon 
the  point.  The  report  of  the  case,  which  is  very  imperfect,  does 
not  show  the  terms  of  the  special  power  nor  the  nature  of  its 
limitations.  All  that  the  case  decides  is,  that  the  words  "  per 
procuration,"  affixed  to  an  indorsement  or  acceptance  by  an  agent, 
import  that  the  agent  acts  by  virtue  of  a  special  power,  and  are 
sufficient  to  charge  any  one  who  takes  the  bill  with  knowledge  of 
the  precise  terms  of  such  power.  The  plaintilT  in  this  case  as  in 
that  of  Attwood  v.  Munnings,  mpra^  Jiad  neglected  to  call  for  the 
production  of  the  power,  and  no  attempt  was  made  to  show  that 
the  indorsement  corresponded  with  its  terms.  The  plaintiff  relied 
mainly  upon  the  fact  that  the  bank  had  paid  two  other  bills  in- 
dorsed in  the  same  manner.  The  case,  taken  as  a  whole,  is  a 
somewhat  obscure  assertion  of  the  same  principle  which  was 
adopted  in  Attwood  v.  Munnings  ;  viz.,  that  one  who  takes  a  bill,  so 
indorsed,  is  bound  to  require  the  production  of  the  special  power, 

47 


738  CHECKS. 

and  to  ascertain  by  comparison  that  the  bill  and  indorsement  cor- 
respond in  all  respects  with  its  terms. 

The  cases  of  Grant  v.  Norway,  10  Com.  B.  70  Eng.  C.  L. 
665  ;  Coleman  v.  Riches,  29  Eng.  L.  &  Eq.  323  ;  and  the  Me- 
chanics' Bank  v.  Tiie  Nef  York  and  New  Haven  Railroad  Com- 
pany, 3  Kern.  599,  are  plainly  distinguishable  from  the  present 
case.  In  neither  of  those  cases  was  the  document  upon  which  the 
question  arose  negotiable.  It  was  sought  there  to  make  the  prin- 
cipal responsible  for  a  false  representation  of  the  agent,  not  to  the 
person  to  whom  the  representation  was  made,  but  to  one  with 
whom  the  agent  had  no  dealings,  and  to  whom  he  had  made  no 
representation.  Upon  a  careful  examination,  it  very  plainly,  I 
think,  appears  that  this  was  the  real  obstacle  to  a  recovery  in  each 
of  these  cases.  When  Sergeant  Crowder,  counsel  for  the  plaintiffs 
in  Grant  v.  Norway,  cited  the  case  of  Hern  v.  Nichols,  and  invoked 
the  doctrine  there  laid  down  by  Lord  Holt,  Justice  Cresswell  re- 
plied :  "  There  the  factor  entered  into  a  contract  with  the  plain- 
tiff for  his  employer.  Here  you  are  a  step  further  off.  You  say 
your  agent,  with  whom  I  made  no  contract,  has  enabled  a  man, 
with  whom  I  did  contract,  to  cheat  me." 

This  remark  presents,  in  my  judgment,  the  turning  point  of 
the  case,  and  the  only  obstacle  to  the  plaintiff's  recovery,  viz.,  the 
want  of  any  privity  of  contract  between  the  plaintiff  and  the 
agent.  This  obstacle  was  precisely  that  which  the  negotiability  of 
the  instrument,  if  established,  would  have  removed ;  because  the 
maker  of  a  negotiable  instrument  is  deemed  in  law  to  enter  into  a 
contract  with  every  one  to  whom  it  is  afterwards  negotiated  ;  and 
where  the  instrument  is  made  by  an  agent  it  is  in  this  way 
only  that  privity  of  contract  can  be  established  between  such  agent 
and  the  subsequent  holders,  without  which  the  principal  can  never 
be  held  responsible  for  the  false  representations  of  the  agent. 
Hence  it  is  that  we  find  the  counsel  for  the  plaintiffs  in  the  cases 
of  Grant  v.  Norway,  and  the  Mechanics'  Bank  v.  The  New  York 
and  New  Haven  Railroad  Company,  supra,  contending  so  strenu- 
ously for  the  negotiability  of  the  documents  in  question  in  those 
cases. 

That  the  want  of  privity  of  contract,  between  the  agent  and 
the  party  seeking  to  hold  the  principal  responsible,  constituted  the 
real  difficulty  in  those  cases  is  also  apparent  from  the  report  in  the 
case  of  Coleman  v.  Riches,  supra,  which  belongs  to  the  same  class. 


t 


THE  farmers'  bank  V.    BUTCHERS'  BANK.-         739 

There  Bond,  the  agent  of  Riches,  had  given  a  false  receipt,  not  to 
the  plaintiff,  hut  to  Lewis,  and  Lewis  had  exhihitcd  this  receipt  to 
the  plaintiff  and  obtained  money  upon  it.  The  difficulty  in  the 
case  was  to  show  the  relation  between  the  parties  to  have  been 
such  that  the  misrepresentation  l)y  Bond  to  the  agent  might  prop- 
erly I)e  considered  as  made  \>y  him  to  the  plaintiff.  To  establish 
this,  the  counsel  for  the  plaintiff  relied  upon  a  course  of  dealing, 
which,  as  he  alleged,  was  known  to  the  defendant.  To  this  the 
chief  justice  answered :  "  I  cannot  see  how  the  knowledge  by 
Riches  of  the  course  of  business,  according  to  which  Coleman 
paid  on  the  production  of  the  receipt,  would  make  the  showing  of 
the  receipt  by  Lewis,  even  in  Bond's  presence,  a  representation  by 
Riches "  (t.  e.,  by  the  agent  of  Riches)  ;  and  Justice  Williams 
adds  :  "  Suppose  Riches  himself  had  given  the  fraudulent  receipt, 
would  that  have  constituted  a  representation  by  Riches  to  Cole- 
man ?  "  L'pon  the  same  argument  being  afterwards  repeated.  Jus- 
tice Cresswell  said :  "  There  is  the  vice  of  the  argument ;  I  do  not 
find  any  evidence  of  such  course  of  dealing  between  the  plaintiff 
and  the  defendant.  The  course  of  dealing  proved,  was  that  which 
existed  between  the  plaintiff  and  the  vendors  and  not  between  the 
plaintiff  and  defendant." 

It  seems  impossible  to  mistake  the  purport  of  these  remarks. 
They  show  that  the  difficulty  in  the  way  of  a  recovery,  in  this  case, 
was  that  no  privity  of  contract  was  established  between  Riches,  or 
his  agent,  Bond,  and  the  plaintiffs,  by  means  of  which  the  misrep- 
resentations made  by  Bond  could  be  considered  as  made  to  the 
plaintiffs.  Had  the  receipt  been  a  negotiable  instrument,  a  privity 
would  have  been  established. 

I  entertain  no  doubt  that  had  the  stock  certificates  in  question,  in 
the  case  of  The  Mechanics'  Bank  v.  The  New  York  and  New  Haven 
Railroad  Company,  supra,  been  held  to  be  negotiable,  the  plaintiffs 
would  have  prevailed  ;  and  such  I  understand  to  be  the  opinion  of 
two  of  my  associates  who  took  part  in  the  decision  of  that  case. 

The  judgment  of  the  Supreme  Court  should  be  affu-med. 

Judgment  affirmed. 

Comstockj  J.,  dissented. 

The  most  recent  case  upon  this  subject  sustains  the  Now  Yorli  doctrine  as 
above  declared.  ^lercliants'  National  Bank  of  Boston  r.  State  National  Bank 
of  Boston,  Supreme  Court  of  the  United  States,  December,  1870.  This  case 
was  one  of  the  most  important  ever  determined  in  America,  both  from  the  vast 


740  CHECKS. 

amount  of  money  involved,  and  the  importance  of  the  questions  to  be  deter- 
mined. It  is  proper  to  state  that  the  cause  was  argued  by  some  of  the  ablest 
counsel  in  the  country ;  and  it  is  to  be  hoped  that  for  the  sake  of  uniformity 
the  rule  now  adopted  respecting  the  national  banks,  in  the  highest  court  of 
America,  may  be  generally  accepted,  and  applied  to  all  banking  institutions. 
The  opinion  of  the  Court,  in  the  above-named  case,  was  delivered  by 

SwAYNE,  J.  This  is  a  writ  of  error  to  the  Circuit  Court  of  the  United  States 
for  the  District  of  Massachusetts.  The  plaintiff  in  error  was  the  plaintiff  in  the 
Court  below.  It  appears,  by  the  bill  of  exceptions,  that  upon  the  evidence  in 
behalf  of  the  plaintiff  being  closed,  the  defendant's  counsel  moved  the  Court  to 
instruct  the  jury  that  it  was  not-  sufficient  to  warrant  them  to  find  a  verdict  for 
the  plaintiff  upon  either  of  the  counts  in  the  declaration.  This  instruction  was 
given.  The  jury  found  for  the  defendant.  The  plaintiff  excepted,  and  has 
brought  that  instruction  here  for  review.  This  renders  it  necessary  to  examine 
the  entire  case  as  presented  in  the  record.  .  .  . 

On  the  twenty-sixth  of  February,  1867,  Fuller,  the  plaintiff's  cashier,  received 
from  the  Second  National  Bank  of  Boston  $200,000  of  gold  certificates,  and  paid 
the  bank,  upon  their  delivery,  the  amount  of  their  face,  and  a  premium  of  twenty- 
five  per  cent.  Payment  was  made  in  currency,  and  legal  tender  notes.  The  next 
day  he  received  from  the  same  bank  $200,000  more  of  like  certificates,  and  paid 
for  them  at  the  same  rate  in  currency,  and  a  ticket  of  credit  by  the  Merchants' 
Bank  in  favor  of  the  National  Bank  for  $175,000.  Both  transactions  were 
pursuant  to  an  arrangement  with  Mellen,  Ward,  &  Co.,  brokers,  in  Boston. 
The  market  premium  upon  gold  at  that  time  was  forty  per  cent.  It  was  under- 
stood between  Fuller,  the  cashier,  and  Mellen,  Ward,  &  Co.,  that  the  latter 
might  receive  the  same  amount  of  gold  from  the  Merchants'  Bank,  at  any  time 
thereafter,  by  paying  the  amount  advanced,  compensation  for  the  trouble  the 
bank  had  incurred,  and  interest  at  the  rate  of  six  per  cent.  There  had  been 
like  transactions  upon  those  terms  between  the  parties  prior  to  that  time.  The 
president  of  the  bank  was  consulted  in  advance  as  to  both  the  purchases  from 
the  Second  National  Bank,  and  approved  them.  The  following  testimony  is 
taken  from  the  record  :  — 

George  H.  Davis  testified  as  follows :  I  am  the  paying  teller  of  the  Merchants' 
Bank.  From  about  the  first  of  January,  1867,  and  previous  to  the  twenty-third 
of  February,  the  bank  several  times  received  gold  or  gold  certificates  from  Mel- 
len, Ward,  &  Co.,  for  which  it  paid  currency  at  the  rate  of  $125  for  $100  in 
gold.  At  that  time  they  had  deposited  in  the  bank  about  $90,000  in  gold.  No 
note,  memorandum,  or  check  Avas  taken  connected  with  it  in  any  way.  The 
gold  was  added  to  the  gold  of  the  bank ;  on  my  cash-book  it  was  added  to  the 
item  of  gold,  and  the  gold  was  mixed  with  the  gold  of  the  bank  in  the  vault. 
If  it  consisted  of  certificates,  they  were  put  in  a  pocket-book  kept  in  my  trunk 
with  other  certificates  and  bills.  (The  paying  teller's  book  was  put  in,  and  from 
the  entries  in  it  on  the  twenty-sixth,  twenty-seventh,  and  twenty-eighth  of  Feb- 
ruary, 1867,  it  appeared  that  the  gold  received  from  Mellen,  Ward,  &  Co.,  was 
added  to  the  gold  of  the  bank.) 

On  the  twenty-eighth  day  of  February,  Carter,  of  the  firm  of  Mellen,  Ward,  & 
Co.,  and  Smith,  the  cashier  of  tlie  State  Bank,  called  together  at  the  Merchants' 
Bank.     Carter  said  to  Fuller,  "  We  have  come  in  for  gold."    Smith,  the  cashier, 


4 


THK  farmers'  bank  V.    BUTCHERS'  BAXK.         741 

said,  "Wo  have  come  to  f^et  an  atuount  of  goM,"  and  that  he  would  "  pay  for  it  Iiy 
certifying  these  checks,"  referring  to  two  papers  wliich  Carter  heM  in  his  liand. 
The  teller  handed  Fuller  eighty-four  gold  certificates  of  SoOO)  each,  making  the 
sura  of  $120,000.  Fuller  announced  the  amount.  Smith  said  that  was  the 
amount  wanted,  and  the  amount  covered  by  the  checks.  He  received  the  certifi- 
cates, certified  the  checks,  and  handed  them  over  to  the  plaintiff's  cashier.  They 
were  drawn  by  Mellen,  Ward,  &  Co.,  upon  the  State  National  Bank  in  favor  of 
Fuller,  the  plaintiff's  cashier,  or  order,  and  were  certified  "  (iood.  C.  II.  .Smith, 
cashier."  One  was  for  .^JoO.OOO,  and  the  other  for  8-7o,00U.  Smith  thereupon 
left  the  bank  with  the  certificates  in  his  possession.  Nothing  was  said  by  Fuller 
to  Carter,  or  by  Carter  to  Fuller,  in  relation  to  the  checks,  and  Fuller  did  not 
know  what  checks  Smith  referred  to  until  they  were  delivered  to  him.  Smith 
did  not  certify  or  deliver  the  checks  until  he  had  got  possession  and  control  of 
the  funds  upon  which  his  certificates  were  app.arently  founded,  and  this  was 
known  to  the  plaintilF's  agent  when  he  received  the  checks.  Later,  on  the  same  day, 
Smith  and  Carter  called  again  at  the  Merchants'  Bank.  Fuller  was  absent.  Smith 
received  $60,000  more  of  gold  and  gold  certificates  from  the  teller,  and  gave  in 
return  a  check  for  $75,000,  drawn  by  Mellen,  Ward,  &  Co.,  on  the  State  Bank, 
payable  to  "  gold  or  bearer."  Like  the  two  previous  cliecks,  it  was  certified 
"  Good.  C.  II.  Smith,  cashier."  This  arrangement  was  in  pursuance  of  the 
same  agreement  as  that  under  which  the  gold  certificates  were  delivered  in 
the  earlier  part  of  the  day.     Both  transactions  were  alike  within  its  scope. 

On  the  first  of  INIarch,  Havens,  the  president  of  the  Merchants''  Bank,  called 
at  the  State  Bank  and  complained  that  Smith  had  not  paid  the  checks.  Smith 
said  he  was  going  out  to  get  the  money.  Havens  inquired,  "  Didn't  you  have 
the  money,  —  the  gold  ?  Were  not  gold  certificates  delivered  to  you  ?  "  He  an- 
swered, "  Yes  ;  I  had  them  here,  but  they  are  not  here  now.  I  am  going  out  to 
get  it,  and  will  come  in  and  attend  to  it."  Subsequently,  in  the  same  conversation, 
he  said,  "  You  hold  the  State  Bank."  Later  in  the  day  Havens  called  upon 
Stetson,  the  president  of  the  State  Bank.  Stetson  denied  that  Smith  was 
authorized  to  certify  the  checks,  and  appealed  to  a  director  who  was  present. 
The  director  was  silent.  In  an  account  which  Fuller  rendered  to  Mellen,  Ward. 
&  Co.,  after  their  failure,  showing  the  disposition  of  various  collaterals  which 
Mellen,  Ward,  &  Co.  had  deposited  from  time  to  time  with  the  Merchants' 
Bank,  the  amount  paid  for  gold  was  put  down  as  a  loan,  and  interest  was 
charged ;  but  in  his  testimony  before  the  jury  he  denied  that  the  money  was 
loaned,  and  insisted  that  the  gold  was  bought  by  the  Merchants'  Bank.  The 
agreement  between  Mellen,  Ward,  &  Co.  and  the  Merchants'  Bank,  rested 
whollv  in  parol.  No  written  voucher  was  given  or  received  on  either  side  touch- 
ing any  of  the  transactions  between  the  parties.  The  record  discloses  nothing 
else  in  this  connection  which  it  is  material  to  consider. 

The  State  Bank  was  organized  under  the  act  of  Congress  "  to  provide  a 
national  currency,"  &c.,  of  the  third  of  June,  1864,  13  Stat.  99.  The  eighth 
section  of  that  act  authorizes  such  associations,  by  their  directors,  to  appoint  a 
cashier  and  other  ollicers,  and  to  exercise,  "  under  this  act,  all  such  incidental 
powers  as  shall  be  necessary  to  carry  on  the  business  of  banking  by  discounting 
and  negotiating  promissory  notes,  drafts,  bills  of  exchange,  and  other  evidences 
of  debt;    by  receiving    deposits;    by   buying  and  selling  exchange,   coin,  and 


742  CHECKS. 

bullion;  by  loaning  money  on  personal  security;  by  obtaining,  issuing,  and 
circulating  notes,  according  to  the  provisions  of  this  act,"  &c.  It  is  further 
provided  that  the  directors  may,  by  by-laws,  regulate  the  manner  in  which  its  busi- 
ness shall  be  conducted  and  its  franchises  enjoyed ;  and  that  its  general  business 
shall  be  transacted  at  an  office  "  located  in  the  place  specified  in  its  organization 
certificate." 

The  fifth  of  the  articles  of  association  authorizes  the  board  of  directors  to 
appoint  a  cashier  and  such  other  officers  as  may  be  necessary,  and  to  define  their 
duties.  The  seventh  by-law  declares  that  the  cashier  *'  shall  be  responsible  for 
the  moneys,  funds,  and  other  valuables  of  the  bank,  and  shall  give  bonds,"  &c. 
The  seventeenth  by-law  requires  that  all  "contracts,  checks,  drafts,  receipts, 
&c.,  shall  be  signed  by  the  cashier  or  by  the  president,  and  that  all  indorsements 
necessary  to  be  made  by  the  bank  shall  be  under  the  hand  of  the  cashier  or 
president,"  unless  absent. 

The  by-laws  contain  nothing  further  upon  this  subject.  The  directors  failed 
to  define  more  specifically  the  powers  and  duties  of  the  cashier. 

Smith,  the  defendant's  cashier,  exercised  habitually  very  large  powers  without 
any  special  delegation  of  authority.  An  account  was  kept  on  the  books  of  the 
ha.uk  with  him  as  cashier,  which  represented  these  transactions,  and  printed 
blank  checks  were  kept  in  the  bank  to  facilitate  them.  The  checks  given  by  him 
for  the  proceeds  of  bills  discounted  and  for  the  purchase  of  exchange  during  the 
five  months  preceding  the  twenty-third  of  February,  1867,  amounted  in  the 
aggregate  to  two  and  a  half  millions  of  dollars.  This  was  exclusive  of  his  clear- 
ing-house checks.  His  checks  for  money  borrowed  of  other  banks  during  the 
six  months  preceding  the  same  twenty-third  of  February  amounted  to  one  mil- 
lion five  hundred  and  forty-seven  thousand  dollars.  A^  large  number  of  the 
cashiers  of  other  banks  in  Boston  were  examined,  and  testified  that  they  exer- 
cised the  same  powers  under  like  circumstances.  There  is  no  proof  that  either 
they  or  Smith  ever  certified  checks.  It  is  not  shown  what  became  of  the  gold. 
Perhaps  some  light  is  thrown  on  the  subject  by  the  remark  of  the  president  of 
the  Merchants'  Bank  to  the  president  of  the  State  Bank,  "  that  the  latter  had 
better  go  to  the  sub-treasury,  and  that  he  would  perhaps  find  his  gold  there." 
We  find  no  reason  to  doubt  that  both  banks,  as  represented  by  their  cashiers, 
acted  in  entire  good  faith  throughout  the  transactions  until  they  were  closed  by 
the  delivery  of  the  last  of  the  certified  checks.  Neither  could  then  have  anti- 
cipated the  difficulties  and  the  conflict  which  subsequently  arose. 

The  first  question  presented  for  our  consideration  is  :  What  was  the  title  of 
the  plaintiff,  and  what  were  the  rights  of  Mellen,  Ward,  &  Co.,  in  respect  to  the 
gold  certificates  delivered  by  the  Second  National  Bank  to  the  Merchants'  Bank  ? 
No  very  searching  analysis  of  the  facts  disclosed  is  necessary  to  enable  us  to 
find  a  satisfi.ictory  answer  to  this  inquiry.  It  does  not  appear  that  Mellen,  Ward, 
&  Co.,  had  any  connection  with  the  certificates  received  from  the  Second  National 
Bank  until  after  the  plaintiff  took  the  action  which  they  invoked,  and  came  into 
possession  of  the  property. 

The  Merchants'  Bank  applied  for  them,  bought  them,  paid  for  them,  received 
them,  and  deposited  them  with  its  other  assets  of  like  character.  It  does  not 
appear  that  any  special  mark  was  put  upon  them,  or  that  a  thing  was  done  to 
distinguish  them  from  the  other  effects  of  the  bank  with  which  they  were  min- 


THE  farmers'  bank  V.    BUTCHERS'  BANK.  743 

glcd.  Upon  the  face  of  the  transaction  it  was  a  simple  sale  by  the  Scooml  Na- 
tional Bank,  whereby  the  entire  title  and  property  became  vested  in  the  plain- 
tiff. But  gold  was  then  at  a  premium  of  forty  per  cent  in  currency.  The 
Merchants'  Bank  paid  but  twenty-five,  according  to  the  contract  between  the 
bank  and  ^Idlen,  Ward,  &  Co.  The  latter  were  to  pay,  and  it  is  presumed  did 
pay,  the  additional  fifteen  per  cent.  This  was  a  part  of  the  considtration  upon 
which  the  ^lerchants'  Bank  entered  into  the  contract.  It  is  evident  that  the 
bank  did  not  agree  to  deliver  to  Mellen,  Ward,  &  Co.,  the  identical  gold  certifi- 
cates which  were  purchased,  but  gold,  or  its  equivalent  in  certificates  to  the 
same  amount,  and  any  gold,  or  any  certificates  would  have  satisfied  the  contract. 
The  bank  cannot,  therefore,  be  regarded  as  holding  the  certificates  in  pledge. 
The  want  of  the  element,  that  the  identical  certificates  were  to  be  delivered,  is 
conclusive  against  that  view  of  the  subject.  If  Mellen,  Ward,  &  Co.  had  ten- 
dered performance  and  called  for  gold,  and  the  bank  had  failed  to  respond, 
Mellen,  Ward,  &  Co.  could  have  sustained  an  action  for  the  breach  of  the  con- 
tract. But  they  could  not  have  maintained  detinue,  trover,  or  replevin  against 
the  bank.  The  real  character  of  the  transaction  was,  that  the  bank  took  the 
title  and  entire  property,  but  ^lellen.  Ward,  &  Co.  had  the  right  to  purchase 
from  the  bank  the  like  amount  of  gold,  or  its  equivalent  in  certificates,  accord- 
ing to  the  terms  of  the  contract,  which  were,  that  they  should  pay  what  the 
bank  paid,  compensation  for  its  trouble,  and  interest  from  the  time  the  purchase 
by  the  bank  was  made. 

In  respect  to  the  $60,000  of  gold  and  gold  certificates  delivered  by  the  teller 
in  the  absence  of  the  cashier,  and  the  excess  of  gold  certificates  over  8100,000 
delivered  by  the  cashier,  the  facts  are  substantially  the  same  as  those  in  regard 
to  the  S'lOO.OOO,  except  that  the  excess  of  certificates,  and  what  was  delivered  by 
the  teller,  had  reference  to  gold  and  gold  certificates  deposited  in  the  bank  by 
Mellen,  Ward,  &  Co.  This  difference  is  not  material.  With  this  qualification 
the  same  remarks  apply  which  have  been  made  touching  the  $400,000  of  certifi- 
cates, and  we  are  led  to  the  same  legal  conclusions. 

The  transactions  between  the  State  Bank  and  the  Merchants'  Bank  were  ap- 
parently of  the  same  character  as  that  between  the  Merchants'  Bank  and  the 
Second  National  Bank.  What  the  understanding  between  Mellon,  Ward,  &  Co. 
and  the  defendant  was  is  not  disclosed  in  the  evidence.  But  it  is  fairly  to  be 
inferred  that  it  was  the  same  as  that  between  them  and  the  Merchants'  Bank. 
When  the  arrangement  was  proposed  by  Carter  to  Fuller,  on  the  twenty-second 
of  February,  Carter  said  that  "when  the  gold  was  taken  from  the  Merchants' 
Bank  he  thought  it  would  go  through  some  other  bank  or  banks."  The  assent 
of  Mellon,  Ward,  &  Co.,  to  the  sale  to  the  State  Bank  by  the  Merchants'  Bank 
extinguished  their  claim  upon  the  latter.  The  Merchants'  Bank  certainly  had  a 
title  of  some  kind,  and  whatever  it  was  it  passed  to  the  State  Bank  unless  the 
contract  was  void,  because  the  State  Bank  had  no  corporate  power,  or  its  cash- 
ier had  no  authority  to  make  the  purchase.  The  act  of  Congress  expressly 
authorizes  the  banks  created  under  it  to  buy  and  sell  coin.  No  question  of 
ultra  vires  is  therefore  involved. 

If  the  Merchants'  Bank  held  the  certificates  as  a  pledge,  it  had  a  special  prop- 
erty which  might  be  sold  and  assigned.  The  assignee  in  such  cases  becomes 
invested  with  all  the  legal  rights  which  belonged  to  the  assignor;     Such  is  the 


744  CHECKS. 

rule  of  the  common  law,  and  it  has  subsisted  from  an  early  period.  '  Mores  v. 
Conham,  Owen,  123;  Anon.,  2  Salk.  522;  Coggs  v.  Bernard,  3  Salk.  268; 
Whitakor  v.  Sumner,  20  Pick.  399 ;  Thompson  v.  Patrick,  4  Watts,  414 ;  Story, 
Bailments,  §  324. 

But  we  are  entirely  satis6ed  with  the  other  view  we  have  expressed  upon  the 
subject.     Modus  et  conventio  vincunt  legem. 

It  is  insisted  by  the  defendant's  counsel  that  the  transaction  was  a  loan  to 
Mellen,  Ward,  &  Co.  As  the  bank  parted  with  its  title,  if  there  were  a  loan  in 
the  eye  of  the  law,  it  would  not  in  any  wise  affect  the  conclusions  at  which  we 
have  arrived. 

Recurring  to  the  subject  of  the  authority  of  the  cashier  of  the  State  Bank  to 
make  the  purchase,  and  excluding  from  consideration  for  the  present  the  certi- 
fied checks,  three  views,  we  think,  may  be  properly  taken  of  the  case  in  this  as- 
pect :  — 

1.  If  the  certificates  and  the  gold  actually  went  into  the  State  Bank,  as  was 
admitted  by  Smith  to  Havens,  then  the  bank  was  liable  for  money  had  and  re- 
ceived, whatever  may  have  been  the  defect  in  the  authority  of  the  cashier  to 
make  the  purchase,  and  this  question  should  have  been  submitted  to  the  jury. 

2.  It  should  have  been  left  to  the  jury  to  determine  whether,  from  the  evi- 
dence as  to  the  powers  exercised  by  the  cashier,  with  the  knowledge  and  acqui- 
escence of  the  directors,  and  the  usage  of  other  banks  in  the  same  city,  it  might 
not  be  fairly  inferred  that  Smith  had  authority  to  bind  the  defendant  by  the  con- 
tract which  he  made  with  the  Merchants'  Bank. 

3.  Where  a  party  deals  with  a  corporation  in  good  faith,  the  transaction  is 
not  ultra  vires,  and  he  is  unaware  of  any  defect  of  authority  or  other  irregularity 
on  the  part  of  those  acting  for  the  corporation,  and  there  is  nothing  to  excite 
suspicion  of  such  defect  or  irregularity,  the  corporation  is  bound  by  the  contract, 
although  such  defect  or  irregularity  in  fact  exists. 

If  the  contract  can  be  valid  under  any  circumstances,  an  innocent  party  in 
such  a  case  has  a  right  to  presume  their  existence,  and  the  corporation  is  es- 
topped to  deny  them. 

The  jury  should  have  been  instructed  to  apply  this  rule  to  the  evidence  be- 
fore them. 

The  principle  has  become  axiomatic  in  the  law  of  corporations,  and  by  no 
tribunal  has  it  been  applied  with  more  firmness  and  vigor  than  by  this  Court. 
Supervisors  v.  Schenck,  o  Wall.  772,  784 ;  Knox  Co.  v.  Aspinwall,  21  How.  539 ; 
Bissell  V.  Jeffersonville,  24  id.  288  ;  Moran  v.  Miami  Co.,  2  Black,  722  ;  Gelpcke 
V.  Dubuque,  1  Wall.  175,  203 ;  Mercer  Co.  v.  Hacket,  ib.  83,  93 ;  Mayor  v. 
Lord,  9  id.  409,  414 ;  Royal  British  Bank  v.  Turquand,  6  Ellis  &  Bl.  327 ;  The 
Farmers'  Loan  and  Trust  Co.  v.  Curtis,  3  Seld.  466 ;  Stoney  v.  American  Life 
Ins.  Co.,  11  Paige,  635;  Society  for  Savings  v.  New  London,  29  Conn.  174; 
Commonwealth  v.  The  City  of  Pittsburg,  34  Penn.  497;  Commonwealth  v. 
Alleghany  County,  37  id.  277. 

Corporations  are  liable  for  every  wrong  of  which  they  are  guilty,  and  in  such 
cases  the  doctrine  of  idtra  vires  has  no  application.  Philadelphia  and  Baltimore 
R.  Co.  V.  Quigley,  21  How.  202,  209  ;  Green  v.  London  Omnibus  Co.,  7  C.  B.  n. 
s.  290;  Life  and  Fire  Ins.  Co.  v.  Mechanics'  Fire  Ins.  Co.,  7  Wend.  31. 

Corporations  are  liable  for  the  acts  of  their  servants  while  engaged  in  the 


THE  farmers'  bank  V.    BUTCHERS'  BANK.         745 

business  of  their  einployment,  in  the  same  manner  and  to  the  same  extent  that 
individuals  arc  liable  under  like  circumstances.  Ranger  v.  The  (ireat  Western 
R.  Co.,  5  H.  L.  Cas.  80;  Thayer  r.  Boston,  19  Pick.  511;  Frankfort  Bank  r. 
Johnson,  24  Me.  490;  Aiifrell  and  Ames,  Corporations,  §§  382,  .388. 

Estoppel  in  pnin  presuj)p()ses  an  error  or  a  fault,  and  implies  an  act  in  itself 
invalid.  The  rule  proceeds  upon  the  consideration  that  the  author  of  the  mis- 
fortune shall  not  himself  escape  the  consequences,  and  cast  the  burden  upon 
another.  Swan  v.  North  British  &c.  Co.,  7  Hurl.  &  N.  603;  Hern  v. 
Nichols,  1  Salk.  289.  Smith  was  the  cashier  of  the  State  Bank.  As  such  he 
approached  the  Merchants'  Bank.  The  bank  did  not  approach  him.  Upon  the 
faith  of  his  acts  and  declarations  it  parted  with  its  property.  The  misfortune 
occurred  through  him,  and  as  the  case  appears  in  the  record,  upon  the  plainest 
principles  of  justice  the  loss  should  fall  upon  the  defendant.  The  ethics  and  the 
law  of  the  case  alike  require  this  result.     Dezell  v.  Odell,  3  Hill,  21G. 

Those  who  created  the  trust,  appointed  the  trustee,  and  clothed  him  with  the 
powers  that  enabled  him  to  mislead,  —  if  there  were  any  misleading,  —  ought  to 
suffer  rather  than  the  other  party.  Farmers'  and  Mechanics'  Bank  of  Kent  Co. 
i\  Drover.s'  and  Butchers'  Bank,  16  N.  Y.  125, 133  ;  Welland  Canal  Co.  v.  Hath- 
away, 8  Wend.  480. 

In  the  Bank  of  The  United  States  v.  Davis,  2  Hill,  451,  465,  Nelson,  C.  J., 
said:  "  Tiie  i)lainti(fs  appointed  the  director,  and  held  him  out  to  their  customers 
and  the  public  as  entitled  to  confidence.  They  placed  him  in  a  position  where 
he  has  been  enabled  to  conunit  this  fraud." 

The  directors  had  fraudulently  appropriated  the  proceeds  of  a  bill  discounted 
for  the  drawer.     It  was  held  the  drawer  was  not  liable. 

The  reasoning  of  Justice  Seldeii,  in  the  Farmers'  and  Mechanics'  Bank  of 
Kent  V.  The  Butchers'  and  Drovers'  Bank,  supra,  is  also  strikingly  apposite  in 
the  case  before  us.  He  said  :  "  The  bank  selects  its  teller,  and  places  him  in  a 
position  of  great  responsibility.  Persons  having  no  voice  in  his  selection  are 
obliged  to  deal  with  the  bank  through  him.  If,  therefore,  while  acting  in  the 
business  of  the  bank,  and  within  the  scope  of  his  employment,  so  far  as  is  known 
or  can  be  seen  by  the  party  dealing  with  him,  he  is  guilty  of  misrepresentation, 
ought  not  the  bank  to  be  responsible  ?  " 

The  same  principle  was  applied  in  the  New  York  and  New  Haven  Railroad 
Co.  V.  Schuyler,  38  Barb.  Sup.  Ct.,  536 ;  s.  c.  affirmed,  34  N.  Y.  30. 

It  was  explicitly  laid  down  by  Lord  IIoU,  in  Hern  r.  Nichols,  1  Salk.  289. 
He  there  said  :  "  For  seeing  somebody  must  be  a  loser  by  this  deceit,  it  is  more 
reason  that  he  that  employs  and  puts  trust  and  confidence  in  the  deceiver  should 
be  a  loser  than  a  stranger,"  "  and  upon  this  the  plaintiff  had  a  verdict.'' 

Smith,  by  his  conduct,  if  not  by  his  declarations,  avowed  his  authority  to  buy 
the  certificates  and  gold  in  question,  from  the  Merchants'  Bank,  and  the  bank, 
under  the  circuinstauees,  had  a  right  to  believe  him. 

We  have  thus  (ar  examined  the  testimony  as  if  the  certified  checks  were  void, 
or  had  not  been  given.  It  remains  to  consider  that  branch  of  the  case.  Bank- 
checks  are  not  inland  l)ills  of  exchange,  but  have  many  of  the  properties  of  such 
commercial  paper ;  and  many  of  the  rules  of  the  law  merchant  are  alike  applicable 
to  both.  Each  is  for  a  specific  sum  payable  in  money.  In  both  cases  there  is  a 
drawer,  a  drawee,  and  a  payee.     Without  acceptance,   no  action  can  be  main- 


746  CHECKS. 

tained  by  tlie  bolder  upon  either  against  the  drawer.  The  chief  points  of  differ- 
ence are  that  a  check  is  always  drawn  on  a  bank  or  banker.  No  days  of  grace 
are  allowed.  The  drawer  is  not  discharged  by  the  laches  of  the  holder  in 
presentment  for  payment,  unless  he  can  show  that  he  has  sustained  some  injury 
by  the  default.  It  is  not  due  until  payment  is  demanded,  and  the  statute  of 
limitations  runs  only  from  that  time.  It  is  by  its  face  the  appropriation  of  so 
much  money  of  the  drawer  in  the  hands  of  the  drawee  to  the  payment  of  an 
admitted  liability  of  the  drawer.  It  is  not  necessary  that  the  drawer  of  a  bill 
should  have  funds  in  the  hands  of  the  drawee.  A  check  in  such  case  would 
be  a  fraud.  Grant,  Banking,  89,  90;  Keene  v.  Beard,  8  Com.  B.  n.  s.  372;* 
Serle  v.  Norton,  2  Moody  &  R.  404,  note ;  Boehm  v.  Sterling,  7  T.  R.  423,430 ; 
Alexander  v.  Burchfield,  7  Man.  &  G.  1061. 

All  the  authorities,  both  English  and  American,  hold  that  a  check  may  be 
accepted,  though  acceptance  is  not  usual.  Robson  v.  Bennet,  2  Taunt.  388,  395  ; 
Grant,  Banking,  89;  Chitty,  Bills  (10th  ed.),  2G1 ;  Boyd'?;.  Emmerson,  2  Adol. 
&  Ellis,  184 ;  Kilsby  v.  Williams,  5  Barn.  &  Aid.  816  ;  Story,  Promissory  Notes, 
§§  489,  490. 

By  the  law  merchant  of  this  country  the  certificate  of  the  bank  that  a  check 
is  good  is  equivalent  to  acceptance.  It  implies  that  the  check  is  drawn  upon 
sufficient  funds  in  the  hands  of  the  drawee,  that  they  have  been  set  apart  for  its 
satisfaction,  and  that  they  shall  be  so  applied  whenever  the  check  is  presented 
for  payment.  It  is  an  undertaking  that  the  check  is  good  then,  and  shall  continue 
good  ;  and  this  agreement  is  as  binding  on  the  bank  as  its  notes  of  circulation, 
a  certificate  of  deposit  payable  to  the  order  of  the  depositor,  or  any  other  obli- 
gation it  can  assume.  The  object  of  certifying  a  check,  as  regards  both  parties, 
is  to  enable  the  holder  to  use  it  as  money.  The  transferee  takes  it  with  the 
same  readiness  and  sense  of  security  that  he  would  take  the  notes  of  the  bank. 
It  is  available  also  to  him  for  all  the  purposes  of  money.  Thus  it  continues  to 
perform  its  important  functions  until,  in  the  course  of  business,  it  goes  back 
to  the  bank  for  redemption,  and  is  extinguished  by  payment. 

It  cannot  be  doubted  that  the  certifying  bank  intended  these  consequences, 
and  it  is  liable  accordingly.  To  hold  otherwise  would  render  these  important 
securities  only  a  snare  and  delusion. 

A  bank,  incurs  no  greater  risk  in  certifying  a  check  than  in  giving  a  certificate 
of  deposit.  In  well-regulated  banks  the  practice  Is  at  once  to  charge  the  check 
to  the  account  of  the  drawer,  to  credit  it  in  "a  certified  check  account,"  and 
when  the  check  is  paid,  to  debit  that  account  with  the  amount.  Nothing  can  be 
simpler  or  safer  than  this  process. 

The  practice  of  certifying  checks  has  grown  out  of  the  business  needs  of  the 
country.  They  enable  the  holder  to  keep  or  convey  the  amount  specified  with 
safety.  They  enable  persons  not  well  acquainted  to  deal  promptly  with  each 
other,  and  they  avoid  the  delay  and  risks  of  receiving,  counting,  and  passing 
from  hand  to  hand  large  sums  of  money. 

It  is  computed  by  a  competent  authority  that  the  average  daily  amount  of 
such  checks  in  use  in  the  city  of  New  York,  throughout  the  year,  is  not  less 
than  one  hundred  millions  of  dollars. 

1  Ante,  718. 


THE  farmers'  bank  V.    BUTCHERS'  BANK.         747 

We  could  hardly  inflict  a  severer  Itlow  upon  the  commerce  and  business  of  the 
country  than  by  throwing  a  doubt  upon  their  validity. 

Our  conclusions  as  to  their  lej^al  efT(!Ct  are  supported  by  authorities  of  great 
weij^ht:  Bicklord  r.  First  National  Bank.  42  111.  "JliH  ;  Willets  v.  Plia-ni.\  Hank, 
2  Duer,  121  ;  Harnet  v.  Smith,  10  Foster  (N.  H.),  2.';(J  ;  Farmers'  and^Ii-chanics' 
Bank  v.  Butchers'  and  Drovers'  Bank,  4  Duer,  219;  14  N.  Y.  624;  Meads  ». 
Merchants'  Bank,  25  N.  Y.  143;  Brown  v.  Leckie  d  al.,  43  111.  497;  Girard 
Bank  v.  Bank  of  Penn  Township,  39  Penn.  St.  92. 

Congress  has  made  them  the  subject  of  taxation  by  name.     13  St.  278. 

But  it  is  streruiously  (k-nied  that  the  cashier  had  authority  to  certify  the  checks 
in  question.     To  this  there  are  two  answers :  — 

1.  In  considering  the  (juestion  of  his  authority  to  buy  the  gold,  the  evidence 
that  he  had  given  his  checks  for  loans  to  his  bank,  and  for  the  proceeds  of  discounts, 
was  fully  considered.  Our  reasoning  and  the  authorities  cited  upon  that  subject 
apply  here  with  equal  force.  We  need  not  go  over  the  same  ground  again. 
The  questions  whether  the  requisite  authority  was  not  inferable,  and  whether  the 
principle  of  estoppel  in  pais  did  not  apply,  should  in  this  connection  also  have 
been  left  to  the  jury. 

2.  As  before  remarked,  the  organic  law  expressly  allowed  the  bank  to  buy 
coin  and  bullion.  We  have  also  adverted  to  the  provisions  of  the  by-laws,  that 
the  cashier  shall  be  responsible  "  for  the  moneys,  funds,  and  all  other  valuables 
of  the  bank;"  and  that  "all  contracts,  checks,  drafts,  receipts,  &c.,  shall  be 
signed  either  by  the  cashier  or  president."  The  power  of  the  bank  to  certify 
checks  has  also  been  sufficiently  examined.  The  question  we  are  now  consider- 
ing is  the  authority  of  the  cashier.  It  is  his  duty  to  receive  all  the  funds  which 
come  into  the  bank,  and  to  enter  them  upon  its  books.  The  authority  to  receive 
implies  and  carries  with  it  authority  to  give  certificates  of  deposit  and  other 
proper  vouchers.  Where  the  money  is  in  the  bank  he  has  the  same  authority  to 
certify  a  check  to  be  good,  charge  the  amount  to  the  drawer,  approi)riate  it  to 
the  pavment  of  the  check,  and  make  the  proper  entry  on  tiie  books  of  the  bank. 
This  he  is  authorized  to  do  virtute  officii.  The  power  is  inherent  in  the  office. 
Wild  V.  The  Bank  of  Passamaquoddy,  3  Mason,  505;  Burnham  r.  Webster,  19 
Me.  232 ;  Elliot  v.  Abbott,  12  N.  Ilamp.  549,  556 ;  Bank  of  Vergennes  r.  War- 
ren, 7  Hill,  91  ;  Lloyd  v.  The  West  Branch  Bank,  15  Penn.  St.  172;  Badger  v. 
The  Bank  of  Cumberland,  26  Me.  428;  Bank  of  Kentucky  i\  The  Schuylkill 
Bank,  1  Parsons  Sel.  Ca.,  182;  Fleckner  r.  Bank  of  United  States,  8  Wheat. 
338,  300. 

The  cashier  is  the  executive  officer,  through  whom  the  whole  financial  opera- 
tions of  the  bank  are  conducted.  He  receives  and  pays  out  its  moneys,  collects 
and  pays  its  debts,  and  receives  and  transfers  its  commercial  securities.  Tellers 
and  other  subordinate  oflicers  may  be  appointed,  but  they  are  under  his  direc- 
tion, and  are,  as  it  were,  the  arms  by  which  designated  portions  of  his  various 
functions  are  discharged.  A  teller  may  be  clothed  with  tiic  power  to  certify 
checks,  but  this  in  itself  would  not  alfect  the  right  of  the  cashier  to  do  the  same 
thing.  The  directors  may  limit  his  authority  as  they  deem  proper,  but  this 
would  not  alfect  those  to  whom  the  limitation  was  unknown.  Commercial  Bank 
of  Lake  Erie  v.  Xorton  el  al.,  1  Hill,  501  ;  Bank  of  Vergennes  v.  Warren,  7 
Hill,  91  ;  Beers  v.  The  Phoenix  Glass  Co.,  14  Barb.  358  ;  Farmers'  and  Mechanics' 


748  CHECKS. 

Bank  v.  Butchers'  and  Drovers'  Bank,  14  N.  Y.  624;  North  River  Bank  v.  Ay- 
mer,  3  Hill,  2G2,  2G8 ;  Barnes  v.  Ontario  Bank,  19  N.  Y.  156,  166. 

The  foundation  upon  wliich  this  liability  rests  was  considered  in  an  earlier 
part  of  this  opinion.  Those  dealing  with  a  bank  in  good  fliith  have  a  right  to 
presume  iiSegrity  on  the  pai't  of  its  officers,  when  acting  within  the  apparent 
sphere  of  their  duties,  and  the  bank  is  bound  accordingly. 

In  Barnes  v.  The  Ontario  Bank,  19  N.  Y.  156,  the  cashier  had  issued  a  fiilse 
certificate  of  deposit.  In  the  Fanners'  and  Mechanics'  Bank  v.  The  Butchers' 
and  Drovers'  Bank,  14  N.  Y.  624;  s.  c,  16  N.  Y.  133;  and  in  Mead  v.  The 
Merchants'  Bank  of  Albany,  25  N.  Y.  146,  the  teller  bad  fraudulently  certified 
a  check  to  be  good.  In  each  case  the  bank  was  held  liable  to  an  innocent 
holder. 

It  is  objected  that  the  checks  were  not  certified  by  the  cashier  at  his  Banking- 
house.  The  provision  of  the  act  of  Congress  as  to  the  place  of  business  of  the 
banks  created  under  it  must  bo  construed  reasonably.  The  business  of  every 
bank,  away  from  its  office  —  frequently  large  and  important  —  is  unavoidably 
done  at  the  proper  place  by  the  cashier  in  person,  or  by  correspondents  or  other 
agents.  In  the  case  before  us,  the  gold  must  necessarily  have  been  bought,  if 
at  all,  at  the  buying  or  the  selling  bank,  or  at  some  third  locality.  The  power 
to  pay  was  vital  to  the  power  to  buy,  and  inseparable  from  it.  There  is  no 
force  in  this  objection.  Bank  of  Augusta  v.  Earle,  13  Peters,  519;  Pendleton 
V.  Bank  of  Kentucky,  1  T.  B.  Monroe,  182. 

It  is  also  objected  that  each  of  the  checks,  after  being  certified,  required  an 
additional  stamp.  The  act  of  Congress  relating  to  the  subject  directs  certified 
checks  to  be  included  in  the  circulation  of  the  bank  for  the  purpose  of  taxation. 
13  St.  278,  c.  173,  §  110.     This  is  a  conclusive  answer  to  the  objection. 

In  Brown  v.  London,  1  Levinz,  298,  judgment  in  a  suit  upon  two  accepted 
bills  of  exchange  was  arrested  after  verdict  because  "entire  damages"  were 
given,  and  the  count,  upon  one  of  the  bills,  failed  to  aver  that  by  the  custom  of 
merchants  and  others  trading  in  England  the  acceptor  was  obliged  to  pay.  This 
was  in  1671.  Other  decisions  in  this  class  of  cases,  not  less  remarkable,  are 
familiar  to  those  versed  in  the  learning  of  the  elder  reports.  The  law  merchant 
was  not  made.  It  grew.  Time  and  experience,  if  slower,  are  wiser  law-makers 
than  legislative  bodies.  Customs  have  sprung  from  the  necessities  and  the  con- 
venience of  business  and  prevailed  in  duration  and  extent  until  they  acquired 
the  force  of  law.  This  mass  of  our  jurisprudence  has  thus  grown,  and  will  con- 
tinue to  grow,  by  successive  accretions. 

We  have  disposed  of  this  case  as  it  is  before  us.  Ilow.fiir  it  may  be  changed 
in  its  essential  character,  if  at  all,  by  a  full  development  of  the  evidence  on 
both  sides  in  the  further  trial,  which  will  doubtless  take  place,  it  is  not  for  us 
to  anticipate. 

The  judgment  below  is  reversed,  and  a  venire  de  novo  will  be  awarded. 

Clifford  and  Davis,  JJ.,  dissented. 

See  also  Clark  National  Bank  v.  Bank  of  Albion,  52  Barb.  .592  ;  Irving  Bank 
V.  Wetherald,  36  N.  Y.  335. 


INDEX. 


INDEX. 


ACCEPTAXCE, 

agent's  duty  to  present  for,  26  et  seq.,  39  and  n. 

eirect  of  custom  and  usage,  'AO  in  n. 

when  notes  and  bills  payable  at  or  after  sight  to  be  presented  for,  40  in  n., 

41  in  n. 
case  of  foreign  Jaills,  ib. 
review  of  all  the  cases  on  the  point,  41  in  n. 
what  constitutes,  41  et  seq. 
verbal  when  sufficient,  42  in  n. 
when  not  necessary,  42,  43  in  n. 
promise  to  accept,  effect  of,  43  et  seq.,  49  in  n.  et  seq. 
parol  promise  to  accept,  50  in  n.  et  seq. 
in  promise  to  accept,  bill  must  be  pointed  out,  52  et  seq. 
permission  to  draw,  effect  of,  5G  in  n.  et  seq. 
what  facts  admitted  by,  57  et  seq.,  59  in  n.  et  seq. 
effect  of  knowledge  that  signature  is  forged,  02  in  n. 
(See  Forgery.) 

admission  of  acceptance,  63  in  n. 

supra  protest,  64  et  seq. 

when  bound  to  make,  ib. 

what  defences  allowable  against  acceptor,  supra  protest,  87  in  n. 

acceptance  after  bill  dishonored,  ib.  et  seq. 

rights  of  party  paying  for  honor  of  other  parties,  88  in  n.  ' 

by  the  United  States,  88  et  seq. 

conditional,  (7;.,  104,  et  seq.,  108  in  n.  et  seq. 

"  when  in  funds,"  108  in  n. 

party  not  bound  to  receive  conditional,  108  in  n. 

release  of  drawer  will  not  discharge  acceptor,  581  et  seq.,  696  in  n. 
ACCIDENT, 

when  sulHcient  excuse.     (See  Dkmand  and  Notice.) 
ACCOMMODATION   PAPER.     (See  Holder  for  Value;   Payment.) 
ACTION, 

who  may  sue  on  note  or  bill,  477,  et  seq.,  478  in  n. 

when  may  be  brought,  480  el  seq.,  490  in  n.  d  seq.,  492  in  n.,  493  et  seq. 


752  INDEX. 

ACTION  —  continued. 

post-notes,  480  et  seq.,  S.  P.  in  n.  490. 

on  lost  note  or  bill,  671  et  seq.     (See  Lost  Notes  and  Bills.) 
ADMISSION.  (»9ee  Acceptance;  Evidence.) 

AGENT.  (See  Acceptance.) 

AT   SIGHT.  (i'ee  Acceptance.) 

B. 
BANKRUPTCY, 

lohen  jxirties  discharged  by.    (See  Indorsee.) 
BILLS  AND   NOTES, 
when  not  negotiable. 

by  reason  of  not  being  payable  in  money,  1. 
payable  in  Canada  money,  1  et  seq. 
payable  in  bank-notes,  6  in  n.,  7  in  n. 
New  York  statute  in  regard  to  negotiability,  6  in  n. 
negotiability  not  indispensable,  ib. 
payable  in  specific  articles,  7  in  n. 

xohen  not  negrdiable,  by  reason  of  being  payable  on  -contingency,  7  et  seq. 
payable  out  of  particular  fund,  7  et  seq.,  8  and  n. 
■with  specific  directions,  8  et  seq. 

power  to  confess  judgment,  9  and  n. 
when  collateral  security  named  in  note,  9  in  n. 
other  conditions,  &c.,  10  and  n. 
certainty  as  to  time  of  payment  and  other  particulars,  11  et  seq.,  12  et  seq. 

in  n. 
payable  at  particular  place,  15  et  seq. 

when  cut  in  halves,  699,  703  et  seq.     (See  Lost  Notes  and  Bills.) 
BLANK. 

effect  of  writings  in,  215.     (See  Holder  for  Value.) 
BROKEN   BANK, 

payment  in  bills  of.    (See  Payment.) 


CHECKS, 

form  of,  days  of  grace,  716  et  seq. 

how  differ  from  bills  of  exchange,  ib.,  718  in  n.  et  seq. 

effect  of  being  certified  by  teller  to'  be  "  good,"  721  et  seq. 

rule  in  Massachusetts,  721. 

rule  in  New  York,  727  et  seq. 

rule  in  the  Supreme  Court  of  United  States,  740  et  seq.,  in  n. 
CASHIER.  (See  Checks.) 

CANADA  MONEY.  (See  Money  ;  Bills  and  Notes.) 

CERTAINTY, 

when  and  what  required  in  notes  and  bills,  11  et  seq.,  12,  13,  14  in  notes. 
(See  Bills  and  Notes.) 


INDEX.  768 

CERTIFICATE, 

of  teller  or  cashier,  effect  of,  740  et  seq.     {See  Checks.) 
COLLATERAL   SECURITY.     (See  Holpkk  fou  Valuk.) 
COMPETENX'Y.  (See  Evidence.) 

COMl'OSrj  ION-DEED, 

ej/'ect  of  uj)on  parties  collaterally  holden.     (See  Indorser.) 
CONDITIONAL   ACCEPTANCE.     (See  Acceptance.) 
CONSIDERATION.  (See  Holder  for  Value.) 

CONSTRUCTIVE   NOTICE.     (See  Holder  for  Value.) 
CONTINGENCY, 

as  ailecting  negotiability  of  notes  and  bills,  7  et  seq.,  8  and  n.,  9  and  n., 
10  and  n. 
CONTRACT.  (.S'ce  Evidence;  Indorser;  Surety.) 

CONTRIBUTION.  (See  Surety.) 

CUSTOM  AND  USAGE.     (See  Acceptance  ;  Presentment.) 


D. 

DAYS  OF  GRACE, 

ichen  allowed.  (See  Presentment.)  * 

DEMxVND, 

of  payment.  (See  Presentment.) 

DEMAND  AND  NOTICE, 

JioiD  excused:  unavoidable  accident,  414  et  seq. 

death  of  maker,  indorser  appointed  administrator,  423  et  seq. 
question  further  discussed,  428  in  n. 
where  bill  drawn  without  funds,  430  et  seq.,  441  in  n. 
effect  of  war,  ib. 
DILIGENCE, 

degree  of.  •  (See  Notice.) 

when  question  of  law,  410  el  seq.,  413  in  n. 
DOMICILE.  (See  Notice.) 

DR.VWI^R.  (See  Indorsement  ;  Acceptance.) 

DRAWN  IN  SETS, 

which  one  required.  (See  Evidence.) 

E. 

EQUITABLE  DEFENCES.     (See  Holder  for  Value.) 
EQUITY.  (See  Lost  Notes  and  Bills.) 

ESTOPPEL.  (Sec  Evidence.) 

EVIDENCE, 

what  sufficient  to  prove  indorsement,  110  et  seq. 
(See  Indorsement.) 

how  far  force  of  arbitrary  signs  explainable  by  oral  proof,  ib. 

presumptions  as  to  time  of  indorsement,  213. 

what  required  to  impeach  title  of  holder,  ib. 

of  title  to  note  or  bill,  217,  220  et  seq. 

48 


754  INDEX. 

EVIDENCE  —  continued. 

effect  of  notice  or  knowledge,  225  in  n.,  258  et  seq.,  2G1  et  seq. 

sufficient  to  put  party  on  inquiry,  235  et  seq^. 

what  siiflicient  to  impeach  title,  239  et  seq. 

how  far  production  required,  498  et  seq..,  601  in  n. 

bill  drawn  in  sets,  498  et  seq. 

to  vary  liability  of  indorser,  5(1.')  et  seq. 

competency  of  party  to  impeach  bill  or  note  by  his  own,  507  et  seq. 

when  indorser  competent  to  prove  paymfint,  522  et  seq.,  527  in  n. 

amount  of  discussed,  528  et  seq. 

-when  notice  to  be  sent,  528  et  seq. 

wh(;n  all  the  witnesses  in  a  continued  chain  must  be  called,  if). 

discussion  of  the  force  of  in  a  particular  case,  ib. 

admissions,  notice,  contract,  estoppel,  536  et  seq.,  540  in  n. 

of  loss  of  bill  or  note,  G74  et  seq.     (See  Lost  Notes  and  Bills.) 
EXCUSES    OF    PRESENTMENT    AND    NOTICE.       {See  Demand  and 
Notice.) 

F. 

FOREIGN  BILL.  (See  Acceptance.) 

FORGERY, 

money  paid  on  forged  indorsement  when  recoverable,  57  et  seq.,  C43  et 

seq.  G48  in  n. 
timely  notice  required  after  discovery,  ib. 
■where  forged  paper  paid  by  maker,  650  et  seq.,  661-670. 
FUNDS, 

bill  drawn  without.     (See  Dejlind  and  Notice.) 


G. 

GIVING  TIME, 

effect  of ,  upon  other  parties.     (/See  Indorser.) 
GUARANTOR.  (See  Surety.) 

GUARANTY.  (See  Indorsement.) 

H. 

HOLDER  FOR  VALUE, 

note  delivered  as  security  for  contingent  debt,  165  et  seq. 

antecedent  debt,  169  et  seq. 
comparative  authority  of  national  and  State  courts,  186  et  seq. 
eiFect  of  taking  note  or  bill  as  payment  of  or  in  security  for  existing  debt, 

195  et  seq. 
question  stated  on  principle,  195,  196. 
English  cases  reviewed,  196-199. 
American  cases,  200-202. 

review  of  later  cases  both  English  and  American,  202-208. 
cases  brought  down  to  present  time,  208-213. 


INDEX.  755 

HOLDER  FOR  VALUE  —  continued. 

presumption  as  to  time  of"  indorsement,  '2l:^. 

when  presumed  to  be  taken  honajide,  il>. 

wliiit  evidence  rt'<|uired  to  impeach  title  of  holder,  ib. 

when  paper  payiiljle  on  di-manil  is  overdue,  214. 

when  holder  must  pay  value,  ih. 

extent  of  recovery,  ih. 

time  of  payment  extended,  21o. 

acceptance  by  procuration,  U). 
in  blank,  ih. 

what  shtdl  put  party  upon  iiupiirj',  210. 

acconnnodatI(Tn  paper,  lMC),  217. 

presumption  of  title,  217  et  seq.,  220  et  seq. 

equities,  ib. 

defence,  by  showing  breach  of  executory  agreement,  222. 

what  knowledge  will  defeat  holder's  title,  225  in  n. 

paper  post-dated,  22o  ct  seq. 

note  void  under  statute,  22(1  et  seq. 

illegal  consideration;  burden  of  proof,  2.')0  et  seq. 

cases  referred  to.  2.')4,  2.")5  in  n. 

what  shall  put  holder  on  inquiry,  23.5  et  seq. 

title  only  affected  by  bad  faith,  239  et  seq. 

<"ases  reviewed  upon  the  point,  2.57  in  n.  et  seq. 

how  far  affected  by  notice  of  defects,  2.58  et  seq. 

indorsee  with  notice  claiming  under  prior  holder  without,  261  et  seq. 

collection  of  cases  upon  point,  2(J2  in  n. 

of  accommodation  paper  with  notice,  263  et  seq. 

when  its  use  is  perverted,  264  et  seq.,  267  et  seq.,  209  et  seq. 

when  taken  overdue;  right  of  set-off,  271  et  seq.,  275  in  n. 

when  maker  can  set  up  usury  as  defence,  277  dt  seq.,  2S0  et  seq.,   287 
et  seq. 

distinction  between,  and  accommodation  party,  581  et  se/. 
HOLIDAYS, 

icJieji  paper  falls  due  upon.     {See  Presentmknt.) 
HUSBAND   AND   WH^E.     (,Sec  Indorse.mkxt.) 

I. 

ILLEGALITY.  (See  Holder  for  Value.) 

INDORSEMENT.  (See  Foisgery.) 

form  of,  whether  the  u.sc  of  arl)itrary  signs  in  pencil  may  lie  explained 
by  oral  proof,  110  et  w/.,  //'.  in  n.  et  seq. 
signing  by  initials.  111  in  n. 
effect  of  guaranty  u  ion  note,  /7>. 
immaterial  what  part  of  note  upon,  112  in  n. 
form  of,  not  material,  /7*. 
b>/  one  not  a  parti/,  112  et  seq.,  124  ct  seq.,   131  ef  seq.,  139  et  .<!eq.,  143 
et  seq.,  loU  et  seq. 


756  INDEX. 

INDORSEMENT  —  continued. 

cases  in  Massachusetts  and  other  States,  131  in  n. 
New  York  and  other  States,  139  in  n. 
Ohio  and  other  States,  150  in  n. 
summary  upon  the  subject,  155  in  n.  et  seq. 
after  viaturity,  156  et  seq. 

in  case  of  the  death  of  one  partner,  160  in  n.  et  seq. 
by  wife  ivith  consent  of  husband,  161  et  seq. 
cases  in  different  States,  164  in  n. 
INDORSEE.  {See  Indorsement  ;  Evidence.) 

how  may  be  released, 

additional  security;  delaying  suit,  544  et  seq.,  546  in  n.,  547  et  seq. 
extension  of  time,  544  et  seq.,  547  et  seq.,  551  et  seq.,  554  in  n.,  558 
et  seq.,  560  in  n. 
<     bankruptcy,  558  et  seq. 

recovery  against  maker,  563  et  seq. 
release  of  first  indorser,  568  et  seq. 

composition  deed  reserving  right  against,  569  et  seq.,  574  in  n. 
mortgage  security  sold  without  consent  of,  577  et  seq. 
any  departure  from  original  contract,  ib. 
INSOLVENCY, 

effect  of.  {See  Presentment.) 


J. 

JUDGIVIENT, 

effect  of  upon  oilier  parties.     (See  Indorser.) 


L. 

LAW  OF  PLACE.  (See  Lex  Loci.) 

LEX  LOCI, 

effect  of.  (See  Presentment.) 

bill  drawn  in  one  country  and  Indorsed  in  another,  709  et  seq. 

conflict  of  authoVities,  712  in  n.  et  seq. 
LOST  NOTES  AND  BILLS, 

wheti  ovmer  may  recover,  671  et  seq. 

conflict  of  authority,  673  in  n. 

circumstantial  proof  of  loss,  &c.,  674  et  seq. 

case  of  negotiable  paper,  679,  680. 

action  at  law  lies  in  some  States,  683  et  seq.,  686  in  n. 

remedy  in  equity,  688  et  seq. 

where  note  negotiable,  but  not  negotiated,  691  in  n.  et  seq. 

action  at  law,  indemnity,  694,  697,  698  in  n. 

where  one-half  the  security  is  lost,  699  et  seq.,  703  et  seq.  in  n. 


INDEX.  7'>7 


M. 


MATURITY.  (See  Indorsement;  Pay.mknt.) 

MONEY, 

promissory  note  or  1)111  of  e.xchaiij^e  must  be  payable  in,  1  et  .sc(j,  G  in  n., 
7  in  n. 


N. 

• 
NATIONAL  COURTS, 

how  far  decisions  of  State  courts  regarded  by,  18G  et  seq. 
NEGLIGENCE, 

e fleet  of.  (See  Presentment.) 

NEGOTIABLE   PAPER.      (See  Holder  for  Value;    Surety;   Bills  and 

Notes  ;    Lo.st  Notes  and  Bills.) 
NON-PAYMENT, 

]>roceedin(js  on  account  of .     (See  Notice;   Payment.) 
NOTICE.  (See  Presentment.) 

form  of,  358  et  seq.,  362  in  n.,  363  et  seq.,  371  in  n.  et  seq. 

mode  of  sending,  376,  377  in  n. 

when  personal  I'equired,  378  et  seq.,  381  in  n. 

by  Avhom  f^iven,  383  et  seq.,  384  in  n.  et  seq. 

the  time  when  should  be  sent,  388  et  seq. 

where  there  are  successive  parties,  390  in  n. 

must  be  sent  by  mail  of  next  day,  392  in  n. 

how  this  construed,  392,  393  in  n.  et  seq. 

where  should  be  sent,  397  et  seq.,  404  et  seq. 

to  place  of  domicile  commonly  siiiruient,  ib. 

how  far  place  of  domicile  presumj)tively  unchanged,  404  in  n. 

where  different  post-offic;es  in  same  town,  409  in  n. 

where  no  post-ollice  in  town  of  domicile,  ib. 

where  party  receives  mail  at  different  places,  410  in  n. 

degree  of  diligence  required,  391  in  n.,  410  et  seq.,  41.)  in  n. 

when  question  one  of  law,  il>. 

reasonable  diligence  defined,  ib.  , 

(Sec  Presentment.) 

where  indorser  has  received  collateral  security,  463  in  n. 

waiver  of  same,  46o  in  n.,  468  et  seq.,  469  in  n.  et  seq. 

when  promise  to  pay  amounts  to  waiver  of,  473  et  seq.,  475  in  n. 
(Sec  Evidence;  FouciEUY.) 

O. 

OVERDUE. 

efect  upon  riijhts  of  holler.  .  (See  Holder  for  Value.) 


758-  INDEX. 


p. 

PARTY, 

.  indorsement  by  one  not.     (*See  Indorskment  ;   Evidence.) 
PAYABLE,  HOW.  (See  Bills  and  Notes.) 

PAYMENT.  (See  Holder  for  Value.) 

before  maturity,  or  to  one  not  authorized  to  receive  payment,  331  et  seq., 
r  338  et  seq.  in  n, 

unaccepted  paper  discounted  by  drawee  before  maturity,  340  et  seq.,  343 

in  n.  ■• 

wrongful  by  principals,  effect  on  surety,  343  et  seq.,  345  in  n.  et  seq. 
where  parties  sign  for  accommodation,  351  in  n. 
when  formal  protest  required  on  non-payment,  355  el  seq. 
form  of  notice  on  non-payment,  358  etseq.,  362  in  n.,  363  et  seq.,  371  in  n, 

et  seq. 
payment  in  bills  of  broken  bank,  617  et  seq.,  625  et  seq.,  634  in  n. 
paper  of  third  party,  637  et  seq.,  642  in  n. 
PERSONAL  NOTICE, 

wJien  required.  (See  Notice.) 

PLACE, 

where  presentment  to  be  made.     (See  Presentment.) 
f  LACE  OF  BUSINESS, 

effect  of  being  closed.     (See  Presentment.) 
POST-DATED.  (See  Holder  for  Value.) 

POST-OFFICE.  (.See  Notice.) 

POST-NOTES.  (See  Action.) 

PRESENTJVIENT.  (See  Notice.) 

and  demand  of  jxiyment,  how  far  necessary,  290  et  seq. 
further  discussion  of  same  point,  296,  297  in  n. 
when  demand  to  be  made,  297  et  seq. 
effect  of  usage  and  custom,  306  et  seq.  in  n. 
days  of  grace  when  allowed,  307  in  n. 
whether  on  inland  bills,  &c.,  308  in  n. 
how  far  affected  by  lex  loci,  308  in  n. 

where  paper  falls  due  on  Sunday  or  holiday  when  payable,  309  in  n. 
at  what  time  in  the  day  to  be  made,  310  et  seq. 
how  far  affected  by  usage  or  convenience,  311  in  n. 
effect  of  being  too  early  or  too  late,  312  in  n. 
hour  will  vary  according  to  circumstances,  ib. 
where  to  be  made,  313  et  seq. 
effect  of  being  in  bank  unknown  to  the  same,  through  neglect  of  its 

officers,  322  et  seq. 
where  maker  has  removed,  326  in  n. 
effect  of  oral  proof  of  agreement  as  to  place  of,  when  none  named  in 

note  or  bill,  ib.  et  seq. 
where  maker  or  acceptor  has  become  insolvent  and  absconded,  329 
in  n.,  450  et  seq.,  451,  452  in  n. 


INDEX.  *7o0 

PRESENTMENT  —  continual. 

or  where  lie  has  merely  removed,  o30  in  n.,    117   el  seq.,  449,  4.j0 

in  n.,  Aiy>  et  set/. 
place  of  business  closed,  iiujuiry  to  Ije  made,  4">8  in  n. 
mere  insolvency  or  connected  with  assignment  to  indorsee,  effect  of, 
4")8  et  seq.,  4f>l  in  n.  et  seq. 
PRESUMPTIONS.  (.See  Evidknci;.) 

PRINCIPAL  AND  SURETY,  • 

quest  ions  between.     (>St'e  Payment;  Suukty.) 
PROCURATION, 

acceptance  by.  (See  IIoldkh  fou  Valuk.) 

PRODUCTION 

of  note  or  1)111  when  required.     (.S'ee  EvinEN'Ci;.) 
PROMISE  TO  ACCEPT.     (.See  Acceptanck.) 
PROTEST, 

of  jiromi^snr)j  note  unnccessarij,  35.5  et  seq. 
when  and  how  far  evidence,  290  el  seq. 

R. 

RELEASE, 

effect  of  upon  other  parties.     (See  Indokser.) 
REMOVAL 

of  maker  or  acceptor.  (See  Presentment.) 

S. 

SALE 

of  collaterals,  ejfcct  on  other  parties.     (Se^  Indorser.) 
SECURITY, 

effect  of  giving  additional.     (See  Indorser.) 
SET-OFF, 

right  of  as  to  overdue  paper,  &c.     (See  Holder  for  Value.) 
SUIT, 

who  may  bring  on  note  or  bill,  477,  478.     (.See  Action.) 
SUNDAY, 

tohen  paper  falls  due  upon.     (See  Presentment.) 
SUPRA  PROTEST.  (See  Accei>tancr.) 

SURETY, 

when  liable  to  contribution,  597  et  .<>eq.,  603-61C  in  n. 

when  holdon  as  guarantor  merely,  (7^ 

difference  between  and  guarantor,  it). 

how  far  affected  by  alteration  of  contract,  (iO.'^-GKl  in  n. 

difference  in  responsibility  when  paper  negotiable,  ib. 

T. 
TIME, 

when  presentment  to  be  made.     (See  Presentment;    Notice.) 


760 


INDEX. 


u. 


USAGE. 
USURY. 


(See  Acceptance;   Presentiment.) 
(See  Holder  for  Value.) 


V. 


VALUE.  (See  Holder  for  Value.) 

VOID  UNDER  STATUTE.     (See  Holder  for  Value.) 


W. 


WAIVER. 

WAR, 

effect  of. 

WHEN  IN  FUNDS. 

WIFE. 

WITNESS. 


((See  Notice.) 

(See  Demand  and  Notice.) 

(See  Acceptance.) 

(See  Husband  ^^d  Wife.) 

(See  Evidence.) 


Cambridge  :  Press  of  John  Wilson  &  Son. 


LAW  LKSEAKT 

Iftrrr'      Y  OF  cAUFrnpsiA 

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